A positive debate. Whatever you say about it, the well-stoked and occasionally somewhat heated debate which has been unfolding in recent times about takeover bids and other large-scale manoeuvres on the part of businesses, in the field of energy in particular, with mutual accusations of "economic nationalism" is, in fact, a positive thing. It is true that some behaviour and certain statements give the impression that national interest takes priority, and that the notion of European interest is often forgotten. But the debate has also given rise to pro-European reactions, it is forcing a clarification of the rules, and it backs up the Commission in its determination to ensure that they are respected. And it is of significance that all of the Member States, at various times, depending on the circumstances, have called for the Commission to intervene and urged it to use its powers in the field of competition and the internal market. And the Commission appears determined to survey and to act, in these two fields where the power it has is real.
Different rules. There is a third aspect, where rules are European, in principle: that of the specific regulation on takeover bids. In reality, however, these rules are not genuinely uniform. The deadline for the transposition into Community law of the European directive voted for on this subject expires this May. But for one fundamental aspect, defence measures against hostile takeover bids, it is left up to the Member States to choose which regime should be applied. The first draft, which was drawn up under the aegis of Frits Bolkestein and proposed by the Commission in 2001, aimed to prevent the management of a company under attack from a hostile takeover bid from taking defence measures without the explicit authorisation of all of its shareholders. However, this draft was rejected by the European Parliament, with votes for and against roughly equal. The 2004 compromise leaves it up to each Member State to define the respective powers of the body of shareholders and the administrators in the face of hostile takeover bids. There is also similar elasticity for other elements, particularly the validity of multiple voting rights and "shareholder pacts" whilst the takeover bid is underway. The result is that national laws differ and will continue to differ, until the European directive has been revised. In reality, current EU legislation is not much more than a core of common rules.
The choices of France and Luxembourg. In two of the Member States directly affected by recent takeover bids, France and Luxembourg, Parliamentary proceedings have just been concluded, and the debates there were instructive. Basically, neither the French parliament nor that of the Grand Duchy adopted the most restrictive formulae they could have. The Luxembourg Parliament had to take account of two partially contradictory requirements: leaving in place the possibility for Arcelor (the largest manufacturing industry of the country) to defend itself against a hostile takeover bid by Mittal Steel and, at the same time, to confirm that Luxembourg's place on the financial map remains a welcoming one, open to foreign businesses. This Parliament rejected various restrictive proposals recommended by the Chambers of Commerce, which would have required all payments related to takeover bids to be made in cash (rather than shares) when industrial production takes place largely outside the Union. Certain "poison pills" were allowed through, but the basic direction taken was a liberal one.
Defence measures were brought in in France, but the Socialist opposition felt that they were insufficient. In fact, French legislation retains the obligation to go through the body of shareholders (on a simple majority vote) before defence measures can be taken, and the option of the targeted company to create new shares in order to increase its capital, making the cost of the operation more expensive for the other company. According to the Socialists, this formula fails to balance out the powers of the management and those of the shareholders, but it allows the latter to determine the future of the targeted company. A reciprocity clause also features in this, which could be used against takeover bids from American companies, for example, which benefit from a veritable wealth of anti-takeover bid measures.
Elsewhere in the EU, situations differ greatly. The German draft (to be discussed at the Bundestag next month) leaves a great liberty of action open to the companies. In the United Kingdom, the debate is in train, and it is likely that temporary measures will be brought in to respect the European deadline (20 May). The Dutch bill will leave the companies practically free to decide for themselves how they act. As is so often the case, Denmark is the only country in which the law to transpose the European directive is already in force.
Tomorrow, I will try to draw a few conclusions from this legal overview, and from other considerations developed in this column over the last few days. (F.R.)