# CE2004078EN.01021701.xml

| 27.3.2004 | EN | Official Journal of the European Union | CE 78/217 |
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27.3.2004

EN

Official Journal of the European Union

CE 78/217

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(2004/C 78 E/0222)

WRITTEN QUESTION E-3070/03

by Christoph Konrad (PPE-DE) to the Commission

(20 October 2003)

Subject:   Distortions of competition caused by the German Foreign Trade Act

Subject:

| 1. | Is the Commission aware that the Federal German Government is intending to introduce in the armaments industry a new authorisation and notification with regard to the sale to foreign buyers of more than 25 % of shares in domestic undertakings to foreign buyers? If so, what is the Commission's reaction thereto, and has it delivered an opinion thereon? |
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1.

Is the Commission aware that the Federal German Government is intending to introduce in the armaments industry a new authorisation and notification with regard to the sale to foreign buyers of more than 25 % of shares in domestic undertakings to foreign buyers? If so, what is the Commission's reaction thereto, and has it delivered an opinion thereon?

| 2. | This new Federal Act is to apply to undertakings which manufacture or trade in goods for export. It is claimed that the aim of the authorisation obligation is to monitor the relocation of German undertakings and dominance by third countries, but only in respect of the sensitive armaments industry. |
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2.

This new Federal Act is to apply to undertakings which manufacture or trade in goods for export. It is claimed that the aim of the authorisation obligation is to monitor the relocation of German undertakings and dominance by third countries, but only in respect of the sensitive armaments industry.

| 3. | The definition and demarcation of what is covered by the term ‘armaments industry’ in the broadest sense of the term is vague. What does the Commission intend to do to prevent the danger that such an authorisation of one EU Government might introduce a politically motivated dominance in other economic sectors as well and thus decisively restrict the competitiveness and entrepreneurial freedom of the German undertakings concerned? |
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3.

The definition and demarcation of what is covered by the term ‘armaments industry’ in the broadest sense of the term is vague. What does the Commission intend to do to prevent the danger that such an authorisation of one EU Government might introduce a politically motivated dominance in other economic sectors as well and thus decisively restrict the competitiveness and entrepreneurial freedom of the German undertakings concerned?

Answer given by Mr Bolkestein on behalf of the Commission

(27 November 2003)

(27 November 2003)

While, according to Article 56 of the EC Treaty, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited, according to Article 58 EC, the provisions of Article 56 EC shall be without prejudice to the right of Member States:

| — | to take all requisite measures to prevent infringements of national law and regulations; |
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to take all requisite measures to prevent infringements of national law and regulations;

| — | to lay down procedures for the declaration of capital movements for purposes of administrative information; and |
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to lay down procedures for the declaration of capital movements for purposes of administrative information; and

| — | to take measures which are justified on grounds of public security (Article 58 (1) b of the EC Treaty). |
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to take measures which are justified on grounds of public security (Article 58 (1) b of the EC Treaty).

In his question, the Honourable Member refers to a German federal law which is at the drafting stage. While any further position by the Commission would require an analysis of existing legislation and its definite wording, an authorisation/notification procedure with regard to the sale of more than 25 % of shares in domestic undertakings to foreign buyers in the sector of armament manufacturing and export trade might be covered by these prudential considerations. The Commission will of course monitor that the scope of the application of this new law will not give rise to concerns in the sense of Article 58(3) of the EC Treaty (arbitrary discrimination, disguised restriction on the free movement of capital).

On the basis of the information available, the Commission does not intend to take specific measures to cope with Member States' initiatives such as the one described by the Honourable Member. The Commission will, however, continue to ensure that the free movement of capital is not unduly restricted.

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