Foreign Direct Investment Review Regimes in Europe

Sector specific approach

In-depth review process
Clearance
Prohibition/Order/
Remedies
Notification obligation
Review process
3 months
3 months

Sector-Specific Approach
Applicable to:	Non-German investors (≥ 25% of the voting rights)
Target:	Defence and cryptotechnology
Notification obligation:	Mandatory

Germany – Substantive review and penalties

• Acquisition = Threat to public order and security?
• Buyer‘s identity: State-owned enterprise (SOEs) or sovereign (SWFs) wealth funds?


• Target’s industry: critical infrastructure, related industries or political focus?
• Broad discretion of BMWi; limited judicial review if challenged in court
• Limited mandatory notification obligations, however:
• Cross-sector review: after prohibition  transaction & SPA invalid
• Sector-specific review: remain provisionally invalid until approval

No core critical infrastructure; no political focus industry
Chinese buyer (SOE?)

Germany – Outlook and amendments

• Increasing level of administrative scrutiny (increasing number of transactions subject to review - timing implications for closing)
• Recent amendments (Bill) will further broaden the regime by:
• Broadening the substantive review scope (i) from an “actual threat” to an “expected threat“ to public order and security, and (ii) to take into account the security of other Member States
• Additions to “critical infrastructure“, in particular in light of COVID-19
• Extending the suspensory effect of filings to transactions involving critical infrastructure
• Lowering the filing threshold to share acquisitions of (generally) 10%
• Does this mean more “Leifeld” cases in Germany in the future?