Germany approves legislation to prevent foreign takeovers

Germany’s Cabinet on Wednesday approved legislation that will make it easier for authorities to prevent foreign takeovers of strategically important companies.

The changes are meant to bring rules in Germany, Europe’s biggest economy, in line with a year-old European Union directive on screening foreign investment.

The plans pre-date the coronavirus crisis, but come as the German government has vowed to “stand by our companies” in the face of investors who might now hope to acquire firms cheaply.

The new rules, which require parliamentary approval, will lower the threshold for examining and blocking potential takeovers.

Authorities will be able to examine whether an acquisition will lead to a “foreseeable impairment” of public order or security, rather than an “actual threat” to it at present.

They also will prevent sales of companies from being completed while they are being examined by authorities.

Examinations will include an increased focus on an investment’s effects on other EU countries and EU projects as well as its effect in Germany itself.

Economy Minister Peter Altmaier said he views “significant German security interests” as including critical infrastructure such as energy and telecommunication services and supplying vaccines.

Germany already tightened rules on foreign investments in some sectors in 2018, partly reflecting increasing concerns about Chinese investors.

That change allowed authorities to launch an investigation of whether an investor from outside the EU can go ahead with an investment if the planned stake is 10% or higher, rather than 25% previously.