Reasons for the decision
The Federal Cabinet prohibited the project on the grounds that the acquisition would have endangered Germany's public order and security. In particular, milder means than stopping the sale, such as approving the acquisition with conditions, had not been suitable to eliminate the identified dangers.
Germany is an attractive destination for foreign investors because of its innovative ation and technological strength, the BMWK said. However, there are also investments that could be detrimental to the country's security, so the federal government must ensure that such negative effects on public security or order are avoided.
Federal Minister Dr. Robert Habeck explained in this regard that one must "look closely at company takeovers when important infrastructures are involved or when there is a danger that technology will flow away to acquirers from non-EU countries. Especially in the semiconductor sector, it is important for us to protect the technological and economic sovereignty of Germany and also Europe." However, Germany remains an open investment location.
Especially in the sectors of microchip production and in the field of semiconductors, China is proceeding strategically, according to Habeck. On the one hand, it is a question of "production control", but also of "influence for the generation of knowledge".
This decision is in line with the view of the Federal Office for the Protection of the Constitution. The Federal Office for the Protection of the Constitution had warned that China was deliberately buying into certain industries in order to use them as political leverage.
This decision once again shows the increased relevance of investment control and reflects the position of the BMWK in previous proceedings.
For example, only in February of this year, the takeover of a German manufacturer producing important components for semiconductors by a Taiwanese group fell through because the Federal Ministry of Economics and Climate Protection did not give the go-ahead for the takeover in time.
Since the 17th amendment to the Foreign Trade and Payments Ordinance came into force in mid-2021, which contains further tightening of investment control in Germany and, in particular, significantly expands its scope of application, investment control has become considerably more important. Since the amendment, investment control procedures are no longer limited to military-related areas, but affect numerous investments in a wide range of sectors.
It is therefore to be expected that in the future more applications will have to be filed within the framework of investment control proceedings and that companies should carefully examine relevant aspects in the run-up to acquisitions.
If you have any questions about investment control, please do not hesitate to contact Raoul Schätzler or the Fieldfisher team.
Sign up to our email digest