25 June 2002

FT: Brussels to challenge Berlin with proposed EU-wide Takeover law

Excerpt

The European Commission is to take on Germany's government and industry with controversial proposals to harmonise takeover rules across Europe. (…)

According to a draft of the plans, seen by the FT, most anti-takeover defences such as 'poison pills', limits on individual shareholdings, and restrictions on the transfer of shares will be outlawed. However, multiple voting rights - where some shares carry more rights than others - would remain unaffected by the new EU takeover code despite a recent recommendation by Commission experts for a 'one-share-one-vote' system.

German industry argues that the latest plans are unfair because they would outlaw measures commonly used by German companies to fight off takeovers, while allowing defences used elsewhere.

British industry favoured a blanket ban on anti-takeover defences to bring European legislation in line with the domestic takeover code. 'The fact that multiple voting rights are not included is a disappointment,' said an official. 'It's not a British way of doing business'.The official added: 'Any form of protectionism and anti-competitive elements would be strongly opposed by British business.'

The dispute could fuel tensions between Brussels and Gerhard Schröder, German Chancellor, in the run-up to the September general election. Over the past few months, the German leader has repeatedly accused the Commission of attacking his country's industry.

The latest proposals, expected to be published in the next few weeks, are also likely to be mired in controversy. They will, however, please companies and governments in a number of countries, led by Sweden, where multiple voting rights are extensively used. The Wallenberg family, which controls companies such as the telecoms group Ericsson and the electrical group Electrolux through multiple voting rights, has campaigned hard in favour of the system. The Commission declined to comment

FT article: Brussels to challenge Berlin with proposed EU-wide takeover law

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