Ger­many tight­ens rules to shield busi­nesses from for­eign takeovers

Kuwait Times - - BUSINESS -

Ger­many has ap­proved rules to make it eas­ier to block the sale of strate­gi­cally im­por­tant com­pa­nies to in­vestors from out­side the Euro­pean Union, prompted by con­cerns about China ac­quir­ing Ger­man ex­per­tise by that route. The new reg­u­la­tions, which come amid fears of ris­ing pro­tec­tion­ism hurt­ing world trade, al­low the gov­ern­ment to block takeovers if there is a risk of im­por­tant know-how be­ing lost abroad. The rules do not need par­lia­men­tary ap­proval.

“We re­main one of the most open economies in the world, but we also need to take fair com­pet­i­tive con­di­tions into con­sid­er­a­tion,” Econ­omy Min­is­ter Brigitte Zy­pries said in a state­ment on Wed­nes­day. “We owe that to our com­pa­nies. They of­ten com­pete with coun­tries whose economies are not as open as ours,” she added. The pur­chase of Ger­man ro­bot­ics maker Kuka by Chi­nese com­pany Midea last year fu­elled con­cerns that China was gain­ing ac­cess to key tech­nolo­gies while shield­ing its own com­pa­nies from for­eign takeovers. The new rules set out for the first time the cri­te­ria for block­ing a deal, specif­i­cally jeop­ar­diz­ing crit­i­cal in­fra­struc­ture, such as hospi­tals and power grids.

Ear­lier this year, the Ger­man eco­nom­ics min­istry with­drew ap­proval for Fu­jian Grand Chip In­vest­ment Fund (FGC) to buy chip equip­ment maker Aix­tron, cit­ing se­cu­rity con­cerns. Last month, Euro­pean Union lead­ers agreed to con­sider screen­ing in­vest­ments by state-owned Chi­nese firms. France, Ger­many and Italy have backed the idea of al­low­ing the EU to block Chi­nese in­vest­ments, partly be­cause Euro­pean com­pa­nies are de­nied sim­i­lar ac­cess in China.

How­ever, some other EU coun­tries, such as Swe­den, have said this is head­ing in the di­rec­tion of pro­tec­tion­ism. Un­der the new Ger­man rules, op­er­a­tors of in­fra­struc­ture com­pa­nies should be bet­ter pro­tected from in­vestors from out­side the EU, if needed. In ad­di­tion, the gov­ern­ment will be able to take twice as long - four months - in re­view­ing deals.

The new rules will take ef­fect once they are pub­lished in the Fed­eral Gazette which in­cludes all laws and de­crees. The move comes just days after G20 world lead­ers agreed to fight pro­tec­tion­ism in­clud­ing un­fair trade prac­tices at a sum­mit hosted by Chan­cel­lor An­gela Merkel. The agree­ment also, how­ever, rec­og­nized the role of le­git­i­mate trade de­fense in­stru­ments. Bri­tish Prime Min­is­ter Theresa May has also said she plans to give gov­ern­ment power to in­ter­vene in the takeover of crit­i­cal in­fra­struc­ture by a for­eign buyer to en­able it to pro­tect na­tional se­cu­rity.

BER­LIN: United Arab Emi­rates’ Min­is­ter for Ed­u­ca­tion, Ah­mad Bel­houl, cen­ter, vis­its the ap­pren­tice­ship train­ing at Ger­man Siemens com­pany and holds a tur­bine in his hands. —AP

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