The European Commission on Monday said it has warned Facebook parent company Meta that it is breaching EU antitrust laws by distorting competition in markets for online classified advertising and abusing its dominant position. The Commission said in a preliminary view that it would further investigate and that it could impose a fine of up to 10 percent of the company’s annual global turnover, if there is sufficient evidence of an infringement of European Union rules.

“The claims made by the European Commission are without foundation,” Meta spokesperson Tim Lamb said in a statement. “We will continue to work with regulatory authorities to demonstrate that our product innovation is pro-consumer and pro-competitive,” Lamb added.

Sources familiar with the matter last month told Reuters the EU antitrust regulators were drawing up charges against Meta over its use of customer data and the tying of its classified advertisements service to its social network.

The Commission said on Monday that it was concerned that Meta is imposing “unfair trading conditions” on competitors of its own classified ads service, Facebook Marketplace, that want to advertise on its social networks Facebook or Instagram.

Last month, The European Commission said that EU regulators want broader rules defining companies’ market power, with more weight given to innovation and pointers on what digital markets are. The move was prompted in part by the growing power of tech giants.

The rules, known as the EU market definition notice, date back to 1997 and help regulators measure a company’s pricing power in a merger or its power to shut out rivals in an antitrust case.

The information can help regulators to decide whether to demand concessions from a company. Businesses and academics have in recent years criticised EU antitrust laws for being inadequate, especially in relation to US tech giants’ merger deals and market power.

The EU competition enforcer launched an investigation into Facebook in June last year, focusing on whether the social network unfairly uses advertisers’ data to compete with them in the online classified ads sector.

© Thomson Reuters 2022