Germany tightens rules to
shield businesses from foreign takeovers
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[July 12, 2017]
BERLIN (Reuters) - 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
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
"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 <KU2G.DE> by Chinese company
Midea <000333.SZ> last year fueled concerns that China was gaining
access to key technologies while shielding its own companies from
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 <AIXGn.DE>, 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.
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A robotic arm fills a glass with Bavarian Weiss beer at the booth of
German company Kuka at the world's biggest industrial fair, "Hannover
Fair", in Hanover, Germany April 24, 2017. REUTERS/Fabian Bimmer/File
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
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
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.
(Reporting by Rene Wagner and Holger Hansen; Writing by Emma Thomassson and
Madeline Chambers; editing by Andrew Roche/Keith Weir)
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