Canon and Toshiba Settle HSR Act Violation Case

On June 10, 2019, the U.S. Department of Justice (DOJ) Antitrust Division filed a complaint and reached a settlement with Canon and Toshiba for violating the Hart-Scott-Rodino (HSR) Act during Canon’s acquisition of a Toshiba subsidiary.

The HSR Act requires companies to notify the DOJ and the Federal Trade Commission (FTC) of certain mergers and acquisitions, allowing the agencies to review transactions for potential anticompetitive effects before they close. For transactions meeting specific size thresholds, parties must file an HSR notification and observe a mandatory waiting period while the agencies evaluate the deal. If the waiting period expires or is terminated early, the parties may proceed. However, if the DOJ or FTC issues a “second request” for additional documents and information, the transaction is paused until compliance is met, a process that can be time-consuming and costly. In some cases, the agencies may block the transaction entirely.

To evade the HSR Act’s waiting period, Canon and Toshiba created a special purpose company to conceal the transaction. This allowed Toshiba to quickly improve its financial statements following the public disclosure of financial irregularities.

To settle the charges, Canon and Toshiba each agreed to pay a $2.5 million fine, implement HSR compliance programs, and adhere to inspection and reporting requirements, among other obligations.

Lessons Learned

The DOJ views HSR Act violations as a serious matter. The Act’s notification and waiting period requirements are essential for enabling the DOJ and FTC to review and challenge potentially anticompetitive mergers before they are finalized. This enforcement action underscores the Antitrust Division’s commitment to upholding the HSR process and ensuring compliance.