German Industry, Unions Criticize EU Takeovers Bill
October 2, 2002
The European Commission plans to unveil a new EU-wide directive on corporate takeovers on Wednesday that could put the Brussels-based body on a direct collision course with Berlin.
EU Internal Markets Commissioner Fritz Bolkestein has been seeking to create a European corporate takeover policy guaranteeing shareholders and possible corporate buyers equal opportunities across Europe.
It has been reported that, unlike a failed previous version of the bill, Bolkestein's new plan will not affect Germany's so-called "VW Law," a quasi golden share law that grants the state of Lower Saxony voting rights disproportionate to its capital stake in the car manufacturer Volkswagen. The law gives the state majority control of the company despite the fact that it only owns 18.5 percent of its total shares.
The key concern for German politicians and businesses is that Bolkestein's bill would require the elimination of a key provision in Germany's own corporate takeover law, that provides corporate chairmen with a poison pill mechanism to stop hostile takeovers. Under Bolkestein's plan, however, takeover decisions would be made exclusively by a company's shareholders.
Bolkestein's plan calls for a three-year grace period for Germany before it would be required to comply with the new regulation.
German unions and industry associations are critical of the bill, which they say will create competitive disadvantages for German companies.
"There's no excuse for prohibiting defense measures in Germany while allowing them to remain in other countries," a statement from DGB, the German association of unions, said. Both DGB and the Federation of German Industries (BDI) claimed the bill would unfairly disadvantage German companies.
Passage of the proposal requires a simple majority vote of the Commission as well as a majority vote in the European Parliament. It could also be blocked by Germany at the EU Council of Ministers if the country can build a so-called blocking minority. Last July, the parliament rejected the first draft of Bolkestein's bill.
Germany moved to derail Bolkestein's first draft of the bill because of concerns that it would eliminate poison pill protections for German corporations while allowing similar provisions in competing countries, including France and Sweden, to remain on the books.