France: A Look Back On A Decision Imposing A Fine On Facebook For Having Provided The European Commission With Inaccurate Information On Its Acquisition Of Whatsapp

Last Updated: 21 September 2017
Article by Emmanuelle van den Broucke

On May 18, 2017, the European Commission imposed a €110 million fine on Facebook for having provided inaccurate information when it acquired WhatsApp, both with regard to the notification form (Form CO) and in response to a request for information concerning the possibility of automatic correspondence between Facebook and WhatsApp user accounts.

It appears from the infringement decision published on July 26, 2017 that, when it was questioned by the Commission during the pre-notification procedure, Facebook explicitly stated it had neither the technical capacity to carry out such an automatic correspondence nor the desire to do so. Furthermore, following the receipt of a document from a third party which attested to the contrary, the Commission sent Facebook a request for information to which the latter reiterated its response.

Yet on August 26, 2016, WhatsApp announced a change in its Terms and Conditions and Private Policy, enabling the correspondence between its user data and Facebook profiles.

Additionally, the Commission noted during its subsequent investigation that, during the examination of the merger, Facebook had already examined the possibility of implementing an automatic correspondence of user profiles between two different applications, and its personnel was aware of this possibility.

This decision is interesting for several reasons.

Firstly, it sets an example: this sanction decision for inaccurate information, the first under Regulation No. 139/2004, appears to announce an increasingly strict policy with regard to companies that notify their mergers by presenting an incomplete or inaccurate file. Incomplete and inaccurate information can indeed distort the Commission's analysis concerning the effects of the operation examined on the relevant markets, while the Commission is forced to give its authorizing decision within strict deadlines.

The second interesting element of this decision resides in its amount: while the Commission did not impose in the case at hand the maximum penalty allowed by Article 14 of the Regulation (the financial penalty being a fine that can reach up to 1% of the global turnover of the year preceding the violation, Facebook registered a turnover of €28 billion in 2016), it did however set an amount that may appear deterrent for companies. Although the Commission took into account mitigating circumstances to reduce its fine, as Facebook did not contest the violation or cooperate with the Commission during this procedure, the overall sanction reached €110 million, i.e. €55 million for having provided false information in the notification form and €55 million for having provided once again the same false information in response to a request for information.

This sanction decision imposed on Facebook may not be an isolated case. The Commission announced on July 6, 2017 having sent statements of objection to General Electric and Merck/Sigma-Aldrich concerning the delivery of inaccurate information for their merger operations.

The Facebook decision must therefore be considered as a strong warning to companies notifying their mergers with regard to the accuracy of the information they have to provide the Commission, on penalty of significant financial penalties. They will have to involve the right people internally to review the notification form, respond to the Commission's questions and not omit facts that are important for the competitive analysis, even if these facts may make the authorization more difficult.

The French Competition Authority recalls that clauses conferring exclusive import rights are forbidden overseas

By decision No. 17-D-14 of July 27, 2017, the French Competition Authority made a new application of the "Lurel" law of November 20, 2012 on overseas economic regulation, which forbids a supplier selling overseas to entrust the exclusivity of its distribution to only one importer/distributor.

As the French Competition Authority noted in its opinion No. 09-A-45 of September 8, 2009, the structural handicaps related to insularity and distance are alone not sufficient to explain the high prices of goods for general consumption overseas. In the distribution sector, the highly concentrated structure of markets, the behavior of the operators, notably through the conclusion of exclusive supply and import agreements, would also explain these high prices.

The Lurel law entrusted the French Competition Authority with specific overseas intervention powers to fight this increase. Exclusive supply agreements are therefore forbidden in all sectors of the overseas economy. The Authority can also make structural commitments in the retail sector mandatory, or even impose structural injunctions in the cases that justify it.

In the case that gave rise to the Authority's decision of July 27, 2017, Materne, a company that produces compotes and desserts, and its distributor, Ets Frédéric Legros, were bound, even after the Lurel law came into force, by an exclusive distribution agreement in Réunion and Mayotte. Despite the Authority's prior decisions regarding this issue, this forbidden practice lasted until July 5, 2016. Reunionese and Mahoran distributors were therefore forced to purchase Materne products from the same importer/wholesaler, Sodibel, a subsidiary of Ets Frédéric Legros, thus reducing competition between companies on these products. The exclusive contract was signed for a period of three years, tacitly renewable.

The two parties therefore had to modify their contract to remove the exclusivity clauses and accept a negotiated sanction, as part of a settlement procedure, amounting to €70,000 for the supplier and €30,000 for the distributor.

A message has thus once again been sent to suppliers who still have exclusivity clauses with regard to overseas import or distribution to modify their contracts without delay.

The United-Kingdom Competition Authority has put in place an algorithm to detect cartels in calls for tenders

The CMA (Competition and Markets Authority) believes that a company can incur a cost increase of up to 30 percent in case of an unlawful agreement between its suppliers to reply to its calls for tenders. To enable a better detection of these unlawful agreements, the CMA has established an algorithm to best detect the situations in which an unlawful agreement may have been made.

The proposed algorithm targets the markets favorable to unlawful agreements, in other words, those where there is little competition to maintain adherence to unlawful agreements and where the benefits expected from such agreements are sufficient to compensate for the risk taken. The data required for the algorithm to function include calls for tenders, proposals from every supplier and the identity of the supplier who won the tender.

The algorithm will then analyze several standard behavioral indicators that are specific to situations of unlawful agreements: the number and structure of tenders, their pricing, and the steps taken by the suppliers to support their tender. Given that the criteria for analysis are not equally applicable to all cartels, the user of this application can adapt the criteria to the specificities of his market, for example, with regard to the number of competitors.

The results of this software, made available to companies and corporations free of charge, obviously do not prove whether or not an unlawful agreement exists, but only give an indication as to whether such an agreement is probable and requires more extensive investigation. For that matter, the CMA has set up a dedicated email address so that all users suspecting the existence of an unlawful agreement can report the situation. The grip on unlawful agreements between companies in calls for tenders is tightening...

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions