Japanese multinational corporation Canon is facing a €28 million fine for breaching European Union ( EU)’s merger rules while acquiring Toshiba Corporation’s medical business three years ago, without EU’s antitrust clearance, according to an EU press release.
According to Margrethe Vestager, European Commissioner of Competition, Canon used a transaction structure known as ‘warehousing’ to acquire Toshiba Medical Systems, without obtaining the EU’s approval.
According to the rules, the merging companies are to notify the EU about the mergers that happen in the EU for review.
“Our merger assessment and decision-making depend on the commission being sure that companies are not jumping the gun and implementing mergers without our approval,” Margrethe Vestager told the media.
Warehousing, which involves an interim buyer, helped Canon acquire Toshiba Medical Systems without the European Union’s approval.
According to the press release, an interim buyer acquired 95 percent of Toshiba Medical Systems’ share capital. Canon, on the other hand, acquired the other 5 percent and also share options over the interim buyer’s stake. This helped Canon acquire a 100 percent stake in Toshiba Medical Systems.
EU’s investigation revealed that the first part was carried out without obtaining the commission’s approval.
The commission revealed that in a situation like this, they could fine up to 10 percent of the company’s annual turnover.
The amount of the EU fine on Canon was decided by the commission by taking into account the nature, gravity, and also the duration of the infringement as well as other external factors.
Canon is yet to respond to the news of EU’s €28 million fine.
In April 2019, the commission had imposed a €52 million fine on General Electric for another merger-related issue.