Debate: Protecting European strategic sectors from foreign takeovers in a post-COVID world
Date: WEDNESDAY, 17 JUNE 2020
Speaker: Nikolina Brnjac
Language: EN

Members of the European Council also welcomed the Commission guidelines on the screening of foreign direct investment and called on the Member States to take all the necessary measures to protect strategic assets and technology from foreign investments that could threaten legitimate public policy objectives. In the words of the leaders, this will contribute to the EU’s strategic autonomy during the crisis and afterwards.  It is clear that the European Union will not get out of this crisis by closing its doors to international trade and investment. Many European companies are fully integrated in the global supply chain and a significant share of our employment is made possible thanks to international trade and investment. Global trade and investment will therefore remain fundamental for Europe’s recovery and growth. The European Union needs to diversify and solidify its global supply chains to ensure the continuous flow of goods and services and to be better prepared for future crises. However, at this time the European Union also needs to be particularly vigilant to ensure that we preserve those assets that are crucial to our security and that are part of the backbone of our economy. This will directly affect our capability to recover fast.  The economic crisis resulting from COVID—19 has weakened many European companies who have seen their stock prices fall. The danger of predatory takeovers by foreign companies, in particular those in state hands or with strong state support, is very real. The EU’s openness to foreign direct investment therefore has to be balanced with adequate tools and protection. EU rules already provide a framework to guarantee the protection of legitimate public objectives and Ministers for the internal market and industry regularly discuss the competitiveness of the EU economy and in particular its industry.  The discussion focused on strengthening the European strategic economic sectors and value chains and, in this context, also the protection from foreign takeovers. Ministers have welcomed the new industrial strategy for Europe that was presented by the Commission in March. They support the action announced by the Commission to reinforce the EU’s strategic digital infrastructures, to develop synergies between civil, defence and space industries, to secure the supply of pharmaceuticals and their ingredients, and to broaden EU access to raw materials, to give just a few examples.  At the informal video conference last Friday, 12 June, Ministers from the internal market and industry also discussed the Commission’s communication on the recovery plan package adopted on 27 May. They welcomed the measures proposed by the Commission to strengthen EU resilience and strategic autonomy across key technologies and value chains, while preserving the benefits of an open economy.  Ministers also welcomed a new European Strategic Investment Facility under InvestEU to support European resilience and investment in strategic industrial chains, notably those linked to the green and the digital transition. The Ministers took note of the Commission’s intention to propose a reinforced foreign direct investment screening mechanism, which would help the EU to protect its strategic assets, infrastructure and technologies from foreign direct investments that could threaten the security of the public order. The existing FDI screening regulation was already a priority file for the three institutions during the past legislature. This regulation was agreed very swiftly and in a very consensual manner by the co—legislators. Our collective engagement in this dossier has made the EU better able today to face the challenge in front of us. As you know, a significant and increasing number of Member States already have a screening mechanism in place and many others are accelerating the creation of their national contact points. The cooperation and exchange of information among Member States and with the Commission about potential foreign takeovers affecting our security or public order has increased sharply.  The Commission is regularly analysing and reporting on investment trends in an expert group, as foreseen in the regulation. Moreover, the upcoming Commission White Paper on an instrument on foreign subsidies will be a good opportunity to address the issue of state subsidies from third countries that have the potential of further disrupting the level playing field in the EU single market. The examples I have just mentioned show how institutional cooperation has improved the situation on the ground for our companies.  Finally, allow me to reiterate that the Council and the Member States will take all the necessary measures to protect strategic assets and technology from foreign investments that could threaten legitimate public policy objectives.