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Facebook/GIPHY and the (Un)innovative Theory of Harm

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Towards the end of the last decade, the success of a handful of U.S. technology companies caused significant consternation amongst European policymakers. The initial response was a series of reports extrapolating new theories of harm in competition law for digital players. Some of these went even further, resulting in the creation of new regulatory regimes handing Government enforcers’ discretionary powers to intervene in the economy, with limited safeguards. In parallel, competition authorities stepped up enforcement using existing tools, resulting in a number of new enforcement actions at European and Member State levels, including former EU Member States.

As these competition cases are brought under judicial scrutiny, there are lessons to be learned for future policymakers, both in terms of the new theories of harm being tested, and the importance of checks and balances on administrative discretion. The UK Competition and Markets Authority (CMA) decision regarding Meta’s acquisition of GIPHY is one of the first such examples. The CMA’s decision has been heralded as opening up a “new era” of antitrust enforcement against tech, and is based on an innovative theory of harm to dynamic competition. But is this new era actually going to be good for consumers and the economy more broadly? At a hearing at the Competition Appeals Tribunal (CAT) at the end of April 2022, the parties and a handful of third-party interveners (including the Computer & Communications Industry Association) made their views known.