A Practical Approach to the New German Foreign Investment Regime – Lessons to be Learned from Merger Control

Abstract

The author presents in this paper the new German foreign investment regime entered into force in the spring of 2009. He sets out the basic principles of the regime as well as its enforcement in practice. According to the new German foreign investment regime, the German Federal Ministry of Economics and Technology (BMWi) may examine and prohibit purchases of German companies by foreign investors if they pose a severe threat to public policy or security. Certain transactions, however, fall within the “safe harbour” or are otherwise exempted so that the BMWi has no right of interference. The author presents several exemptions from the scope of application of the regime, which can be either identified from the wording of the law by reverse argument or derived from the spirit and purpose of the new foreign investment regime. Furthermore, by presenting the concept of so called “critical infrastructures”, the paper gives valuable guidance to practitioners on what the German administration might consider relevant for public policy or security. The last part of the paper summarizes the filing and the review process. The parties may, in order to receive clearance for their transaction, notify their transactions to the BMWi and receive a certificate of non-objection. While, this notification is wholly voluntary, parties who do not apply for clearance bear the risk that their transactions are blocked or unwound if the BMWi decides to investigate the transaction within three months from signing ex officio.