On the 14th August 2017, it was widely reported in the UK press how Jean-Claude Juncker, the European Commission President, is preparing to unveil EU foreign takeover controls at a keynote speech in September. Such a system would be similar to CFIUS, the USA’s Committee on Foreign Investment. In the USA, the CFIUS mechanism allows the USA to block foreign takeovers when they could threaten USA strategic interests. This in the past has gone as far as technology companies, but also includes more obvious defence company takeovers.

Back in February 2017, Italy, France and Germany issued a joint letter to the EU Commission, proposing similar measures in response to a perceived imbalance in the ability of countries with restrictions on foreign access, having unfettered access to valuable EU companies. Although not mentioned in the letter, China was widely perceived as the bogeyman in mind as the world’s second largest economy had recently been targeting German technology companies, notably Kuka, a German robot manufacturer. Further, China’s investment into the EU had increased exponentially over the previous years. Whilst not a bad thing in itself, the perceived fear is the want of Chinese companies to buy valuable EU intellectual property, combined with the inability of EU companies to make similar acquisitions in China.

Currently there is no EU wide foreign investment approval control system. There is a highly active antitrust merger control regime, but that regime only focuses on competition concerns. The regime does not have jurisdiction to consider EU strategic or political interests other than national security concerns, financial stability or plurality of the media. The use of these national security type exemptions is only exercised on a national basis and therefore does not lead to a harmonized approach.

Although similar discussed measures have failed to get EU-wide support in the past and were never enacted, there is now a feeling on the ground that there is a much higher chance of EU-wide acceptance this time around. As well as increased Chinese takeover activity in sensitive sectors, it has also been widely reported how the UK, post-Brexit, is strongly considering its own foreign takeover control system in the telecoms, defence and energy sectors. The EU may well use the opportunity to introduce similar measures to ensure uniformity throughout Europe.