Brussels, 04/04/2006 (Agence Europe) - As expected, on 4 April, the European Commission began an infringement procedure against France over the authorisation procedure created for foreign investors in certain defined sectors. By Decree, adopted in late 2005, France decided that foreign investors wishing to acquire a third or more of a French company active in sensitive sector would have first to be approved by the Industry Ministry. Paris identified eleven sectors to be protected in this way against takeover bids from foreign investors for reasons of public policy, public security or national defence (see EUROPE 9119). Unconvinced by the first French explanations (see EUROPE 9242), the Commission remains doubtful over the proportionality of the procedure in relation to its objectives. The Commission considers that the provisions of the Decree could restrict the free movement of capital (Article 56 of the Treaty) and freedom of establishment (Article 43), and has, therefore, sent a reasoned opinion which allows France two months to provide clarification.
It is by no means certain that, even if there were no such investment, the damages the procedure is supposed to prevent would not occur anyway, notes the Commission. It would also like more information on how far the French measure is necessary. France is also called on to clarify why companies established in the EU, but under the control of third-country investors, could be submitted to the more stringent procedure applicable to third-country companies, whereas a company legally and genuinely established in a Member State should be treated as a national of that Member State. The Commission is also concerned that investments in companies could require authorisation because only a marginal share of the turn-over originates from activities that relate to public policy, public security or national defence. Finally, the Commission considers that the inclusion of casinos within the scope of the Decree is unsatisfactory given that casinos should be covered by the appropriate transposition of the money laundering directive.