Foreign Takeovers

Shooting Yourself in the Foot

A robotic arm fills a glass with Bavarian Weiss beer at the booth of German company Kuka at the world’s biggest industrial fair, “Hannover Fair
The sale of robotics firm Kuka to a Chinese firm got the German government thinking. Only German businesses don't necessarily want the help. Source: Reuters

You would think German firms would be happy. The German government on Wednesday moved to tighten controls on foreign takeovers involving sensitive technologies or critical infrastructure. Only instead of drawing praise, Berlin’s move has drawn sharp criticism from political and industry leaders. Among other things, businesses complain they were never consulted.

The new rules announced by the Economics Ministry, which do not need parliamentary approval, increase the time for government officials to review takeovers with an eye to blocking them, while expanding the definition of what could be considered “sensitive” technology. The toughened stance comes after recent controversies over the appetite of state-owned Chinese companies for German firms with innovative technologies.

Critics, however, noted the timing is particularly awkward after German Chancellor Angela Merkel hosted world leaders at a summit in Hamburg this weekend, where she talked tough on the importance of keeping global trade free and fair.

“It is more than regrettable that the Economics Ministry sends a signal of protectionism into the world just a few days after the G20 summit,” said Michael Fuchs, deputy chairman in parliament for the center-right Christian Democrats, which are led by Ms. Merkel.

In Germany’s current grand coalition government, the economics portfolio has been held by the center-left Social Democrats. The new rules, which go into effect in a few weeks, were approved by Ms. Merkel’s entire cabinet.

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