Competition Authority seeks to fine Facebook NIS 6m

Michal Halperin Rami Zarnegar
Michal Halperin Rami Zarnegar

The Competition Authority alleges that Facebook failed to report two acquisitions in Israel as required by law.

Competition Commissioner Adv. Michal Halperin announced yesterday that the Competition Authority was considering fining Facebook NIS 6 million for failing to notify it of merger and acquisition deals it had carried out in Israel. The Competition Authority stated that it was considering a finding that the company had carried out mergers that were required to be reported under the Competition Law.

<p>The letter summoning Facebook to a hearing concerns acquisition deals that the company carried out in 2018 and 2019 when it bought two Israeli companies, Redkix and Servicefriend, without reporting the deals to the Competition Authority or obtaining approval from the Competition Commissioner before carrying them out as the Competition Law requires.

<p>The Competition Authority states that a monopoly, whether it has been declared as such or not, must submit notification of a merger for any deal to which it is a party and must obtain approval from the Competition Commissioner before the merger is carried out.

<p>The Competition Authority finds that Facebook, which also owns social network Instagram, is "a prima facie monopoly in the market for social networks for private users in Israel, and the deals should therefore have been reported."

<p>Facebook has 60 days in which to make its case before the Competition Commissioner. Facebook has not yet answered the letter.

<p>Facebook stated in response to the report: "We are in constant touch with the Competition Authority. We shall reply to the Competition Authority's preliminary claims to demonstrate that these claims have no cause or basis. There was no reporting duty in relation to these deals, and we believe that the Competition Authority will reach the correct conclusion on this matter."

<p>In certain circumstances, even foreign companies are required to file a notification to the Competition Authority of deals carried out in Israel or abroad. When a foreign company acquires a first company in Israel, it is not obliged to report the deal or obtain approval. However, after a foreign company has already bought a local company, or at least 25% control of a company in Israel, any future acquisition must be reported.

<p>Facebook has made six acquisitions in Israel over the years. Its first was of Snaptu, which developed a platform for running apps on simple telephones, for $70 million. Following the deal, Snaptu transferred to Facebook's main offices in the US and its activity in Israel was shut down.

<p>A year later, Facebook bought acquired facial-recognition technology company Face.com for $100 million.

<p>In 2013 it bought spyware VPN app Onavo for $130 million. The acquisition of Onavo is the subject of a suit filed by the US Federal Trade Commission against Facebook a few months ago. The Federal Trade Commission claims that Onavo's technology enables Facebook to monitor usage patterns of users of various applications in order to find out whether these applications represent a threat to its business. Only after buying Onavo did Facebook set up an official development center in Israel.

<p>In 2015, Facebook announced the acquisition of Kfar Sava-based company Pebbles Interfaces, which developed technology for operating a computer through hand and finger gestures, for $60 million.

<p>In 2018, Facebook bought Redkix, which developed an email platform that serves as an enterprise application, in a deal worth tens of millions of dollars. In 2019, it bought Servicefriend, which developed a customer service bot for messaging. The company became part of Facebook's digital wallet development project.

<p>The demand from the Competition Authority in Israel comes at the same time as the two huge antitrust claims filed against Facebook by US regulators. The claims filed by the US Federal Trade Commission and 48 state attorneys general relate to two acquisition made by Facebook in the past: the acquisition of Instagram for $1 billion in 2012, and the acquisition of WhatsApp in 2014 for $19 billion.

<p><i>Published by Globes, Israel business news - <a href=http://en.globes.co.il>en.globes.co.il</a> - on May 12, 2021</i>

<p><i>© Copyright of Globes Publisher Itonut (1983) Ltd. 2021</i>

Michal Halperin Rami Zarnegar
Michal Halperin Rami Zarnegar
Shekel credit: Shutterstock Vladirina 32 Shekel weakens after BoI rate call

Poria Financial Planning chairman Or Poria: There is growing uncertainty over the collapse of the hostage deal, and the increasing probability of renewed fighting in the south.

Daniel Aronovitz credit: Joseph Laor Insight Partners: $6b and still investing in Israel

Insight Partners newly appointed Israel partner Daniel Aronovitz tells "Globes" about the US firms plans for Israel and reveals the huge extent of past investment.

Bank of Israel Governor Amir Yaron credit: Eyal Izhar, Tali Bogdansky BoI Governor: We hope for two rate cuts in second half

Bank of Israel Governor Prof. Amir Yaron tells "Globes" he remains concerned about inflation, higher demand than supply, and real estate balloon loans.

Bank of Israel Governor Prof. Amir Yaron credit: Yossi Cohen BoI keeps rate unchanged for ninth consecutive time

The Bank of Israel Monetary Committee reiterated: the interest rate path will be determined in accordance with the convergence of inflation to its target.

Supervisor of Banks Daniel Hahiashvili credit: Yossi Cohen Regulator opposes Israeli banks increasing dividends

Supervisor of Banks, Daniel Hahiashvili is reportedly reluctant to let banks increase their dividend distribution, from a ceiling of 40% of profits towards 50%.

Metro credit: Bar Lavi Metro dispute over station entrances to delay tenders

NTA believes stations only need one entrance while the Israel Planning Administration says several are necessary.

Declining tech industry pay  credit: Ussama Azam Unsplash Tech salaries in Israel falling with jobs harder to find

Despite inflation tech salaries are declining, the Central Bureau of Statistics reports.

Tel Aviv credit: Shutterstock New Tel Aviv master plan massively boosts building rights

The plan, set to be approved for deposit, adds 11.3 million square meters of housing, 6.1 million square meters of office space and allows construction of 80-floor buildings in certain places.

Israeli apartments Credit: Shutterstock Apartments sold and rented

A selection of recent real estate deals in Israel in Kfar Saba, Even Yehuda, Rishon Lezion, Hadera, Haifa and Tzfat.

Jerusalem's Midtown project credit: DBLD architects Foreign residents dominate Jerusalem city center housing market

Wealthy foreign residents are increasingly pricing residents out of the market in central neighborhoods, as ghost apartments haunt the city.

Egyptian tanks in Sinai near Rafah credit: Reuters Mohamed Abd El Ghany Egyptian military violations in Sinai concern Israel

President Donald Trump's relocation plan for Gazans is further straining fraught relations between Israel and Egypt. "Globes" examines whether it could spark a war.

Yitzhak Tshuva credit: Gidon Levy and Tali Bogdanovsky Isracard shareholders approve acquisition by Delek

For the deal to go through, approval is now needed from the Supervisor of Banks and the Israel Competition Authority.

Air Canada Photo: Shutterstock Air Canada to resume Israel flights in June

The Canadian airline will resume Toronto-Tel Aviv flights on June 8 and Montreal-Tel Aviv flights in August.

NICE CEO Scott Russell credit: SAP NICE Systems falls sharply on disappointing 2025 guidance

NICE sees $693-703 million revenue in the first quarter of 2025, up 6% from the corresponding quarter of 2024, with non-GAAP earnings per share of $2.78-2.88 - 3.8% below the analysts' consensus for revenue and 2.4% below for profit.

Tel Aviv credit: Shutterstock Urban renewal plan approved in heart of Tel Aviv

The plan for the Hahashmal neighborhood opposite the Old Central Bus Station includes a 30-floor tower.

Smartshooter credit: Smartshooter Germany buys Kibbutz Yagur's Smartshooter AI sights

The product family includes systems mounted on personal rifles, remotely controlled systems, and systems carried by vehicles, robots, and even drones.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018