Toshiba 2014 Annual Report Download - page 148

60 TOSHIBA Annual Report 2014
Toshiba Corporation and Subsidiaries
March 31, 2014
Notes to Consolidated Financial Statements
24. LEGAL PROCEEDINGS
In January 2007, the European Commission (the “Commission”) adopted a decision imposing fines on 19 companies,
including the Company, for violating EU competition laws in the gas insulated switchgear market. In April 2007, the
Company filed an appeal to the General Court of the European Union (the “GC”) seeking annulment of the Commission's
decision. In July 2011, the GC handed down a judgment and annulled the entire fine imposed on the Company, but
upheld the Commission's determination about alleged anti-competitive behavior. The Company appealed the GC’s
judgment to the European Court of Justice (the “ECJ”) in September 2011. In June 2012, the Commission adopted a
decision re-imposing fines on the Company, by recalculating the above-mentioned fines. In this decision, the Company
was individually fined €56.8 million and was also fined €4.65 million jointly and severally with Mitsubishi Electric
Corporation. The Company filed an appeal with the GC seeking annulment of this decision in September 2012 on the
ground that the procedure and substance of the new decision are unreasonable. In December 2013, the ECJ delivered its
final ruling to support the Commission’s decision in respect of the alleged infringement of EU competition laws in the gas
insulated switchgear market. As a result, the Company accrued the reasonably estimated amount expected to be paid for
the fines.
In February 2011, the Ministry of Defense of Japan (“MOD”) cancelled contract for development and manufacture of
“reconnaissance system for F-15” between MOD and the Company. In July 2011, the Company filed a lawsuit against MOD
to Tokyo District Court seeking payment of approximately ¥9,319 million ($90,476 thousand) including payment for parts
which have been already completed. In October 2012, MOD filed a counterclaim seeking payment for the penalty of the
cancellation of the contract. In March 2014, the Company increased the amount of its claim by approximately ¥3,017
million ($29,291 thousand). The Company properly executed its duties pursuant to conditions of the contract. Therefore,
the Company thinks that MOD's cancellation of the contract and the claim for penalty is unreasonable and will assert its
position in the Court.
Since December 2006, in the United States, certain purchasers of LCD panels and related products from the Group and
other defendants have filed lawsuits against the Group and other defendants, seeking compensation of damages caused
by alleged infringement of U.S. antitrust law. Though the Group settled with the class action plaintiffs, litigations between
direct action plaintiffs are still pending. As the Group believes that there was no illegal activity in the LCD business, the
Group plans to pursue all available legal avenues to defend in the pending litigations.
In December 2012, the Commission adopted a decision imposing a fine of approximately €28 million on the Company,
plus a fine of €87 million jointly and severally with Panasonic Corporation and MT Picture Display Co., Ltd. for infringement
of EU Competition Law in the color picture tube (used for Televisions) market. Following its own investigation, the
Company contends that it has not found any infringement of EU competition laws, and it brought an action to the GC in
February 2013.
In November 2013, Japan Post Co., Ltd. (“JP”) filed a lawsuit against the Company and NEC Corporation for violating the
antitrust law concerning a bid for postal code automatic reading and sorting equipment, seeking payment of
approximately ¥3,756 million ($36,466 thousand) and delayed damages. This claim is based on the cease and desist order
issued by the Japan Fair Trade Commission in December 2010. The Company will assert its position in the Court because it
considers there is no causal association between its action and damage claimed by JP and that JP's claim is unreasonable
in the Tokyo High Court.
The Group undertakes global business operations and is involved from time to time in disputes, including lawsuits and
other legal proceedings and investigations by relevant authorities. Due to differences in judicial systems and the
uncertainties inherent in such proceedings, the Group may be subject to a ruling requiring payment of amounts far
exceeding its expectations. Any judgment or decision unfavorable to the Group could have a materially adverse effect on
the Group's business, results of operations or financial condition.
The Group's Management currently believes that there are meritorious defenses to all of these legal procedures,
including lawsuits and investigations. Based on the information currently available to both the Group and its legal
counsel, Management believes that such legal procedures, if any, would not have a material adverse effect on the
financial position or the results of operations of the Group.