Court Declares ARCON’s N60bn Fine Against Facebook Nigeria Illegal

Justice Yellim Bogoro of the Federal High Court in Lagos has declared the N60 billion fine imposed by the Advertising Regulatory Council of Nigeria (ARCON) on Facebook Nigeria Operations Limited Illegal, stating that the regulator exceeded its legal authority and breached the company’s constitutional right to a fair hearing.

Justice Bogoro, who made the declaration while delivering judgment in Suit marked, FHC/L/CS/2205/2024, declared ARCON’s Notice of Violation/Demand for Compliance dated 21 October 2024, unconstitutional, unlawful, null, and void, and barred the agency from taking further steps to enforce it.

The judge also held that ARCON lacked the statutory power to impose fines for alleged criminal violations under the Advertising Regulatory Council of Nigeria Act, 2022, without first obtaining a conviction from a court or other competent tribunal.

The dispute arose from ARCON’s claim that Facebook Nigeria displayed advertisements to Nigerian audiences on Facebook and Instagram without prior approval from the Advertising Standards Panel, contrary to provisions of the ARCON Act and the Nigerian Code of Advertising.

Following these alleged breaches, the regulator ordered the company to cease displaying the advertisements and imposed an N60 billion penalty.

Apparently dissatisfied with the development, Facebook Nigeria, through its lawyer, Mofesomo Tayo-Oyetibo (SAN), challenged the action, arguing that ARCON lacked the legal authority to determine criminal liability or impose punitive sanctions via an administrative notice without allowing the company to defend itself.

The company also argued that it does not own or operate Facebook or Instagram, claiming both platforms are owned and controlled by Meta Platforms Inc., a separate foreign entity.

But ARCON, represented by Akinlolu Kehinde (SAN), contended that Facebook Nigeria acts as Meta’s operation in Nigeria and should therefore be held responsible for regulatory violations arising from advertisements on the platform.

The regulator further argued that the notice was simply a compliance directive, allowing the company the option to comply, pay the specified violation fee, or face prosecution.

However, Justice Bogoro dismissed the regulator’s arguments.

The judge stated that Facebook Nigeria is a distinct legal entity from Meta Platforms Inc. and that ARCON failed to present credible evidence showing that the Nigerian company owns, operates, or controls Facebook or Instagram.

The court maintained that the argument that Facebook Nigeria represents Meta’s interests in Nigeria was insufficient to establish liability for the alleged advertising infractions.

Regarding fair hearing, the court ruled that ARCON violated Section 36 of the Constitution by accusing the company of misconduct and imposing a N60 billion fine without first hearing its defence.

Justice Bogoro also held that Section 57(4) of the ARCON Act explicitly requires the regulator to provide a fair hearing before imposing any penalty.

The court further found that the alleged violations were criminal because Section 34 of the ARCON Act designates the unlawful exposure of advertisements as an offence.

The judge also held that, because the Act stated that punishment can be imposed only “upon conviction,” ARCON had no authority to impose the N60 billion fine through an administrative process.

He insisted that, regardless of what ARCON called it, the demand was a fine that could only be imposed by a court following proper judicial procedures.

As a result, the court invalidated the Notice of Violation/Demand for Compliance. It declared ARCON lacked authority to impose fines for breaches of Sections 34(3), 54, or other criminal provisions of the ARCON Act.

Justice Bogoro also issued a perpetual injunction preventing ARCON, its officers, agents, and associates from enforcing the 21 October 2024 notice against Facebook Nigeria.