Banner triangles

Canon fined €28million for “gun-jumping”

Canon, the Japan-based imaging and optical products manufacturer, has been fined €28million for partially implementing its acquisition in Toshiba Medical Systems Corporation (TMSC) before notification to and approval by the European Commission breaching EU merger control rules.


The EU merger control system contains two clear procedural obligations intended to ensure that relevant mergers and acquisitions are not implemented prior to receiving clearance from the European Commission following a review of their impact on competition.

The notification requirement

  • Mergers that fall within the EU Merger Regulation must be notified to the European Commission prior to their implementation and following conclusion of the relevant agreement, the announcement of the public bid, or the acquisition of a controlling interest1. Notifications must contain the information, including documents, as requested in the applicable notification form. Such information must be correct and complete2.

The standstill obligation

  • A merger must not be implemented before its notification and until it has been declared compatible with the internal market by the European Commission3. In essence, the merger should be at a standstill until dictated by the European Commission.

The European Commission can impose fines of up to 1% of the aggregate turnover of the undertaking concerned where they (intentionally or negligently) supply incorrect or misleading information in a notification or supplementing that notification4. The European Commission can impose a fine of up to 10% of the aggregate turnover of the undertaking concerned where, either intentionally or negligently, it fails to notify a concentration prior to its implementation (without the prior approval of the European Commission), or implements a concentration prior to obtaining clearance5.

Canon case

On 27 June 2019, the European Commission fined Canon €28million for breaching the EU Merger Regulation.

Canon notified the European Commission of its plan to acquire TMSC from Toshiba on 12 August 2016 and the transaction was unconditionally cleared by the European Commission on 19 September 2016.

However, the European Commission later sent a statement of objections to Canon6 detailing concerns that the transaction structure used by Canon to facilitate the acquisition had allowed it to implement the acquisition prior to obtaining the relevant merger approvals from the European Commission.

Canon had used a warehousing two-step structure as part of the acquisition, using an interim buyer as follows:

Step 1: the interim buyer acquired 95% in the share capital of TMSC for €800, whereas Canon paid €5.28billion for the remaining 5% and share options over the interim buyer’s stake. This step was carried out prior to notification to or approval by the European Commission.

Step 2: following approval of the merger by the European Commission, the share options were exercised by Canon, acquiring 100% of the shares of TMSC.

The European Commission concluded that:

  • the first and second steps in the transaction together formed a single notifiable merger;
  • the first step contributed to the acquisition of final control over TMSC, which occurred with the second step;
  • the first step was necessary for Canon to gain control over TMSC;
  • by carrying out the first step, Canon partially implemented its acquisition of TMSC before both the notification and the European Commission’s approval, breaching both the notification requirement and standstill obligation; and
  • Canon was aware of its obligations under the EU Merger Regulation, as such the breach was, at least, negligent.


The European Commission considers the early implementation of a transaction in breach of EU merger review procedural obligations to be a very serious matter, as it undermines the effective functioning of the EU merger control system. When deciding the amount to fine, the European Commission has regard to the nature, gravity and duration of the infringement.

The European Commission considered that Canon’s fine was proportionate while also serving as a deterrent. Notably, it was of no consequence that the transaction was ultimately notified to and indeed cleared by the European Commission.
The implications of failing to follow the European Commission’s rules and procedures are significant and Canon is not an unusual case.

  • In 2017, Facebook was fined €110million for providing incorrect or misleading information during the European Commission’s 2014 investigation of its acquisition of WhatsApp.
  • In 2018, Altice, the multinational cable and telecommunications company based in the Netherlands, was fined €124.5million for implementing its acquisition of the Portuguese telecommunications operator PT Portugal before notification or approval by the European Commission.
  • Ongoing investigations by the European Commission include the alleged breach by Telefónica Deutschland of its commitments offered to secure the European Commission’s approval of its acquisition of E-Plus in 2014, and the alleged breach by Merck and Sigma-Aldrich of providing incorrect or misleading information in the context of their merger.

There is a trend towards hefty fines being imposed on companies for breaching the procedural rules in relation to merger control, which clearly demonstrates the need to consult specialist competition lawyers when dealing with a relevant merger under the European Commission’s jurisdiction.

  1. Article 4(1) of the EU Merger Regulation
  2. Article 4(1) of the Merger Implementing Regulation
  3. Article 7(1) of the EU Merger Regulation
  4. Article 14(1)(a) of the EU Merger Regulation
  5. Article 14(2) of the EU Merger Regulation
  6. On 6 July 2017


This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.


Read the latest articles and commentary from Shoosmiths or you can explore our full insights library.