German Deputy Economy Minister Proposes Protecting High-tech Companies against Foreign Takeovers

Germany’s Deputy Economy Minister Matthias Maching submitted a proposal comprising of six key points to government officials to review investment at the EU level on Monday, Reuters cited local newspaper Welt am Sonntag reporting.

The paper projected the proposal would have a wide-reaching rights for the EU and national governments to ban German high tech companies from being acquired by non-EU investors.

Chinese investors acquiring German assets has urged the government to protect key technologies.

Chinese household appliance manufacturer Midea acquired German industrial robot maker Kuka for EUR 4.5 billion (US $5.04 billion) earlier this year, while Chinese chipmaker San’an Opto is rumored to be in talks with Osram about a potential bid for the company’s LED component business Osram Opto.

German Economy Minister Sigmar Gabriel even asked for a European-wide safeguard clause to prevent foreign companies from merging companies with technology that is viewed as important for future economic success of the region.

German industry association VDMA against protective measures

In response to German’s Economic Ministry’s decision, the head of The Mechanical Engineering Industry Association (VDMA) in Germany pointed out it would be better if the government ensured enterprises were treated fairly when investing abroad.

Thilo Brodtmann, head of the VDMA, responded saying competition and open markets was crucial for the future of the machinery industry.

"These basic rules should not be thrown overboard," Brodtmann said in a statement.

"Mechanical engineering companies in Germany, therefore, do not want extended protection from foreign investors, but above all to have the same conditions for their own investments abroad as there are in the EU."

Protective measures implemented by the government should be implemented with caution, he added.

"The right of an entrepreneur to sell his property freely should not be restricted for reasons of daily policy," he said.

A spokesman from the Economy of Ministry has declined to comment on the internal government working papers, wrote

“Minister (Sigmar) Gabriel has, however, repeatedly made clear that he would like to sound out options – also at the European level – to make fair competition possible, especially in international competition with state-subsidized foreign companies, and at the same time to remain open for investment,” the spokesman said.

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