The Competition and Markets Authority (CMA) arrived at a final decision regarding Meta’s acquisition of Giphy on Tuesday, 18 October, ordering the tech giant to sell the GIF search company.
The CMA’s decision was influenced by Giphy’s plan to expand its advertising business to the UK. Before its merger with Meta, Giphy had entered the US market, and was considered a viable and much-needed competitor to the dominance of Meta-owned platforms in the display advertising space. The CMA, concerned not to take a snapshot or static view of the markets, therefore saw the acquisition as a block on potential competition.
The Giphy case is significant as it shows that the CMA will consider market dynamic and potential new entry in its analysis of any merger.
Tim Cowen, Chair of the Antitrust Practice at Preiskel & Co, stated:
“The decision is very interesting as a signal for other deals because it is now the leading example of evidence being taken into account of supply side factors and their impact on competition post-merger. This is often a difficult evidential challenge in forward looking merger reviews. Here, the facts appear to have been clear: Giphy was in the US advertising market and was planning to enter the UK. So, the CMA had to order disposal of Giphy to ensure that its ability to expand into the UK and compete and drive the innovation that is needed in a dominated market, can now happen. This will be an important consideration in deals such as H3G/Vodafone where dynamic competition, the need for collective investment to support faster 5G roll out, and the nature and extent of post-merger competition will be significant.”
For a more detailed discussion of the CMA’s decision and its wider significance, please see Preiskel & Co’s blogpost here.
Header image courtesy of Unsplash (licensed by the free Unsplash license).