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Thomas Dworetzky, Contributing Reporter | July 01, 2019
The settlement also requires that the companies put in place HSR compliance programs and agree to inspection and reporting requirements.
In the complaint, DOJ alleged that the two firms “devised a scheme to avoid” waiting period requirements and that the arrangement “had no purpose” beyond enabling the deal to close before March 31, 2016.
The DOJ complaint alleged that the impetus behind the structure stemmed from “long-running financial irregularities at Toshiba,” which exploded into public view in 2015, and that these revelations, in turn, necessitated that Toshiba “shore up its financial statement,” which it had to do by recognizing the sale proceeds from the deal “by the end of its 2015 fiscal year on March 31, 2016.”
The complaint further claimed that both companies, by their “own admission,” acknowledged the problem. “It simply was not possible to complete a significant acquisition of TMSC voting securities before the end of Toshiba’s fiscal year, due to the review periods under various merger control laws.”
In January, 2017, China's Ministry of Commerce reportedly slapped a 300,000 yuan ($43,000) antitrust fine on the deal.
The deal got a regulatory nod of approval in Japan in 2016, but Takeshi Shinagawa, director of the Fair Trade Commission's (FTC) mergers-and-acquisitions division, stressed at the time that, “we decided to make an announcement about the warning to let everyone know that it is not acceptable, so the same method won’t be used in the future.”
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