Monteberg’s proposal would strengthen already massive controls on foreign acquisitions

France has acquired a substantial arsenal in recent years to filter foreign investment.

Arnaud Montberg, a strong supporter of economic sovereignty, this Friday put forward a new proposal to protect the tricolor flag. The candidate for the next presidential election wants the managers of companies sold to a foreign firm to respond”of his actions in court with criminal liability for economic treason”, he launched on RMC/BFMTV. One thing is certain that candidate Monteberg is in phase with former minister Monteberg. While he was at Bercy, the former socialist was at the origins of a famous decree in 2014 called the “Monteburg Decree”, which detailed the list of areas in which foreign investment was controlled. Since then, the law has only widened and hardened.

At the time, Arnaud Montberg had not invented anything, specifies business lawyer Me Olivier de Maison Rouge, a specialist in economic intelligence law. ,As early as 1966, Charles de Gaulle enacted legislation to govern the principle of foreign investment in France. The law was then codified in 2000; Article L of the Monetary and Financial Code. 151-3 had become», explains the doctor of law. ,The “Monteburg Decree” was merely an extension of what already existed.,

Directly, the text of the Minister for Economy and Productive Recovery had expanded the list of sensitive activities to several other sectors (energy, health, water, transport and telecommunications) that required prior authorization from the state for foreign investment. A decree was published by Arnaud Monteberg in reaction to the controversial 2014 acquisition of Alstom’s energy arm by American General Electric (GE). Till that time, the law only covered activities related to defence, security and information technology.

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An Arsenal Strengthened by Pact Law

,Over time, along with scientific and technological developments, the list has grown.», Claire Vanini, associate attorney at CMS Law Firm, Recall Me. Aerospace, cyber security, artificial intelligence and robotics joined in early 2019, then, in early 2020, written press and online press services for political and general information, food security, storage energy and quantum technologies. The pact law, promulgated in May 2019, provided for an extension from last year, part of which was devoted to tightening controls on foreign acquisitions.

In addition to expanding the list of sectors affected by the former government authorization, it reduced the participation limit from 33.33% to 25%, triggering the opening of the control process – valid only for non-European investors. The same law also tightened the financial penalties that the Minister of Economy can take against an investor who does not respect the authorization process, failures that can result in the emptiness of the operation. Furthermore, with the entry of renewable energy generation technologies in September, the list of areas considered to be strategic has recently been extended even further.

“Some European countries that did not have a foreign investment control policy are in the process of adopting one, notably Belgium and Luxembourg.”

Me Claire Vanini, Associate Attorney at CMS Law Firm

The COVID-19 crisis has also prompted the government to strengthen its arsenal of foreign investment controls, weakening many companies. In April 2020, biotechnology was included in sensitive sectors, while the 25% limit activating the authorization process for non-European investors was temporarily lowered to 10%. In December 2020, this last measure was extended to the end of 2021.”A new expansion can’t be ruled out“, call me Claire Vanini.

highly publicized veto

As a result, last year, at least 20% of foreign investments in France were subject to a prior authorization process. The General Directorate of the Treasury has actually done 275 checks out of a total of 1,215 transactions recorded.

,While most acquisitions are purely and only authorized», Assures me Claire Vannini, it’s not all about. ,For some complex tasks, the Ministry of Economy and Finance may ask the potential buyer to make a commitment, for example to maintain production in France or not to terminate existing contracts.», refers to a lawyer specializing in competition law. The state can go to the veto. An extremely rare measure, but one that the French government is less and less reluctant to take. In December 2020, he opposed the acquisition of Photonis, a French company specializing in night vision for the armed forces, by the American conglomerate Teledyne in the name of safeguarding its strategic interests. Then, in January 2021, Bercy announced a “non» Closer to a proposed merger by Canadian Couch-Tard to French distribution giant Carrefour.

If France is today the European champion of foreign investment controls – in comparison, Germany handled 159 acquisition transactions in 2020 and 69 in Italy in 2019 –, this strengthening of the filtering mechanism is not exclusive to France. Italy, Spain, Germany and the United Kingdom have expanded their arsenals in recent months. ,Some European countries that did not have such a policy are in the process of adopting it, notably Belgium and Luxembourg.», indicates Claire Vannini to me. These member states are following the guidelines of the European Commission, which on 27 March 2020 encouraged foreign investment to be controlled. A European Cooperation Mechanism on the subject also came into force in October 2020. Advisory, it facilitates the exchange of information between member states in the event of foreign investment. If the scope of this device is limited, itnaivetyOf the EU, some observers pointed to the United States, and China in particular.


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About the Author: Forrest Morton

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