Protectionism or Legitimate National Interest? A European Perspective on the Review of Corporate Acquisitions by Foreign Purchasers

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Rachel Brandenburger, Mark Jones, Oct 15, 2014

In Europe, the question of whether there is, or should be, a role for national interest considerations in the review of corporate acquisitions by foreign purchasers has made headline news several times this year. In the Spring, Pfizer’s proposed bid for AstraZeneca sparked concerns in the United Kingdom about whether the takeover of a U.K.-based company by a U.S.-based one would erode the U.K.’s national scientific research base and harm its standing not only in the United Kingdom but also globally. Around the same time, concerns about General Electric’s purchase of ALSTOM’s energy business led the French government to expand its foreign investment approval rules to apply to an additional list of strategic sectors, and prompted an alternative proposal by Germany’s Siemens to acquire the ALSTOM business and create a European champion.

In addition to these specific examples, the continuing difficulties that the European economy is experiencing appear to be prompting a more general debate about broadening the basis for reviewing mergers beyond strict competition criteria in order to facilitate the creation of European champions better able to compete globally. For example, Germany’s Chancellor Merkel and (then) French Industry Minister Montebourg have both publicly supported calls by some of the major European mobile telecoms companies to allow further consolidation in the sector…

These periodic calls for change beg the question of how the EU system works. This is explained in the following sections of this article. We first provide an overview of how the current EU merger control framework accommodates both competition and non-competition considerations and delineates the discretion of EU Member States to intervene within a framework of EU law enforced by the European Commission. We then outline how this framework is complemented by the European Commission’s responsibility for overseeing EU Member States’ adherence to the EU law principles of freedom of establishment and free movement of capital.

*Rachel Brandenburger, Senior Advisor & Foreign Legal Consultant to Hogan Lovells US LLP (admitted in England & Wales); Mark Jones, Partner, Hogan Lovells International LLP