EU aims to curb foreign takeovers of strategic assets

The Palace of Culture and Science in the Polish capital Warsaw lit up in the colours of the Union Jack last year to support Britain's staying in the EU. Yesterday, European Commission chief Jean-Claude Juncker signalled that Britain would regret its
The Palace of Culture and Science in the Polish capital Warsaw lit up in the colours of the Union Jack last year to support Britain's staying in the EU. Yesterday, European Commission chief Jean-Claude Juncker signalled that Britain would regret its decision to leave the bloc in March 2019.PHOTO: REUTERS

France, Germany, Italy laud plan to screen investments as China buys high-tech firms

STRASBOURG • France, Germany and Italy yesterday welcomed a proposal by European Commission chief Jean-Claude Juncker to limit China's ability to buy up European firms in infrastructure, energy and high-tech manufacturing.

In the European Union's equivalent of a State of the Union address in the US, Mr Juncker presented proposals for an investment screening framework. Its aim is to give EU member states a tool to intervene in cases of foreign direct investment in strategic assets, in particular if carried out by state-controlled or state-financed enterprises.

"Germany, France and Italy firmly welcome the Commission's proposals as an important step towards a level playing field in Europe," a joint statement published by the German Economy Ministry said. Germany's Economic Affairs Minister Brigitte Zypries said Berlin was very interested in foreign investment when it took place under market conditions.

"But we need to prevent other states from taking advantage of our openness in order to push through their industrial policy interests."

Mr Juncker's proposals ensure fair competition in the EU and also offer better protection against company acquisitions that do not comply with market rules, she said.

"In future, the member states will have clear powers to intervene in the case of state-controlled direct investment in European companies," Ms Zypries said.

French Economy Minister Bruno Le Maire said the EU proposal needed to be complemented by further work to ensure reciprocity in public procurement.

In June, French President Emmanuel Macron urged the Commission to come up with a way to screen investments in strategic sectors from outside the bloc. In July, Germany became the first EU country to tighten its rules on foreign corporate takeovers following a series of Chinese deals giving access to Western technology and expertise.

France already has national legislation in place to block such deals in certain sectors such as energy and telecoms. The purchase last year of German robotics maker Kuka by Chinese company Midea raised concerns that China was gaining too much access to key technologies while shielding its own companies from foreign takeovers.

Mr Juncker yesterday also pushed to expand Europe's global economic footprint in a sign of growing confidence that the political threats posed by Brexit and populism could be curtailed.

"The wind is back in Europe's sails," said Mr Juncker, whose speech prompted outbreaks of applause by members of the 751-seat EU Parliament. "We have now a window of opportunity."

Saying the EU was recovering from its "battered and bruised" state last year, he also signalled that Britain would regret its decision to leave the bloc in March 2019, adding that the step would mark "a very sad and tragic moment".

Mr Juncker said he would ask EU governments for the authority to begin market-opening negotiations with Australia and New Zealand. This comes on the heels of a provisional EU free-trade accord with Japan and a week before a hard- fought European deal with Canada takes effect.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on September 14, 2017, with the headline 'EU aims to curb foreign takeovers of strategic assets'. Print Edition | Subscribe