Harmonization of Takeover Discipline: A Comparative Law and Economic Overview

Abstract

In May 2004, the European Council of Ministers has eventually adopted the 2004/25/EC Directive, conventionally known as Takeover-Bid Directive. That has been the result of a compromise reached after about 30 years of negotiations. Despite the strong resistance expressed by Member States belonging to the civil law tradition, the Directive has been inspired by the City Code of London directed towards a more liberal conception market for corporate control. This paper shall focus the attention on key provisions such the neutrality, break through, freeze out, sell out and mandatory bid rules in order to understand the workability and efficiency of their implementation. In fact, the analysis aims at providing a clear and useful overview of these norms that shall allow realizing how they meet with the legal and economic European culture. The investigation will set forth the heterogeneousness of the corporate structures and the extent to which these affect the market for corporate control and of course its discipline. In particular, the solutions adopted in the US, UK and Germany will be examined through the comparative law method. The discussion dealing with the similarities and the differences will shed light on the spirit and the rationale vested in the provisions contained in the Directive. In the face of the harmonization of European law, the 13th Directive seems not to have reached the purpose of steering takeover practises up. This is probably due in part to the strong path-dependency that keeps continental corporations from dispersing their ownership structure and in part to the opt out character of some of the above mentioned provisions.