EU Trade Ministers, "Protect Companies from Predatory Takeovers"... Concerns over China

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Trade ministers of European Union (EU) member states have reportedly promised to protect Europe's strategic sector companies, whose management has worsened due to the economic slowdown caused by the COVID-19 pandemic, from predatory acquisitions. Although no country was directly named as a potential threat for predatory acquisitions, China is said to be the greatest concern.

According to AFP, on the 16th (local time), trade ministers of EU member states discussed measures to protect European companies in strategic sectors weakened by the economic downturn caused by COVID-19. The EU trade ministers held a video conference to discuss the impact of COVID-19 and responses, as well as the recent foreign direct investment (FDI) screening guidelines issued by the European Commission.

Jean-Baptiste Lemoyne, Deputy Minister of Foreign Affairs of France, said that in a situation where the corporate value of some companies has significantly declined, "it is important to prevent undesirable predatory acquisitions." Deputy Minister Lemoyne conveyed that the trade ministers of member states agreed to cooperate if threats arise. Sigrid Kaag, Trade Minister of the Netherlands, also said there was consensus that "Europe is not for sale." Phil Hogan, EU Commissioner for Trade, stated, "We need to know who is investing and for what purpose, and we must use our investment screening system to avoid the sale of strategic assets."

Although the potential threat actors of such predatory acquisitions were not explicitly identified, participants individually voiced concerns about China. At a video conference of defense ministers from NATO member countries held on the 15th, concerns were also raised about the risk of strategic companies losing control to China.

Earlier, Ursula von der Leyen, President of the European Commission, pointed out on the 25th of last month that health and medical research companies could become targets of non-EU groups. Accordingly, the European Commission proposed to advance the enforcement of related EU regulations originally scheduled to take effect in October. This is to address concerns about foreign groups targeting European companies, especially China. The screening regulation adopted last year was intended to coordinate reviews of foreign investments that could affect the security and public order of the EU and its member states, and was scheduled to be applied starting this October.

This content was produced with the assistance of AI translation services.