The General Court of the European Union dismissed in its entirety the appeal of the Japanese company Canon, which was fined €28 million by the European Commission in June 2019 for violating the Merger Regulation (139/2004), in a judgment delivered on Wednesday 18 May (case T-609/19) (see EUROPE 12284/21).
This acquisition transaction took place in two stages. While notification of the transaction took place in August 2016, the first step was taken in March 2016 so that the sale of the Toshiba subsidiary would be recognised as a capital contribution in Toshiba’s accounts without Canon formally acquiring control until the necessary authorisations were obtained.
Like the Commission, the General Court is of the opinion that Canon implemented its acquisition before it was notified to and authorised by the EU institution.
According to the European judge, the Commission was right to observe that the case law of the Court of Justice distinguishes between the concepts of ‘concentration’ and ‘implementation of a concentration’. While a ‘concentration’ only occurs when a lasting change of control takes place, ‘implementation’ (even partial) of a concentration can take place as soon as the parties to a concentration implement transactions which contribute to a lasting change of control over the target undertaking.
Without the two-step transaction structure put in place by Canon, Toshiba would not have been able to relinquish control of its subsidiary or irreversibly collect payment from its subsidiary before the end of March 2016. Also, the interim transaction was a necessary step to achieve a change in control over the Toshiba subsidiary, with Canon gaining more certainty about the subsequent acquisition of control.
The two steps of the transaction structure leading to the acquisition of control over Toshiba’s subsidiary by Canon therefore formed a single concentration notifiable to the Commission.
See the General Court’s judgment: https://aeur.eu/f/1ou (Original version in French by Mathieu Bion)