Germany is developing its own version of the U.S. process that vets foreign direct investment for national security concerns: Germany plans for own Cfius deal watchdog (Bertrand Benoit, Tony Barber, and George Parker , Financial Times, Sept 27). But the Germans want to skip some of the bells and whistles:
New legislation being drafted by the German government to scrutinise acquisitions by foreign state-controlled investors is shaping up to be a minimalist version of the equivalent US mechanism, according to senior German officials....
The government embarked on drafting the reform last month after Angela Merkel, the chancellor, expressed concern about the national security implications of sovereign wealth funds in Asia and the Middle East acquiring German companies in sensitive sectors....
The vetting mechanism favoured by the chancellery and economics ministry, which are leading the drafting, could be described as a “light” version of Washington’s Cfius, the inter-agency Committee on Foreign Investment in the US.
Like Cfius, it would subject foreign buyers of assets with relevance to national security relevant to filing a declaration with the government, which would then have a limited number of days to block the deal. Under the chancellery’s proposed model, government scrutiny would be limited to a small number of sectors directly related to security. These would not include banks, media companies or consumer industries such as carmaking but may include the energy sector.
The mechanism would only apply to state-controlled buyers and would not affect hedge funds and private equity firms. It would also be strictly inter-ministerial, with no involvement of parliament in order to avoid the review process falling hostage to party politics.
“We are aiming for as lean and liberal a system as possible,” said the senior official. “We think this is the only one compatible with EU competition law. It will offer investors legal security and do the openness of the German economy justice.”...
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