Return of Protectionism in M&A Transactions The European Regulatory Landscape Philipp Haas 19 September 2019

Table of Contents FDI regime in France (p. 3) FDI regime in Germany (p. 5) FDI regime in Italy (p. 6) EU FDI Directive (p. 7) Further information (p. 8)

FDI regime in France General Observations Even if foreign investments are scrutinized by the French government, foreign investment flows in France have been rising over the last few years and, in particular, since the election of President Emmanuel Macron, with a significant 42% increase in 2017 (reaching c. $50 billion) compared to the year 2016 ($35 billion) (according to the 2018 World Investment Report, UNCTAD) The following are recent examples of foreign investments in French strategic companies: in 2014, Chinese automaker Dongfeng acquired a 14% stake in French automaker PSA; in April 2015, Chinese consortium Casil Europe acquired a 49.9% stake in the French airport Toulouse-Blagnac; in 2015, General Electric acquired French Alstom’s energy division; in September 2017, the French government approved the merger of Siemens’ mobility unit into Alstom, with the German conglomerate taking a 50% stake in the French company (ongoing); and in September 2017, the Italian shipbuilder Fincantieri announced it would take effective control of STX France through the acquisition of a 51% stake in the French shipyard

Draft bill obliging Govt to disclose stats to be adopted FDI regime in France Non-EU investors subject to prior authorisation in 12 sensitive sectors Sensitive sectors include energy, water supply, transport, electronic communication network and public health Prior authorisation required where non-EU investor acquiring: (1) control of French company; (2) business of French company; (3) > 33.33% capital / voting rights of French company Transactions carried out without requisite prior approval null and void Draft bill obliging Govt to disclose stats to be adopted

7 cleared with security agreement FDI regime in Germany Foreign Trade Regulation tightened in 2017 Ability to examine whether public order or security endangered where non-EU/EFTA investor acquires (directly or indirectly) at least 25% voting rights in German company (cross-sectoral regime) Mandatory notification where related to "critical infrastructure", voluntary for all other sectors Non-German investor required to notify if directly or indirectly acquires at least 25% voting rights in German company operating in military or IT securities sectors (sector-specific regime) Greater scrutiny but prohibitions will remain the exeption to the rule? 2016/17: 66 reviewed (2017 alone) 7 cleared with security agreement 4 conditions

FDI regime in Italy Golden Power rules expanded October 2017 Foreign investors must notify when acquiring equity interest in Italian company active in defence/national security sectors (when treshold of 2, 3, 5, 10, 20, 25% of capital are exceeded) OR acquisition is in energy, technology, transportation or communication industries Certain corporate actions taken by foreign owners must also be notified e.g. liquidation Enforcement practice focused on behavioural restrictions Increased scrutiny H2 2017 Past 5 years 40+ filings 7 conditions 1 veto

EU FDI Directive Directive for foreign investment screening BUT … AND EU framework for FDI screening Basic procedural requirements Screening criteria Cooperation mechanism EC screening of projects of EU interest Transparency and information Directive for foreign investment screening BUT … AND BUT … NO prior notification requirement NO EU powers of intervention EU ability to influence proceeding

For further information 70 page pdf summary covering EU, France, Germany, Spain, Netherlands and Italy e-mail to: gabriela.pablo@nkf.ch