Structuring and legal considerations

Key laws and regulations

What are the key laws and regulations implicated in technology M&A transactions that may not be relevant to other types of M&A transactions? Are there particular government approvals required, and how are those addressed in the definitive documentation?

In the Netherlands, mergers and acquisitions are transacted mainly under Books 2, 3, 5, 6 and 7 of the Dutch Civil Code (DCC). Additionally, more so than in certain other jurisdictions, the interests of employees play an important role in Dutch mergers and acquisitions; this is particularly the case for technology transactions in any shape or form. Dutch companies with more than 50 employees typically have a (central) works council, whose advice must be sought in the context of a transaction. Moreover, the works council has additional powers in relation to a company’s strategic decision-making process. These powers of the works council and trade unions are transcribed in the Dutch Works Council Act and Social Economic Council’s Merger Code 2015 (SER 2015). Generally speaking, the completion of an employee representation body consultation procedure is included in the purchase agreement as a signing or closing condition. Finally, all M&A transactions are subject to Dutch or European competition rules and regulations, as will be discussed in more detail below.

For technology M&A transactions, the following additional legislation - encompassing intellectual property law as well as information technology and privacy law - is of particular relevance:

  • the Copyright Act;
  • the Neighbouring Rights Act;
  • the Databases (Legal Protection) Act;
  • the Patents Act 1995;
  • the Community Plant Breeders’ Right Regulation (2100/94/EC);
  • the Directive on the Transfer of Undertaking (2001/23/EC);
  • the Assessment of Employment Relationships (Deregulation) Act;
  • the Telecommunications Act;
  • the General Data Protection Regulation (GDPR);
  • the Benelux Convention on Intellectual Property (BCIP);
  • the Copyright Directive (2001/29/EG);
  • the Union Trade Mark Regulation;
  • the Trade Secret Act, which has not yet entered into force and is currently being reviewed by the Senate;
  • the Community Designs Regulation;
  • the Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (the Software Directive);
  • the Neighbouring Rights Act;
  • the Legal Protection of Original Topographies of Semiconductor Products Act;
  • the Trade Names Act;
  • the Seeds and Planting Materials Act 2005;
  • the Directive EU 2019/790 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC (DSM-Directive); and
  • the Regulation EU 2019/1150 on promoting fairness and transparency for business users of online intermediation services.

In general, no governmental approvals are required to effect a transaction. However, as previous touched upon, all transactions are subject to Dutch or European competition laws. As a result, if a transaction exceeds or is likely to exceed certain turnover thresholds - as defined in the Dutch Competition Act or EC Merger Regulation (39/2004/EG) - parties must obtain clearance from the Netherlands Authority for Consumers and Markets or the European Commission, or the relevant authorities in certain other member states, or third countries, as the case may be.

Moreover, if a company is active in a specific regulated industry, such as the financial sector, the healthcare industry or the IT or telecommunications sector, specific licences or approvals might be required.

Government rights

Are there government march-in or step-in rights with respect to certain categories of technologies?

Under current Dutch and European law, no general technology-related governmental march-in or step-in rights exist. Traditionally, EU policies have been directed towards encouraging mergers and foreign investments. This is illustrated by the Treaty on the Functioning of the European Union, which not only abolishes transfer restrictions on capital and payments between member states, but also between member states and third countries. Moreover, unlike the United States or Australia, the European Union does not have an institution in place to screen incoming foreign investments or to prevent a merger on account of the nationality of the acquirer.

However, in recent years, the European Union has taken a step back from its traditional liberal policy towards mergers and foreign investments. In light of recent controversies pertaining to privacy and security and an increased interest of foreign investors in companies that are crucial to the Dutch and European technology infrastructure, a trend is visible aimed at protecting ‘vital technology’. To date, 14 out of the 28 member states have implemented measures for the screening of foreign investments. Moreover, at the European level, a regulation entered into force on 10 April 2019 that will, among other things, create a framework for the screening of foreign direct investments at the level of the members states as well as a pan-European screening mechanism for foreign investments that threaten EU interests. Finally, closer to home, the Dutch Minister of Economic Affairs took a first step towards protecting technology companies in the telecommunications sector by drafting a bill that gives the Minister of Economic Affairs the right to prevent a new shareholder from acquiring or maintaining a controlling interest in a ‘telecommunications party’ if the acquisition threatens public interest. Following a heavy debate and a negative advice of the Dutch Council of State, a revised version of the bill was sent to Parliament on 5 March 2019, where it is currently pending review. One of the major changes to the bill is that the party who intends to acquire a controlling interest in a telecommunications party must notify the Dutch Minister of Economic Affairs if this control leads to ‘relevant influence’ in the telecommunications sector.

Legal assets

How is legal title to each type of technology and intellectual property asset conveyed in your jurisdiction? What types of formalities are required to effect transfer?

In technology M&A transactions, the most important IP rights are patents, trademarks, copyrights, design or model rights and database rights.

Patents may be granted for technological inventions that are new, the result of an inventive step and are capable of industrial application. A patent gives the owner an exclusive right to forbid third parties from using the invention for commercial purposes. Provided that the requirements are met, a patent is established by registration of the invention in the applicable Dutch or European patent register. The scope of protection is 20 years.

A trademark can be any sign capable of graphic representation which has a distinguishing characteristic (eg, not descriptive). Provided that the requirements are met, a trademark is established by registration of the sign in the applicable Benelux, European or international trademark register. The scope of protection is 10 years, but can be extended perpetually.

Works of literature, arts and science (including software) are protected by copyright law. A copyright grants the creator the exclusive right to publish, copy or multiply the work. A product qualifies as a ‘work’ when it is a personal intellectual creation and bears a personal mark of the creator (as a result of creative choices). Provided these requirements are met, a copyright is established automatically. Registration is not required; there is no copyright register in the Netherlands. The duration of the protection is 70 years after the death of the creator.

A design or model right protects the external appearance of two- or three-dimensional objects. An object qualifies as a design or model when it is new and has an own character. Design or model rights are established by registration in the applicable Benelux, European or international register. Registration gives the owner the exclusive right to use the design or model. The scope of protection is five years, to be extended every five years up to a maximum of 25 years. Unregistered designs or models can be protected by a design or model right as well, but the scope of protection is limited and the duration of protection is three years.

Databases, as well as the information contained in the databases, are protected by copyrights and database rights, respectively. Database rights are automatically granted to the producer upon creation of the applicable database. There is no register. A database is a collection of works or data that is methodically structured and shows a substantial investment. It gives the owner the exclusive right to request or reuse (parts of) the databank. The scope of protection is 15 years.

To effect a transfer of the above-mentioned IP rights, an authentic or private deed of transfer is required that contains all conditions and reservations to the transfer. If a patent, trademark or design or model right is transferred, it does not bind third parties until the transfer instrument has been registered in the appropriate register.

Although it does not technically qualify as an IP right, domain names can be protected through registration with the Foundation for Internet Domain Registration. Once registered, the owner has a contractual right to exclusively use a particular IP address. The transfer of a domain name requires a deed and a subsequent notification of the Foundation for Internet Domain Registration.

Finally, trade secrets and know-how - that do not formally qualify as IP rights under Dutch law - can be protected by contractual measures. Information qualifies as a trade secret if it is secret, has value and proper measures have been taken to uphold its confidential nature. Under the new Trade Secret Act the owner of a trade secret can prohibit others from obtaining, using or publishing a trade secret. In some cases, the owner even has the right to demand a recall or order the destruction of the products made using the trade secret.

Due diligence

Typical areas

What are the typical areas of due diligence undertaken in your jurisdiction with respect to technology and intellectual property assets in technology M&A transactions? How is due diligence different for mergers or share acquisitions as compared to carveouts or asset purchases?

In the Netherlands, due diligence in technology transactions typically focuses on:

  • title to shares (if a share deal);
  • IP rights owned by the company (trade names, design or model rights, copyrights, neighbouring rights, trademarks, patents, databases, plant breeders’ right, chip rights, often including domain names, know-how or trade secrets; although these last three do not officially qualify as such);
  • agreements involving the company’s use of third-party IP rights, know-how, or use of IP rights or company know-how (eg, licence agreements and transfer deeds);
  • possible infringements of third-party intellectual property and vice versa;
  • historic and pending litigation involving IP rights or know-how;
  • security interests and encumbrances established on or prejudgment or executory seizure of IP rights or company know-how;
  • agreements related to the website maintained by the company;
  • agreements involving compliance with, or documents evidencing compliance with, statutory privacy provisions;
  • privacy statements or policies; and
  • documentation relating to (adequate) procedures to prevent unauthorised access and the introduction of viruses, worms, Trojan horses, spyware or other disruptive elements into the information technology.

In a share deal, merger or demerger, all company assets and liabilities are automatically transferred, following the execution of the notarial deed of transfer of shares or execution of the notarial deed of merger or demerger. Therefore, in a share deal, there will be particular emphasis on title to share as well as the review of key agreements in order to confirm the extent to which change of control clauses are triggered.

By contrast, in an asset deal or carveout (assuming pre-closing restructuring is involved), all assets and liabilities must be separately transferred, taking into account all applicable transfer requirements. As a result, the due diligence investigations conducted in a share deal differ from the investigations conducted in an asset deal in the sense that there is an increased focus on the individual assets concerned. Moreover, depending on the type of assets being transferred and the identity of the buyer, conducting a ‘Transfer of Undertakings’ (Protection of Employment) Regulations 2006 analysis is paramount. Due diligence must establish whether a transfer of undertaking has taken place, by which certain employees are automatically transferred from the seller to the buyer irrespective of the ‘scope’ of the assets and liabilities that are transferred by virtue of the asset purchase agreement.

Finally, in recent years, an increasingly popular phenomenon in technology transactions has been the ‘acqui-hire’, by which companies acquire the company’s assets or shares for the sole purposes of hiring its key software engineers. Once the new people are onboard, the acquired business is liquidated. In an acqui-hire, part of the due-diligence research should be a thorough assessment of the engineers and their terms of employment, as well as their values, work habits and priorities.

Customary searches

What types of public searches are customarily performed when conducting technology M&A due diligence? What other types of publicly available information can be collected or reviewed in the conduct of technology M&A due diligence?

Generally, a buyer and its (legal) advisers will review the information included in the trade register of the Dutch Chamber of Commerce. This register contains information on the target’s registered name and address, its directors, annual accounts and other filings, such as past mergers or demergers. Moreover, before the wire transfer of the purchase price to the seller upon completion of the transaction, the central insolvency register is checked to confirm that neither the target company nor its subsidiaries have been declared bankrupt.

In a technology M&A due diligence, it is customary to consult additional registers to confirm, among other things, that all IP rights are owned by the target and to establish what, if any, registered licences are issued. Trademarks and design or model rights - depending on their scope - are registered with the Benelux Office for Intellectual Property, the European Union Intellectual Property Office or the World Intellectual Property Organization, respectively. Each organisation maintains its own register. Patents - depending on their scope - are registered in the Dutch Patent Register or European Patent Register. Finally, domain names - which do not technically qualify as IP rights, but may qualify as trade names - are registered with the Foundation for Internet Domain Registration. Copyrights are created by operation of law and are, therefore, not registered in the Netherlands. Therefore, we require an overview of all IP rights and copies of all relevant licence agreements, to verify whether all relevant intellectual property is owned or validly licensed by the target.

Registrable intellectual property

What types of intellectual property are registrable, what types of intellectual property are not, and what due diligence is typically undertaken with respect to each?

In the Netherlands the following types of intellectual property are registrable: trademarks, design or model rights, patents, plant breeder’s right and domain names. Due diligence typically consists of a review of the registers. See question 5.

Other IP rights, such as copyrights, database rights, trade names and trade secrets are not registrable under Dutch law. These rights arise by operation of law or first usage. For due diligence purposes, it is important to review all relevant agreements and other documentation held by the target related to these rights. See question 5.


Can liens or security interests be granted on intellectual property or technology assets, and if so, how do acquirers conduct due diligence on them?

Under Dutch law, there is no single legal equivalent to a lien. A lien can refer to an array of Dutch security interests. In practice, the most common security interest vested in respect of IP rights or technology assets is a pledge. Under Dutch law, IP rights can be encumbered by a pledge, provided that the relevant intellectual property law states that the IP right is transferable. This is the case for copyrights, trademarks, design or model rights, patents and plant breeders’ rights. The requirements for the creation of a pledge differ per IP right; however, in most cases, a pledge is established through an authentic or private deed. To the extent that the IP rights are registered, the pledge is recorded in the applicable register.

Moreover, most technology assets - such as hardware - can be encumbered by a right of pledge, provided that these assets qualify as movable assets. A pledge is created by an authentic or registered private deed. In these instances, due diligence typically consists of reviewing the relevant deeds and underlying contracts containing the obligation to create a pledge. Depending on the nature and motives for the transaction, seller, buyer and creditor can decide to settle all outstanding debts prior to closing or, alternatively, agree that the acquirer will take over (part of) the existing debt after closing. In the first case, the pledge will terminate by operation of law prior to closing. In the second case, the creditor will enter into new (finance) agreements with the acquirer upon closing, waive its existing pledge prior to closing and establish a new pledge post-closing. If a pledgor (debtor) fails to comply with its obligations under the finance agreement, the pledgee (creditor) can dispose of the IP rights as if he or she were the owner.

Employee IP due diligence

What due diligence is typically undertaken with respect to employee-created and contractor-created intellectual property and technology?

Establishing ownership of IP rights, created by employees or independent contractors, is particularly relevant when copyright protected works are involved - as these are not formally registered or recorded. According to the Dutch Copyright Act, copyrights vest in the creator by operation of law. However, if the creator is an employee, the Dutch Copyright Act dictates that all copyrights created by an employee vest in the employer, provided that these activities fall within the employee’s job description. To avoid confusion and prevent copyrights from automatically vesting with the employee, an IP clause is often included in employment agreements. The same rules do not apply if the person creating the intellectual property qualifies as a contractor rather than an employee. All copyrights created by a contractor automatically vest in contractor as creator. To avoid having to seek the permission of the contractor each time the copyright protected works are used, companies will typically include an IP clause in their agreements. This clause compels contractors to transfer all copyrights created throughout the course of the assignment to the company.

Unfortunately, the distinction between employees and independent contractors is not always clean-cut. Even if an agreement is not formally labelled as an employment agreement, it can qualify as an employment agreement if it satisfies the statutory requirements and vice versa. Earlier this year, a Dutch lower court ruled that the relationship between food-delivery company Deliveroo and its deliverers qualifies as an employment agreement. The decision was controversial as it followed an earlier decision, in which the Dutch lower court ruled that the relationship between Deliveroo and its deliverers should qualify as an assignment agreement rather than an employment agreement. In another case against the cleaning service platform Helpling, the court decided that the relationship should not be seen as an employment agreement nor as an agency work employment contract with Helpling, but should be perceived as employment intermediation. Therefore, it appears that the jury is still out on how the contractual relationship between workers and online platforms with similar hiring constructions should be qualified.

In light of these rules and case law, due diligence related to employee- and contractor-created intellectual property typically focuses on standard and personalised employment agreements; freelance agreements and (standard) management agreements; agreements involving hiring out and hiring in employees; and proceedings, pending proceedings or other employment-related disputes. If relevant, due diligence should also focus on employees who contributed to patentable inventions, as they may hold certain rights or be entitled to compensation. Finally, if trade secrets are considered valuable company assets, due diligence should also focus on confidentiality and secrecy undertakings with employees and contractors. Under the new Trade Secret Act, if a company does not have adequate non-disclosure agreements in place, this may prevent know-how from qualifying as a trade secret. If due diligence investigations reveal that the agreements with employees or contractors do not sufficiently protect intellectual property, IP rights must be transferred to the target prior to completion by means of a separate deed of transfer.

Transferring licensed intellectual property

Are there any requirements to enable the transfer or assignment of licensed intellectual property and technology? Are exclusive and non-exclusive licences treated differently?

A licence can be granted for all IP rights. A licence is, in essence, an agreement between the owner of the IP rights (licensor) and a third party (licensee), by which the licensor authorises the licensee to use its IP rights. A licence can be limited in, among others, time, scope, territory, type of IP right, exclusivity, sublicences, transferability, royalties, types of goods or services, and duration. Apart from the requirement that consent must be reached between licensor and licensee, no formal requirements exist for the establishment of a licence under Dutch law (except for an exclusive copyright licence that should be done by deed). However, a patent, design or model right or trademark licence does not bind third parties until the licence is registered in the relevant register. In practice, a licence is usually embedded in a written agreement in order to avoid discussions at a later stage. Generally speaking, licence agreements can be transferred. Parties can include a provision in the licence agreement, dictating that the licence cannot be transferred (ie, exclude the right to transfer). Considering that the legal implications of a clause of this nature can be particularly burdensome, this should always be verified during due diligence.

Debate exists on whether the new owner of the IP rights is bound by a pre-existing licence after transfer. The prevailing opinion is that the new owner must respect the licence, provided that the new owner knows or should be aware that a licence agreement exists (eg, by consulting the appropriate register). As not all IP rights are registered in the Netherlands, an essential part of the due diligence investigation is to find out whether the company has entered into licence agreements with third parties.

Software due diligence

What types of software due diligence is typically undertaken in your jurisdiction? Do targets customarily provide code scans for third-party or open source code?

In the Netherlands, due diligence typically focuses on the review of:

  • agreements relating to the sale, purchase, licensing or licence granting of software;
  • agreements relating to IT services;
  • agreements relating to technology in escrow and technology escrow for hardware and software;
  • reseller, distribution and strategic alliance agreements with other IT suppliers;
  • letters of intent with suppliers and customers related to IT;
  • general terms and conditions governing the sale or purchase of IT (hardware, software or IT-related services); and
  • assignment agreements related to rights on hardware or software offered or delivered to customers (ie, IP transfer deeds).

See question 8 for the due diligence typically conducted if employees or independent contractors are involved in the development of software.

As part of this due diligence, the target company usually provides information on whether the software used is licensed through third parties or open source. However, since lawyers (in general) are not qualified to comment on the quality of software, we explicitly exclude this from the scope of our due diligence. If the nature of the transaction requires in-depth software due diligence we advise clients to involve third-party experts.

Other due diligence

What are the additional areas of due diligence undertaken or unique legal considerations in your jurisdiction with respect to special or emerging technologies?

In general, most of the aforementioned considerations apply equally to special or emerging technologies, with privacy compliance being a major focus point. Further, depending on the nature of the transaction, specific regulatory requirements may apply, which will constitute part of the due diligence investigation.

Purchase agreement

Representations and warranties

In technology M&A transactions, is it customary to include representations and warranties for intellectual property, technology, cybersecurity or data privacy?

In technology M&A transactions, representations and warranties for intellectual property, information technology and privacy are commonplace.

For intellectual property, these warranties and representations are typically aimed at ensuring that the company or group (target) holds full, unencumbered, title (ownership) to all vital intellectual property, that no infringements have occurred or are anticipated to occur related to the company’s and third parties’ IP rights, that relevant non-disclosure agreements are in place, no trade secrets or know-how have been shared outside the ordinary course of business and that proper measures have been taken to keep these trade secrets or know-how secret.

For information technology, the warranties are aimed at ensuring that the company holds full and unencumbered title to all vital information technology, has sufficient backup, disaster recovery and security plans and procedures in place, has not been subject to any major failures or breakdowns, and has not planned any major IT investments immediately after closing. Finally, privacy-related representations and warranties usually require the seller to declare that the target has complied with and continues to comply with all applicable privacy laws, such as the GDPR and the Telecommunications Act.

Customary ancillary agreements

What types of ancillary agreements are customary in a carveout or asset sale?

In the Netherlands, the following ancillary agreements are typically seen in carveout technology M&A transactions:

  • transition services agreements;
  • (limited) licensing agreements;
  • cross-licence or (confirmatory) IP transfer agreements or deeds of assignment;
  • contract transfer agreements;
  • distribution agreements; and
  • IP co-existence agreements.
Conditions and covenants

What kinds of intellectual property or tech-related pre- or post-closing conditions or covenants do acquirers typically require?

Depending on the background of the transaction, the outcome of the due diligence investigations and the level of intertwinement of the companies involved, several pre- and post-closing conditions can be agreed upon. In practice, the following pre- and post-closing conditions are often included in purchase agreements:

  • the obligation to transfer all IP rights to the relevant group companies prior to closing or obtain relevant licences,
  • the obligation to enter into any of the agreements mentioned in question 13 before or after closing,
  • a correction of chain title for intellectual property,
  • the obligation to obtain a waiver from third parties prior to closing in the event a (material) agreement contains a change-of-control provision; and
  • the obligation to implement measures aimed at full compliance with the applicable data protection or consumer protection laws.
Survival period

Are intellectual property representations and warranties typically subject to longer survival periods than other representations and warranties?

In transactions, a distinction is typically made between fundamental warranties (ie, title to shares or assets, organisation and standing and capital structure) and business warranties. As a rule of thumb, fundamental warranties have a significantly longer survival period than business warranties. In Dutch M&A transactions, where intellectual property plays a vital role, IP warranties are typically elevated from the status of business warranty to the status of fundamental warranty, and are, therefore, subject to longer survival periods. Fundamental warranties are typically subject to a survival period of at least five years (but usually longer) while, for business warranties, the survival period is typically somewhere between 12 and 36 months.

Breach of representations and warranties

Are liabilities for breach of intellectual property representations and warranties typically subject to a cap that is higher than the liability cap for breach of other representations and warranties?

In general, the cap on fundamental warranties is often 100 per cent of the purchase price. The cap on business warranties is usually anywhere between 10 and 50 per cent of the purchase price, depending on the risk appetite and the bargaining power of the parties involved.

As stated in question 15, if intellectual property plays a crucial role in a transaction, the corresponding warranties are usually labelled as fundamental warranties. As a result, the cap is higher than for business warranties. In practice, it is not uncommon for there to be a separate basket for IP representations and warranties with a separate cap, which is then often on the higher side of the business warranties’ cap. If so agreed, the remaining business warranties are then often subject to a lower cap. If and to the extent risks were identified during the due diligence investigation, which cannot easily be quantified and for which pre- or post-closing conditions are no viable alternative, a seller is typically requested to provide specific indemnities. These specific indemnities are usually not subject to the time and monetary limitations that apply to claims for breach of representations and warranties, save for the overall cap and no accumulation.

Are liabilities for breach of intellectual property representations subject to, or carved out from, de minimis thresholds, baskets, or deductibles or other limitations on recovery?

Generally, liabilities for breach of IP representations and warranties are not carved out from the applicable limitations to recovery. However, depending on the nature of the transaction and the importance attributed to the intellectual property, this can differ. Business warranties are subject to time and monetary limitations, as well as subject to or qualified by disclosure. These limitations often do not fully apply to the fundamental warranties. Therefore, in the event that IP representations and warranties are elevated to the status of fundamental warranties, sellers are required to accept only limited carveouts.


Does the definitive agreement customarily include specific indemnities related to intellectual property, data security or privacy matters?

In the Netherlands, technology-related indemnities are included in the final transaction documentation if the due diligence investigation or a subsequent disclosure reveals a specific risk that cannot be easily quantified or resolved through the pre- or post-closing route. Indemnities that are often included are indemnities against any claims from third parties arising out of or related to (the infringement of) their IP rights or the use of corresponding licences; and indemnities concerning the lack of ownership of or title by the target to IP rights, for instance, when different jurisdictions are involved and a transfer of title cannot be established with certainty.

Walk rights

As a closing condition, are intellectual property representations and warranties required to be true in all respects, in all material respects, or except as would not cause a material adverse effect?

It is important to note that unlike certain other (common law) jurisdictions, Dutch transactions do usually not contain a bring-down condition. Representations and warranties (especially the fundamentals) are often repeated at closing, but a breach of warranty does not entitle a buyer to put the transaction on hold or walk away altogether, but rather grants the buyer the right to subsequently claim damages.

Updates and trends

Key developments of the past year

What were the key cases, decisions, judgments and policy and legislative developments of the past year?

Key developments of the past year20 What were the key cases, decisions, judgments and policy and legislative developments of the past year?

There have been several developments that influence technology M&A transactions.

Telecommunications Sector (Undesirable Control) Bill

On 5 March 2019, the Dutch State Secretary, Mona Keijzer, sent a bill to Parliament, which would give the Minister of Economic Affairs the right to prevent a new shareholder from acquiring or maintaining a controlling interest in a ‘telecommunications party’ if the acquisition threatens public interest. The bill was amended after the Dutch advisory organ, the Council of State, issued a negative advice. One of the major changes to the bill is that the party who intends to acquire a controlling interest in a telecommunications party must notify the Dutch Minister of Economic Affairs if this control leads to ‘relevant influence’ in the telecommunications sector. The bill is currently pending review by Parliament.

EU Foreign Investment Screening Regulation

On 10 April 2019, the new EU regulation for the screening of foreign direct investments entered into force (Regulation (EU) 2019/452). The regulation provides a legal framework for the screening of foreign direct investments in the European Union. In its current form, the regulation only applies to takeovers that could potentially pose a threat to national security or public order. This could be a company that operates in a critical infrastructure sector, such as data storage, or a company that owns or develops critical technology, such as artificial intelligence.

The regulation will, among other things:

  • create certain standards for screening mechanism at a national level;
  • establish a system through which member states and the European Commission can exchange information and ‘comments’ related to certain investments; and
  • allow the European Commission to issue opinions if an investment poses a threat to security or public order or if an investment could undermine a project or programme of interest to the EU. A member state must take the utmost account of the opinion.

The regulation shall apply from 11 October 2020.

DSM Directive

On 17 April 2019, the European Union adopted the directive on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC or DSM-directive for short. On 1 July 2019, the Dutch government issued a consultation version of the bill aimed at implementing the DSM Directive. In its current form, the bill will bring about several significant changes, such as the possibility to scan large quantities of copyright protected data or text (also known as data mining) under certain circumstances and the option to prohibit news aggregator website and media monitoring services, such as Google and Facebook, from sharing links to (news) articles. The bill also introduces a liability for certain large online platforms that share copyright protected work without the prior authorisation of the holder of such rights. Platforms are freed from this liability to the extent that they have used their best efforts to obtain permission of the holders of such rights, have used their best efforts to ensure the unavailability of specific works for which the holders of such rights have provided the relevant and necessary information (ie, filter at the gate) and acted with speed and efficiency to ensure that the relevant works are taken down and stay down after receiving a notification of the rightful owner of the work. The DSM Directive should be implemented by 7 June 2021.

P2B Regulation

On 20 June 2019, the European Union adopted the EU regulation on promoting fairness and transparency for business users of online intermediation services or P2B Regulation for short. The regulation aims to restore the balance between online platforms and (small) businesses or ‘business users’ by imposing obligations on platforms and online search engines. Platforms might, for example, have to amend their terms and conditions, but are also faced with fundamental business decisions, such as: how to establish a consistent and conscientious strategy on ranking and differentiated treatment? The P2B Regulation enters into force on 12 July 2020.