Mar 10 2005
Asahi Kasei Corporation and Asahi Kasei Chemicals Corporation have concluded an agreement for settlement of the class action litigation 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.
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.
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 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.
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.
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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