Asahi Kasei Corporation and Asahi Kasei Chemicals Corporation (hereinafter collectively
“Asahi Kasei”) have concluded an agreement for settlement of the
class action litigation (hereinafter the “Class Action”) pending
in a U.S. district court in which the plaintiffs are seeking damages from Asahi
Kasei for injury purportedly arising out of an alleged unlawful agreement between
Asahi Kasei and FMC Corporation (“FMC”) to allocate between themselves
the market for microcrystalline cellulose (“MCC”).
Asahi Kasei is fully confident that no such unlawful agreement for market allocation
in fact existed, but has nevertheless decided to conclude this settlement agreement
in view of the burden of cost and risk that a continuation of the Class Action
could entail, and to maintain a favorable environment for the further development
and growth of its MCC business.
The settlement agreement is subject to final approval by the court.
Essentials of the agreement
Under the terms of the agreement, Asahi Kasei will pay US$25 million to the plaintiffs
and, upon the final approval by the court, all direct purchasers of MCC who have
not excluded themselves from the classes involved will release any member of
the Asahi Kasei Group from any and all claims relating to the direct purchase
of MCC in the U.S., and the Class Action against Asahi Kasei will be dismissed. The
agreement also clearly states that Asahi Kasei does not recognize the existence
of any misconduct claimed by the plaintiffs.
Circumstances of Class Action and settlement
In 1998, Asahi Kasei and FMC became the subjects of an investigation by the
U.S. Federal Trade Commission (the “FTC”) alleging the existence of an
agreement between them to allocate the MCC market between themselves in violation
of U.S. antitrust law during the period 1984 to 1997. The investigation
was closed in December 2000 when Asahi Kasei and FMC each entered into a consent
agreement with the FTC pledging strict adherence to U.S. antitrust law, even
though neither Asahi Kasei nor FMC recognized any wrongdoing, in order to accomplish
the early resolution of this issue.
The publication of the consent agreements
was followed, beginning in January 2001,
by a number of civil legal proceedings
in the U.S. in the form of class actions
against Asahi Kasei and FMC.
Those brought in federal district courts were consolidated in the U.S. District
Court for the Eastern District of Pennsylvania.
The court certified the class action status in August 2003, and factual
discovery was then initiated and continued until November 2004, around which
time Asahi Kasei sought to clear the way toward a resolution of the issue with
the plaintiffs, thus leading to the present agreement for its settlement.
Asahi Kasei perspective relating
to settlement
Asahi Kasei has remained confident throughout
the course of the proceedings that no unlawful
market allocation such as that alleged by the
plaintiffs had in fact existed. However,
in view of the burden of legal expenses and
the dissipation in human resources that a continuation
of the active defense in the Class Action would
entail, as well as the uncertainty attendant on a decision by jury and the risks
that might arise in the event of an unfavorable decision, Asahi Kasei has, after
close and full consultation with its legal consul in the U.S., determined the
best course to be the early conclusion of this settlement agreement, thereby
enabling the creation of an environment and circumstances most favorable for
the full and effective concentration of its resources on furthering the development
and growth of its MCC business.
Effect on corporate results
The settlement amount will be entered as a special loss in the financial statements
for the fiscal year which is to be ended on 31 March 2005. Current forecasts
for this fiscal year remain unchanged.
Previous reports
The circumstances of this class action litigation were previously described in
the corporate Annual Report for fiscal year 2003 and in the corporate Japanese-language
financial reports issued during the year 2004.
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