UK watchdog blasts Facebook’s ‘high risk strategy’ in Giphy case

CMA stresses 'the serious and flagrant nature' of the company’s failure to respect an order in the agency's merger probe.

UK watchdog blasts Facebook’s ‘high risk strategy’ in Giphy case

The U.K. competition authority said Facebook has adopted a “high risk strategy,” which ultimately led to a roughly €60 million fine, in the company’s approach to an order imposed by the agency as part of an ongoing investigation into Facebook’s acquisition of animated image provider Giphy.

Last week, the Competition and Markets Authority slapped a £50.5 million fine on the U.S. firm, saying that it breached an order to prevent the companies from integrating while the merger investigation is ongoing. Such orders make sure that companies involved in a merger continue to compete as they would without the transaction.

In its full decision

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published Thursday, the authority detailed three breaches of the order, called an initial enforcement order (IEO).

“The CMA has found that Facebook adopted a high risk strategy reflecting a decision not to fully comply with its obligations under the IEO, which manifested itself through three breaches” of the order, the CMA said.

As part of the merger review process, Facebook is expected to regularly update the authority on its compliance with the order. The CMA said that the company failed to submit such updates “in the appropriate form.”

The company also failed to disclose in a timely manner an outage affecting the only provider of animated images on Facebook platforms other than Giphy, the CMA said. Some details of the outage were redacted, but the document says that it “was considerably longer than 24 hours,” it said. Finally, Facebook changed its chief compliance officer twice without asking for consent.

The CMA stressed “the serious and flagrant nature of Facebook’s failure to comply with the order,” adding that “Facebook has no reasonable excuse for its failures to comply with the IEO.”

A spokesperson for Facebook referred to comments the company made last week. “We strongly disagree with the CMA’s unfair decision to punish Facebook for a best effort compliance approach, which the CMA itself ultimately approved,” they company said at the time. “We will review the CMA’s decision and consider our options.” 

Source : Politico EU More   

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EU blames Russia for ‘political pressure’ in Moldova gas squeeze

Europe's poorest country is mired in a difficult gas supply negotiation with Gazprom.

EU blames Russia for ‘political pressure’ in Moldova gas squeeze

Russia is using natural gas sales as a “political weapon” against Moldova, EU foreign policy chief Josep Borrell said Thursday.

Moldova, Europe’s poorest country, is involved in a bitter dispute with Russia’s Gazprom over energy supplies.

Gazprom has historically supplied Moldova, but its demand for a steep increase in prices at a time when gas prices are soaring around the world prompted the Moldovan government to refuse the deal.

The EU and Moldova also accuse Gazprom of seeking to impose political obligations on the country in exchange for a better gas price, for example demanding that Moldova’s newly-elected pro-EU government distance itself from Brussels — something Moscow denies.

Moldova received a pledge of €60 million in aid from the EU on Wednesday to subsidize surging household gas bills, but the funds are nowhere near enough to sustain the nation, the country’s Prime Minister Natalia Gavrilița said.

“Even the richest countries cannot afford such an increase, let alone a country like Moldova, and we are very worried that paying the spot price would actually have very serious political, social and economic consequences and would set back the development agenda of the country for years,” she told POLITICO on Thursday.

Although the government in Chișinău has made political accusations against Russia, on Thursday Gavrilița was more circumspect; a Moldovan delegation is currently negotiating a gas deal with Gazprom. But in a joint news conference with the Moldovan leader, Borrell was clear about where the blame for the crisis lies.

“We see attempts by Gazprom to put political pressure in return to lower the gas prices,” he said, without offering evidence of what the company was doing. “We agreed with the prime minister on the importance of strengthening resilience against any potential efforts by third parties to use energy as a geopolitical weapon.”

Spot gas prices at Europe’s benchmark TTF trading hub broke records this year amid a global supply crunch, rising from under €20 per megawatt-hour at the start of the year and peaking at €116 per MWh in early October. A November contract traded around €75 per MWh late Thursday, after Russian President Vladimir Putin said Gazprom would begin boosting shipments to Europe after November 8.

But any such supply increase isn’t coming fast enough for Moldova. It declared a state of emergency last week and booked gas volumes from Poland, Ukraine and the Netherlands, but analysts say the cost of this would be unbearable for the fragile country through the winter unless it gets foreign help.

Moldova says it’s Gazprom’s fault.

Gavrilița said that in August, the Russian energy giant led the country to believe that a rolling contract dating from 2007 would be renewed with no problem in September. “We had assurances that the contract could be extended, and at the very least extended under previous conditions for a month if negotiations had to continue.”

But she alleged that Gazprom then changed its tune.

“Two days before the deadline at the end of September, we actually were offered an extension by one month but under different conditions,” she said, arguing that the conditions were unacceptable both in terms of cost and political implications.

Gazprom did not respond to a request for comment.

Gavrilița admitted her country’s reliance on Gazprom is so complete that in its 30 years of independence, it never had to purchase gas on open markets — until this week.

“Monday was the first time we bought a small amount of gas on the spot market, the very first trade,” she said. “Now we know how to technically carry out a trade and we could do higher volumes should they be necessary … which gives us a little bit of leverage in terms of our negotiations with Gazprom.”

Moldova’s Infrastructure Minister Andrei Spînu has been in St. Petersburg since Wednesday, negotiating a new deal with Gazprom’s Chief Executive Alexey Miller. Gavrilița told reporters there has been “certain progress.”

America Hernandez contributed reporting.

Source : Politico EU More   

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