Foreign predatory buying of EU crucial industries

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by Claire Hollier 

Considering the current economic crisis caused by the COVID-19 pandemic, there are signs of increased concern that European companies, notably those in critical sectors, are increasingly vulnerable to foreign takeover attempts.

This was brought to light by Die Welt on the 15 March, reporting that the Trump administration offered substantial funds to get hold of a coronavirus vaccine developed by a German company – CureVac.  Die Welt reported that Trump was trying to lure the Germany-based company to shift its research wing to the United States, presumably to develop the vaccine first and foremost (or rather exclusively) for the United States.  Reuters contacted a spokesperson for the German Health Ministry who confirmed the report in the Welt am Sonntag.

This prompted German politicians to vociferously criticize the US.  The Minister for the economy Peter Almaier reacted to the report in the Welt am Sonntag stating ‘Germany is not for sale’.  Reuters highlighted the tweet by Karl Lauterbach, a senior lawmaker with the Social Democrats, junior partners in Chancellor Angela Merkel’s coalition, ‘The exclusive sale of a possible vaccine to the USA must be prevented by all means.  Capitalism has limits.’

Against this background, the European Commission on 25 March, issued new guidelines for the screening of foreign direct investment (FDI) in companies and critical assets in the European Union (EU), notably in the fields of health, medical research, biotechnology and infrastructures being essential for security or public order.  These guidelines are to be applied within the context of Regulation (EU) 2019/452 establishing a framework for the screening of FDI into the EU, set to be applied in October 2020.  In its press release the Commission states that the guidelines will operate in the public interest, in accordance with the requirements of the Regulation, since ‘protection of public health is recognized as an overriding reason in the general interest’ under EU law.

Member States consider that predatory investment, eg. Vulture purchases by investors outside the EU when stock markets have slum down, is also viewed as contrary to public security, not only public health.

This increased awareness to retain resources into the EU, may well lead to the revisiting of policies in favour of governments taking over equity stakes in companies considered vital for the Member State and the EU.

If anything, this pandemic has led to the revisiting of stringent competition and state-aid rules and adjusting to a framework of justifiable state-intervention – attributing more weight to public security, public health and the retention of EU assets.

Claire Hollier 

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