France, Germany, Italy welcome EU push to curb foreign takeovers

PARIS/BERLIN (Reuters) - France, Germany and Italy jointly welcomed on Wednesday a proposal by European Commission chief Jean-Claude Juncker to limit China’s ability to buy up European companies in infrastructure, hi-tech manufacturing and energy.

European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium June 14, 2017. REUTERS/Francois Lenoir

In the European Union’s equivalent of a U.S. president’s State of the Union address, 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 toward 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,” Zypries added.

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,” 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 and more widely in all EU trade relations.

In June, French President Emmanuel Macron urged the Commission to come up with a system for screening 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 KU2G.DE by Chinese company Midea 000333.SZ raised concerns that China was gaining too much access to key technologies while shielding its own companies from foreign takeovers.

Reporting by Michael Nienaber in Berlin and Michel Rose in Paris; Editing by Gareth Jones