Center for American Entrepreneurship and Small Business & Entrepreneurship Council Comment on the June 14, 2022 Decision by the UK’s Competition Appeal Tribunal Regarding the Blocking of Meta’s Acquisition of Giphy
June 21, 2022
Washington, DC – John R. Dearie, president of the Center for American Entrepreneurship, and Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council, today issued the following joint statement regarding the UK’s Competition Appeal Tribunal’s recent decision pertaining to Meta’s appeal of the CMA’s decision to block the acquisition of Giphy:
“On December 23, 2021, we commented on the United Kingdom’s Competition and Market Authority (CMA) November 30th announcement that it had directed Facebook parent company Meta to sell Giphy, a platform for sharing animated images, asserting that the acquisition could reduce competition among social media platforms. Meta agreed to acquire New York-based Giphy in May of 2020 for $400 million after Giphy approached Meta. Facebook and Giphy are not direct competitors.
We took note of the case given the unprecedented nature of a foreign authority, the CMA, seeking to block the merger of two U.S.-based companies that are not direct competitors in either the United States or the UK. In our statement we emphasized: 1) that market economies function best, most efficiently, and fairly when the rules of competition are clear, transparent, predictable, and consistent; 2) the critical importance of acquisition as a mechanism for realizing value and recycling capital into future generations of startups that drive innovation, economic growth, and job creation; and, 3) that CMA’s decision amounted to a major regulatory overreach that could be disruptive to investment in innovation in the United States, the UK, and elsewhere.
It should be emphasized that prior to the merger, Giphy had no place of business in the UK and had never sold any advertising outside the United States. The CMA’s decision to block the merger thus relied entirely on potential competition from Giphy based upon hypothetical speculation.
Given our previous comments, we noted with great interest the June 14, 2022 decision by the UK’s Competition Appeal tribunal regarding Meta’s appeal of the CMA’s decision to block the acquisition of Giphy.
Although it dismissed other aspects of Meta’s appeal, the tribunal ruled that during its review the CMA had withheld critical information from Meta – specifically, that Meta’s rival Snap had subsequently acquired Gfycat, a close competitor of Giphy. This information had been in the possession of the CMA since June 24 2020, but was not revealed to Meta by the CMA until August 25, 2021, late in the review process.
In its decision, the tribunal commented “we consider that the Snap information was material that should have been disclosed more fully and sooner.” As a result, the tribunal found the CMA had failed to properly consult during its probe and had also wrongly redacted material from its final decision. The tribunal said the CMA’s withholding and redacting of relevant information is “unlawful,” “cannot be justified,” and “prima facie undermines the entirety of the Decision.”
The tribunal will now determine whether the case should be sent back to the CMA for re-examination.
Given our concerns regarding the unprecedented nature of the CMA’s original decision, the tribunal’s decision to nullify CMA’s ruling, and the implications of the final outcome for innovation and entrepreneurship in the United States, the UK, and elsewhere, we will continue to monitor the case with great interest.”
About the Center for American Entrepreneurship
The Center for American Entrepreneurship (CAE) is a nonpartisan research, policy, and advocacy organization whose mission is to engage and educate policymakers in Washington and across the nation regarding the critical importance of entrepreneurs and startups to innovation, economic growth, and job creation – and to pursue a comprehensive policy agenda intended to significantly enhance policy circumstances for new business formation, survival, and growth.
For more information, visit www.startupsUSA.org
Follow CAE on Twitter: @startupsUSAorg
About the Small Business & Entrepreneurship Council
The Small Business & Entrepreneurship Council (SBE Council) is an advocacy, research, and education organization dedicated to protecting small business and promoting entrepreneurship. Its network of supporters, including entrepreneurs and small business owners, state and local business organizations, corporate partners and associations work to strengthen the environment for robust entrepreneurship, investment, innovation and small business growth. Since its founding in 1994, SBE Council has worked both domestically and across the world to further its mission, and is viewed as one of the most powerful and effective organizations dedicated to protecting small business, and promoting entrepreneurship.
For more information, visit www://sbecouncil.org/
Follow SBE Council on Twitter: @SBECouncil