A few weeks ago, I blogged about Canon & Toshiba’s unsuccessful efforts to structure an acquisition around HSR’s pre-merger notification requirements. U.S. regulators imposed a total of $5 million in monetary penalties on the parties, among other sanctions. Now European regulators have weighed in – and this Wilson Sonsini memo reports that they’ve imposed a much larger monetary sanction on one of the parties. Here’s the intro:
As the time taken to secure merger control clearances for global transactions lengthens, the parties and their advisers may be tempted to explore alternative deal structures that might allow a transaction to close sooner than otherwise expected. In a stark reminder to industry that it will not tolerate schemes that have, in its view, been devised to circumvent or undermine the efficacy of merger review, the European Commission (EC) announced on June 27, 2019 that it was fining the Japanese conglomerate, Canon, EUR 28 million (almost $32 million) for closing its acquisition of Toshiba Medical Systems (TMSC) in 2016 before notification to the EC and other competent agencies.
Like its American counterparts, the EC didn’t think the deal’s two-step structure passed muster. Instead, it viewed as a “warehousing scheme” that was part of a single transaction. Accordingly, it concluded that the transaction was subject to a notification requirement prior to the first stage of the deal, & that Canon had violated its standstill obligation by completing the first step prior to notification.
– John Jenkins