The Magnitude of EU Fundamental Freedoms: Application of the Freedom of Establishment to the Cross-Border Mergers Directive

Abstract

This article will examine the 10th Company Law Directive on Cross-Border Mergers in the light of the EU fundamental freedom of establishment. The provisions of the Cross-Border Mergers Directive must comply with the fundamental freedom of establishment. This article argues that the contribution of some provisions of this Directive to freedom of establishment is questioned. It is argued that some provisions of this Directive do not fully comply with freedom of establishment and that the choices of the European legislature are definitely open to criticism. The EU fundamental freedoms could impose certain safeguards which derive directly from the Treaty on the Functioning of the European Union. The European Court of Justice (ECJ) had interpreted the freedom of establishment with regard to crossborder mergers. According to the ECJ's case law (SEVIC), cross-border mergers constitute an exercise of the freedom of establishment. This article scrutinizes the main provisions of the Cross-Border Mergers Directive and analyses their relationship with the fundamental freedom of establishment, as interpreted by the ECJ. The relationship between SEVIC and the Cross-Border Mergers Directive will also be discussed and some conclusions would be drawn. The EU Mergers and Acquisitions market is a fragment of the internal market and as such all the corporate financial mechanisms of this market must comply with the EU fundamental freedoms.