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Canon, Toshiba To Pay $5 Mln To Settle Federal Charges Related To TMSC Deal

canon jun11 lt

The United States Department of Justice announced that Japanese companies Canon Inc. (CAJ) and Toshiba Corp. (TOSYY.PK,TOSBF.PK) have agreed to pay $5 million to settle federal charges against them for violating antitrust laws.

The charges were related to Canon's $6.1 billion acquisition of Toshiba Medical Systems Corp. or TMSC from Toshiba in 2016. The DoJ noted that the companies violated the premerger notification and failed to observe the waiting period requirements of the Hart-Scott-Rodino Act or HSR Act.

As per the DoJ complaint, the scheme devised by Canon and Toshiba for the deal had no purpose other than to complete the sale of TMSC prior to March 31, 2016, and avoid the HSR Act's waiting period requirements.

The complaint also alleged that Toshiba needed to recognize the proceeds of the TMSC sale by the end of its 2015 fiscal year on March 31, 2016 as it was facing financial difficulty after its financial irregularities became public in 2015.

DoJ also noted that by Canon's and Toshiba's own admission, Canon could not acquire TMSC outright because "it simply was not possible to complete a significant acquisition of TMSC voting securities before the end of Toshiba's fiscal year due to the review periods under various merger control laws."

Bruce Hoffman, Director of the Federal Trade Commission's Bureau of Competition, said, "The prior notice provisions of the HSR Act are designed to allow the agencies to analyze a proposed transaction before it is consummated to determine whether it will harm competition. Deliberately structuring a transaction to avoid or delay HSR filing undermines the efficacy of the premerger notification process, regardless of whether the parties' motives for doing so in a particular case were anticompetitive."

Under the settlement agreement, the companies would pay $2.5 million each. Both companies also need to implement HSR compliance programs and comply with inspection and reporting requirements as well as other obligations in the order.

The DoJ filed the complaint and proposed final judgment in the U.S. District Court for the District of Columbia on June 10.

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