Resurgence of Protectionism – Can European Member States Really Do Whatever They Want to Foreign Takeovers?

EU Competition Commissioner Joaquín Almunia recently cited the French initiatives to block the GE-Alstom deal as an example of “worrying signals of protectionist threats” in Europe. France is not, however, to be singled out. EU Member States have sought to protect their national champions for decades, relying, among others, on an EU merger provision which allows Member States to take measures to protect their legitimate interests.

France’s Extended Powers to Intervene in Foreign Takeovers -

In May 2014, the French government adopted a decree extending its powers to block foreign investments in strategic activities relating in particular to energy supply, water supply, transport networks, electronic communication services, and public health. This measure cannot be detached from the government’s initial opposition to GE’s bid for Alstom’s power and grid businesses. After lengthy discussions, an update to GE’s offer received support from the French government at the end of June. Under the terms of the agreement, France would purchase a 20 per cent stake in Alstom to ensure, in particular, that the State would retain a say in job-related decisions and decision-making at the company.

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