The Federal Ministry for Economic Affairs and Climate Action
(BMWK) is planning to further tighten the
investment screening procedure for assessing foreign direct
investments in Germany. This is laid down in a key points paper of
the BMWK for a corresponding "Investment Review
Act".
Background and context
Already under the current legal situation, the BMWK may examine the
direct or indirect acquisition of or investment in a domestic
company by a (non-EU) investor on a case-by-case basis. This is to
ensure that foreign direct investments do not have any detrimental
effects on the public order and security in Germany or the EU. If
public security is endangered, approval for the involvement of a
foreign investor in a German company can be denied (Fieldfisher already reported on this).
In recent years, the regulations for assessing foreign direct
investments have been continuously tightened due to their growing
importance, most recently with the 17th amendment to the Foreign
Trade and Payments Ordinance in mid-2021, which expanded the list
of cases requiring a foreign direct investment filing and
subsequent screening from predominantly military-related areas to
numerous civilian areas.
Planned amendments
With the planned amendments, the regulations on investment control
are to be significantly expanded again, especially against the
background of an impending influence of foreign (non-EU) investors
on German infrastructure and a possible takeover of German
know-how. In the process, the group of critical sectors for which
particularly strict screening rules apply is to be enlarged. This
includes the semiconductor industry in particular. Another
sensitive aspect concerns the reversal of the burden of proof for
investments in "particularly security-relevant sectors":
Under the current draft, the BMWK would first assume that business
in these sectors is "safety-critical". It would then be
up to the companies concerned to prove otherwise.
According to a BMWK spokeswoman, the key points of the law are
currently being agreed upon by the departments.
Outlook
The BMWK's project follows a general European trend. The EU
Commission has also announced that it will present a proposal for
stricter regulation of non-European and especially Chinese
investments by the end of the year. The focus of these efforts is
primarily the protection of European security and economic
interests.
Links
- Handelsblatt - Habeck gets support for tightened investment screening (German version only)
- Handelsblatt - How Habeck wants to limit the influence of the People's Republic of China (German version only)
- Handelsblatt - Investment controls increase pressure on superpower China (German version only)
- European Commission - Speech by the Presidents on EU-China relations
- Fieldfisher - BMWK publishes facts and figures on investment screening procedure in Germany
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