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Facebook faces $1.8 million fine for buying firms without Israeli regulator nod

US giant is ‘monopolist’ force in social media in Israel and thus required by law to report acquisitions to the Competition Authority; FB is ‘fully cooperating’ with inquiry

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Facebook CEO Mark Zuckerberg testifies before a House Financial Services Committee hearing on Capitol Hill in Washington, October 23, 2019. (AP Photo/Andrew Harnik)
Facebook CEO Mark Zuckerberg testifies before a House Financial Services Committee hearing on Capitol Hill in Washington, October 23, 2019. (AP Photo/Andrew Harnik)

Israel’s Competition Authority said on Tuesday it is mulling imposing a fine of some NIS 6 million ($1.8 million) on US social media giant Facebook and its Israeli arm for snapping up two Israeli companies without the consent of the authority.

The fine is subject to a hearing and Facebook has the right to submit its comments to the authority’s director general Michal Halperin within 60 days, the authority said in a statement.

The authority sent a letter to Facebook after the US firm bought two Israeli companies, RedKix, Inc in 2018 and Service Friend Ltd. in 2019, without obtaining the authority’s nod.

Facebook was obliged to report these acquisitions to the Competition Authority since it is a “monopolist” force in the market, with a market share in excess of 50 percent, the statement said.

Under Israel’s Economic Competition Law, entities or people that hold 50% or more of any relevant market, whether declared or not, are required to get the director general’s consent before any merger transaction.

The ICA said that according to an inquiry it conducted, Facebook and Instagram, are “prima facie,” or at first sight, a “monopolist” force in the social media networks market for private users in Israel.

“We are cooperating fully with the Israeli Competition Authority inquiry. We will respond to the Authority’s preliminary claims to demonstrate that they are without merit or foundation. There was no reporting obligation in relation to these transactions and we believe that the Authority will reach the right conclusion,” a Facebook spokesperson said in a text message.

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