'EU must tighten foreign takeover rules'

German Economy Minister Brigitte Zypries has requested European Commission chief Jean-Claude Juncker to finally come up with proposals on how to effectively strengthen member countries' veto rights when it comes to blocking Chinese takeovers of European companies with expertise in sensitive and key technologies.

Germany, France and Italy voiced their concerns to EU Trade Commissioner Cecilia Malmstroem as early as February, but had seen no political action since.

In a letter To Juncker, Zypries acknowledged that Chinese takeovers in Europe went hand in hand with important capital inflows that "proved the attractiveness of European locations and helped safeguard jobs across the bloc including Germany."

But she warned that China was demonstrably out to gain access to key technologies while at the same time protecting its own companies from European investors.

On the alert

"Open markets cannot be a one-way street," she added.

According to a study by consultancy EY, Chinese investors acquired 68 companies in Germany last year alone, shelling out $12.6 billion (10.7 billion euros) for the transactions. It meant a record number of takeovers and more than in the past 10 years combined.

Earlier this year, Germany had become the first EU nation to tighten its rules on foreign takeovers. In a unilateral move, new regulations resulted in the government being able to block mergers, if there's a risk of critical technology being lost abroad. Parliamentary approval is also not required for the government in Berlin to block takeovers of German firms.

To introduce more scrutiny in deal-making, national leaders have long called on the European Commission to analyze foreign investments in sectors such as energy, banking and technology where China has been seeking Europe's know-how.

hg/sri (Reuters, dpa)