GERMANY LAW AND PRACTICE Contributed by: Daniel Möritz, Jan Bonhage, Hendrik Bockenheimer, Carl-Philipp Eberlein, Markus Ernst, Matthias Rothkopf, Christoph Wilken and Alexander Rang, Hengeler Mueller
actively issue the FDI certificate or to open the in- depth screening within this period. The deadline for the in-depth screening (Phase II) is four months from submission of the information requested by the MoE at the opening of Phase II. The MoE opens Phase II if the authorities involved have security-related concerns or require further informa - tion to assess security aspects. The MoE may extend the four-month period by three months if the case implicates special factual or legal difficulties. The period may be extended by another month if the Federal Ministry of Defence asserts that the transaction specifically affects German defence interests. The periods are suspended by information requests of the MoE or the negotiation of a mitiga - tion agreement. All deadlines are extendable with the acquirer’s and seller’s consent. Recent FDI litigation underlines that FDI clearance is deemed to have been issued if applicable deadlines are not met by the MoE. 7.2 Criteria for National Security Review Under the FDI screening standard, the MoE can ban the acquisition or issue security-related orders if the acquisition is likely to affect public order or security in Germany, in another EU member state, or in relation to certain EU projects or programmes. This standard is in line with the EU Foreign Investment Screening Regulation. Under former German FDI laws, there had to be a threat at that time to essential German public interests. General economic policy objectives (eg, protection against the effects of competition or strengthening German companies) do not justify the restriction or When reviewing public order and security issues, the MoE considers German vulnerabilities (eg, defence projects, critical infrastructure, security of supply, digi - tal or technological sovereignty aspects, and protec - tion of classified information) as well as foreign threats at issue. Such foreign threats include control of the acquirer by a foreign government (eg, due to state funding “beyond a marginal extent”), the “serious risk” prohibition of an acquisition. Vulnerabilities and Threats
of criminal or administrative offences by the acquirer, or known spy and data security issues. Relevance of Control In contrast to merger control procedures, the review - ability of FDI does not depend on a notion of control. Thus, non-controlling minority investments above the FDI screening threshold can be screened by the MoE. The MoE may consider matters of control on a case- by-case basis when assessing whether the screened FDI is likely to affect public order or security. The reviewability of FDI does not generally depend on the legal form or structure of the German target com - pany. Thus, German companies structured as partner - ships or joint ventures are generally in the scope of the German FDI screening. In an FDI screening, the MoE may, for instance, consider whether the involvement of a German company in a joint venture might mitigate security risks to some extent. 7.3 Remedies and Commitments If the foreign investment at issue is likely to affect pub - lic order or security, the MoE may order remedies and/ or request commitments to address these concerns. The MoE has broad discretion when requesting such measures in co-ordination with the other authorities involved. The MoE’s leeway regarding suitable rem - edies is not limited by a list of measures. The request is typically addressed to both the acquirer(s) and the German target and, in some cases, also to the sell- side. The MoE typically tailors the request to the vulnerabili - ties and threats at issue. Requested remedies may, among other things, include: • requirements on the protection of classified infor - mation and other sensitive data, including on security-cleared projects (including the implemen - tation of data security/protection systems); • commitments on the (non-)integration of critical IT systems, personnel and operative services of the acquirer and target; • assurances to maintain German companies or sites, not to relocate certain production or R&D divisions out of Germany or the EU, to maintain a certain number of German directors to hold IP
247 CHAMBERS.COM
Powered by FlippingBook