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Commission fines Canon €28 million after acquisition of Toshiba Medical Systems Corporation

Christian Fernsby |
The European Commission has fined Canon, the Japan-based imaging and optical products manufacturer, €28 million for implementing its acquisition of Toshiba Medical Systems Corporation (TMSC) before notification to and approval by the Commission, in breach of EU Merger control rules.

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EU merger control provides a quick and efficient one-stop shop for companies.

To be able to deliver accurate decisions within tight timelines, the EU merger control system is built on clear procedural rules that companies must fully respect.

EU merger rules require that merging companies notify planned mergers of Union dimension for review by the Commission prior to their implementation ("the notification requirement") and do not implement them until notified to and cleared by the Commission ("the standstill obligation"). The notification requirement safeguards the Commission's ability to detect and investigate mergers. The standstill obligation prevents the potentially irreparable negative impact of transactions on the market, pending the outcome of the Commission's investigation.

On 12 August 2016, Canon notified the Commission of its plan to acquire Toshiba Medical Systems Corporation (“TMSC”) from Toshiba. The transaction was unconditionally cleared by the Commission on 19 September 2016.

For the acquisition, Canon used a so-called “warehousing” two-step transaction structure involving an interim buyer.

As a first step, the interim buyer acquired 95% in the share capital of TMSC for €800, whereas Canon paid €5.28 billion for the remaining 5% of the shares and share options over the interim buyer's stake. This first step was carried out prior to notification to or approval by the Commission.

As a second step, following approval of the merger by the Commission, Canon exercised its share options, acquiring 100% of the shares of TMSC.

In July 2017, the Commission addressed a Statement of Objections to Canon detailing its concerns that, through the transaction structure put in place for its acquisition of TMSC, Canon had implemented the acquisition before notifying it to the Commission and obtaining approval under EU merger control rules.

In November 2018, the Commission addressed a Supplementary Statement of Objections to Canon, complementing the preliminary view taken in the Statement of Objections and reflecting developments in the case law.

The Commission confirms its preliminary view that Canon breached the EU Merger Regulation and fines the company €28 million.


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