The Office of Fair Trading (OFT) has announced that it has approved Facebook’s proposed purchase of Instagram, a photo-sharing website, for US$1 billion. The OFT had previously said that it was seeking written representations about whether the takeover raised any competition or public interest issues, and, following the information it received from that request, the OFT has approved the purchase.
There was initially concern that the takeover of Instagram, a potential competitor of Facebook in the future, would have a detrimental impact on users who would be restricted from using other apps or websites. The OFT considered whether the proposed purchase would decrease competition in the picture uploading market in the UK, for example by preventing users of Instagram from uploading pictures from websites other than Facebook.
If the OFT had found that competition would be “substantially lessened” as a result of the takeover, it would have referred the takeover to the Competition Commission for further investigation. However, based on its findings, the OFT decided against a referral to the Competition Commission and approved the takeover.