27 June 2002

HB: Schröder prevails in EU Takeover Dispute

Excerpt
The European Union Commission has decided to postpone its planned reform of EU takeover law; and in so doing, it has removed a potentially difficult subject from the agenda for this year's German elections, the German newspaper Handelsblatt reports.

As recently as last Friday, Frits Bolkestein, the commissioner for the internal market and taxation, was reported to be determined to present his draft directive on July 2. But his spokesman said on Wednesday: 'The commissioner has changed his opinion. The directive will be presented at a later date.'

According to commission insiders, Bolkestein's decision was made at the behest of EU Commission President Romano Prodi and not of his own volition. He had already been subjected to much criticism, on the grounds that in trying to rush through his draft directive, he had bypassed fellow commissioners Günter Verheugen and Michaele Schreyer (both of whom are German). Brussels insiders also report that Bolkestein's relations with Chancellor Gerhard Schröder of Germany were growing increasingly frosty. Monti intervened to prevent relations from deteriorating further.

Criticism of Bolkestein's directive was aimed at both its timing and its content, Brussels insiders said. So now, they added, the commissioner will go back and rework it with his term of legal experts headed by Dutch attorney Jaap Winter, an expert in trade law. And this time, he will also consult the European Parliament, these people said.

But whereas Germany would have been forced to dismantle all its takeover barriers, Bolkestein's directive would have done nothing about barriers in other countries. The most notable mechanism that would have gone untouched was the system of multiple voting rights, widely used in France and Sweden. This system allows dynasties such as the Wallenbergs and Peugeots to carry on controlling companies in whose capital they hold only minority stakes.

Klaus-Heiner Lehner, a member of the European Parliament, criticized these gaps in Bolkestein's directive. 'This would not have created the level playing field that's needed,' he said.

HB: Schröder Prevails in EU Takeover Dispute

© Handelsblatt