June 9, 2016 / 10:55 AM / 4 years ago

Germany's Gabriel seeks EU rule to block foreign takeover of key technologies

BERLIN (Reuters) - Germany’s economy minister called on Thursday for a European-wide safeguard clause which could stop foreign takeovers of firms whose technology is deemed strategic for the future economic success of the region.

German Economy Minister Sigmar Gabriel (R) and state secretary Rainer Baake (C) attend a news conference on the renewable energy act reform in Berlin, Germany, June 8, 2016. REUTERS/Axel Schmidt

A recent series of bids for German engineering firms has prompted Berlin to think about whether it needs to do more to protect technologies that are crucial for the online development of industry, one of its economic priorities.

“Should it remain the case that government agencies are only allowed to conduct preliminary investigations into investment in areas deemed relevant for security and defense?” Gabriel wrote in a guest article for magazine WirtschaftsWoche.

“In my opinion, it’s not enough,” he said.

“We need to clarify whether we should not create the option to assess the interests of investors against the EU’s industrial interests for sectors that can be of existential significance for the strategic future of the European economy,” he added.

In the United States, a government panel reviews foreign takeovers to establish whether they will harm national security and assesses deals in a wide range of industries.

Gabriel’s proposal comes amid concerns over rising Chinese interest in German firms, triggered by a $5-billion bid by Chinese home appliance maker Midea for German industrial robot maker Kuka.

Gabriel has said he would welcome a European counter-offer for Kuka but the government has made clear it cannot intervene in a corporate matter.

On Wednesday, Gabriel called for an international “level playing field” in foreign investment and said Berlin wanted the European Union to tackle the issue. [L8N19026S]

He drew a distinction between open markets and what he called “a state-capitalist interventionist market”, a clear reference to China, where German companies have long complained of obstacles to investment and acquiring local firms.

Reporting by Caroline Copley; Editing by Keith Weir

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