The cabinet adopted today the 9th Ordinance amending the Foreign Trade and Payments Ordinance presented by the Economic Affairs Ministry, introducing better rules for the scrutiny of corporate acquisitions by investors from countries outside the European Union.
said: “Recent years have seen a substantial increase in the number and complexity of corporate acquisitions. The instruments we have available to review them need to respond to this. For this reason, we have widened the scope of sector-specific scrutiny and included certain types of critical infrastructure. We continue to be one of the world’s most open economies, but we want to make sure that competition is fair. We owe that to our companies. Many of them are facing competition from countries whose economic system is not as open as ours. In future, reporting requirements and adequate scrutiny periods will deliver better protection and greater reciprocity for companies with critical infrastructure.”
In Germany, the acquisition of a shareholding of at least 25 percent in a German company by investors from outside the EU and EFTA-European Free Trade Association can be scrutinised by the Economic Affairs Ministry. The review considers whether the acquisition poses a threat to public policy or public security in the Federal Republic of Germany. In particularly sensitive security-related areas like military equipment and cryptotechnology, all foreign investments are scrutinised to see whether essential security interests of the Federal Republic of Germany are affected.
The amendment to the Foreign Trade and Payments Ordinance which was adopted today adapts the modalities of the review process to the increased number and complexity of corporate acquisitions. Most of the review periods are extended from two to four months so that more information can be obtained. It is made unambiguously clear that “indirect” acquisitions are also subject to scrutiny. These are cases in which foreign investors establish a company in the EU to purchase a German firm.
Also, the scrutiny is being widened in particularly security-sensitive areas to include further companies which develop or manufacture certain key enabling technologies in the defence sector. The content of the review, which derives from EU law (danger to public order or security and essential security interests), is not changed by the new rules. Similarly, the possibility – which however is restricted by high barriers – to prohibit an acquisition is not changed or widened.
In parallel to this, we have also launched an initiative at EU level together with Italy and France to bring about changes to EU law.