Investors from outside of the European Union (EU) will face even tighter scrutiny on acquiring stakes in German companies, according to a new draft law proposed as a way of protecting “sensitive economic sectors.”
Speaking to German newspaper Die Welt on Tuesday, Economic Affairs and Energy Minister Peter Altmaier said that under the proposed new law, Berlin would be able to intervene when a non-EU investor directly or indirectly obtained a stake of 15 percent or more in a German company deemed “sensitive.”
Current restrictions, in place since last year, have allowed interventions on shareholdings of 25 percent or more in areas such as defense, infrastructure and security.
Altmaier said that while Germany wants “companies to continue investing,” the government had a “responsibility to protect security interests, public order and public safety.”
“Until now, we've only been able to carry out reviews when at least 25 percent of a company's shares have been acquired. Now we want to lower this threshold so we can review more acquisitions in sensitive economic sectors.”
Upon receiving government approval, the new law could come into effect by the end of this year, according to Die Welt.
The move would come after several prominent voices in Germany’s business community spoke out against the recent takeover of German data security firm Brainloop by its US rival Diligent.
Brainloop manages data encryption for more than two thirds of DAX-listed firms including BMW, Adidas and Allianz. According to Handelsblatt, there are “national security implications,” with concerns over “American approaches to IT security.”
A recent bid by Chinese firm Yantai Taihai for German toolmaker Leifeld was also abruptly dropped earlier this month, amid speculation that Berlin authorities would seek a veto on the deal.
In response to German scrutiny of the Leifeld deal, Chinese Foreign Ministry spokesperson Geng Shuang said China hoped the German side could treat Chinese investment objectively and provide open and fair market access and a stable institutional framework for Chinese companies' investment.
The 4.5 billion US dollar takeover of German robotics firm Kuka by China’s Midea in 2016 was believed to have led to last year’s ruling that allowed scrutiny of 25 percent non-EU company stakes.
While Berlin's increasing scrutiny of foreign deals has been criticized as a form of protectionism, German Chancellor Angela Merkel has repeatedly spoken in favor of free trade. Last month, Chinese Premier Li Keqiang and Merkel both called for increased trade between both countries, with both leaders speaking out against protectionism.