However, this concern constitutes only half of the CMA’s argument. While warning of reduced competition between social media platforms, regulators also warned of its impact on non-existent markets. CMA stated that if Giphy had not been acquired, it could compete with Facebook in the UK advertising market. “Prior to the merger, Giphy had already launched innovative advertising services, and it was considering expanding these services to countries outside the United States, including the United Kingdom,” the regulator said in a statement, citing Pepsi and Dunkin’ Donuts as GIF created to promote its brand.
“It’s very interesting,” said Peter Broadhurst, a competing partner at the Crowell & Moring law firm, who referred to the CMA’s targeting of transactions involving two US companies as “expansionists.” “Giphy does not generate any income in the UK,” he said. “But the CMA found evidence, not particularly strong evidence, that it may try to sell ads in the UK at some point in the future, and they feel that’this is enough for us.'” The decision also indicated that Pepper said that in Encouraged by Brexit, British regulators are ready to show themselves on the global antitrust arena. “In the UK, we have an unusual system that gives the CMA considerable powers to intervene in many transactions, and it has been using these powers, especially after Brexit, to respond to smaller transactions.”
The decision is not entirely surprising. Since April 2021, CMA has been conducting an in-depth investigation of the Giphy acquisition. In September 2021, Facebook responded to the interim findings of the investigation by questioning the UK’s jurisdiction over the transaction in a document Announced by the British Government“In this case, the facts are simple,” Facebook said. “Facebook and Giphy have no competition in the UK, and there is no overlap in related business activities, which leads to competition problems.”
Tyler believes that Meta is now facing a growing trend, that is, countries that are not materially related to the transaction are marking mergers. She added that the European Union and its member states have also begun to pay attention to transactions taking place far outside their borders, noting that Austria submitted Meta’s acquisition of the customer service platform Kustomer to the European Commission in March 2021. It is difficult to enforce the merger, so many other enforcers may be studying how to prevent market damage from happening,” Taylor said.
It is unusual for the regulator in one country to prevent the company involved in a transaction from taking root in another country, but it is not unprecedented. In 2001, the European Union blocked a proposal by Boston-based General Electric to acquire Honeywell, another American conglomerate. In 2018, a Chinese review undermined US semiconductor company Qualcomm’s plan to annex Dutch rival NXP. In May 2021, although Farelogix had no UK customers or turnover, airline software companies Sabre and Farelogix failed to appeal the CMA’s decision to block its merger.