Court voids ARCON’s ₦60bn penalty against Facebook Nigeria

A federal high court in Lagos has nullified the ₦60 billion penalty imposed by the Advertising Regulatory Council of Nigeria (ARCON) on Facebook Nigeria Operations Limited, ruling that the regulator acted beyond the powers granted to it under the law.

In a judgment delivered by Justice Yellim Bogoro in Suit No. FHC/L/CS/2205/2024, the court declared ARCON’s Notice of Violation and Demand for Compliance, dated October 21, 2024, unconstitutional, unlawful and of no legal effect.

The judge also restrained the advertising regulator from taking any further steps to enforce the sanction against the company.

The dispute arose after ARCON accused Facebook Nigeria of displaying advertisements on Facebook and Instagram to Nigerian audiences without obtaining prior approval from the Advertising Standards Panel, an action the regulator said violated the Advertising Regulatory Council of Nigeria Act, 2022, and the Nigerian Code of Advertising.

Following the allegation, ARCON directed the company to halt the advertisements and demanded payment of ₦60 billion for what it described as repeated regulatory breaches.

Facebook Nigeria challenged the decision through its counsel, Mofesomo Tayo-Oyetibo (SAN), arguing that ARCON lacked the legal authority to determine criminal liability or impose punitive financial sanctions through an administrative notice.

The company further maintained that it neither aowns nor operates Facebook or Instagram, explaining that both platforms are controlled by Meta Platforms Inc., a separate foreign corporate entity.

ARCON, represented by Akinlolu Kehinde (SAN), urged the court to dismiss the suit, insisting that Facebook Nigeria represents Meta’s operations in the country and should therefore be held responsible for regulatory violations connected to advertisements displayed on the platforms.

The regulator also argued that its notice was a compliance measure that merely gave the company the option of complying with its directives, paying the prescribed penalty or facing prosecution.

However, Justice Bogoro rejected the regulator’s position.

The court held that Facebook Nigeria is a distinct legal entity from Meta Platforms Inc., adding that ARCON failed to present credible evidence showing that the Nigerian company owns, controls or manages Facebook or Instagram.

According to the judge, merely asserting that Facebook Nigeria represents Meta’s interests in Nigeria was insufficient to establish liability for the alleged advertising violations.

On the issue of due process, the court ruled that ARCON breached the company’s constitutional right to fair hearing by accusing it of wrongdoing and imposing a substantial financial sanction without first giving it an opportunity to defend itself.

Justice Bogoro noted that Section 57(4) of the ARCON Act requires the regulator to accord an alleged violator a fair hearing before any penalty can be imposed.

The court further held that the alleged offences cited by ARCON are criminal in nature because Section 34 of the Act classifies the exposure of advertisements in violation of the law as an offence punishable only upon conviction by a competent court.

The judge ruled that the ₦60 billion demand, regardless of how ARCON described it, amounted to a criminal fine that could only be imposed after judicial proceedings.

Consequently, the court declared that ARCON lacks the statutory authority to impose fines for alleged breaches of Sections 34(3), 54 or any other criminal provisions of the Act without a prior court conviction.

The disputed notice was set aside, while the court granted a perpetual injunction restraining ARCON, its officials, agents and representatives from enforcing the October 21, 2024 notice against Facebook Nigeria.