According to the Financial Times, Facebook’s $1-billion purchase of photo-sharing site Instagram is under review by the Federal Trade Commission. The Financial Times added that the routine competition investigation could take six months to a year, which could delay the deal’s anticipated second-quarter closing. Unknown to some, deals that involve more than $66 million typically undergo greater regulatory scrutiny, under current antitrust law. Initially, the FTC and Department of Justice will conduct a preliminary review to determine whether any antitrust concerns come up warranting closer examination. After a preliminary review, the majority of deals reviewed by the FTC and Justice Department are allowed to proceed. However, companies may have to provide more information if there’s a second request.
The Financial Times also added that the FTC has already started to gather data from some of the social networking giant’s rivals. While the deal has a big chance of getting approved, many believe that the regulators will meticulously examine the deal because of the whopping price, and the profile of the companies as well. But supposed that the FTC will block the deal, Facebook will be forced to walk its talk when it promised to pay Instagram a termination fee of $200 million. “We have agreed to pay Instagram a $200 million termination fee if governmental authorities permanently enjoin or otherwise prevent the completion of the merger or if either party terminates the agreement after December 10, 2012,” Facebook said last month.
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