Short Reads

Netherlands FDI regime protecting national security is getting closer

Netherlands FDI regime protecting national security is getting closer

Netherlands FDI regime protecting national security is getting closer

05.08.2021 NL law

On 30 June 2021, a legislative proposal introducing an investment screening on grounds of national security in the Netherlands was submitted to the House of Representatives. The proposal introduces an ex ante and ex post screening mechanism for investment activities related to vital providers or companies active in sensitive technology in the Netherlands. Although the regime is not yet effective, parties to a potential transaction should already account for the potential (including retroactive) effects of the regime.

The legislative proposal for the Dutch national security FDI regime (Wet veiligheidstoets investeringen, fusies en overnames, Vifo) introduces a notification obligation concerning investment activities related to vital providers and companies active in sensitive technology that are seated in the Netherlands. This proposal incorporates the input received following a public consultation and the advice from the Council of State (Raad van State) with a few amendments.

As explained in our October 2020 Newsletter, the proposed regime serves to complement the existing sectoral investment screening regimes for the electricity, gas and telecommunication sectors. The proposal concerns various issues such as the standstill obligation, failure to notify, failure to provide complete and correct information, failure to comply with measures imposed, the review period, possible mitigating measures and prohibitions.  

Scope and substantial test

The proposal predefines vital providers in certain sectors, including heat transport, nuclear power, air transport, the port area, banking, financial market infrastructure, extractable energy and gas storage. Sensitive technologies include military and dual use products. The government can identify additional categories by separate order.

Qualifying investments include many types of investment activities that lead to a change of control (e.g. takeovers, mergers, joint ventures, demergers and asset deals). For companies active in sensitive technology, acquisitions of minority shareholdings of 10%, 20% and 25%, or the right to appoint one or more board members, may already trigger a notification obligation. The rules apply equally to EU and non-EU investors, including Dutch investors.

The Minister (or the Bureau for Investment Screening ("BTI")) will conduct a vulnerabilities and threats assessment. Vulnerabilities may relate to (i) the continuity of critical processes, (ii) the integrity and exclusivity of knowledge and information associated with vital processes and sensitive technology and (iii) the creation of strategic dependencies. When assessing threats, the Minister will assess several factors including the acquirer’s ownership structure and relations, criminal record, any international sanctions imposed and the security situation in the country of residence.

Advice for companies contemplating M&A deals

Once entered into force, which we do not expect before the year-end, the regime will have retroactive effect until 8 September 2020 (instead of the previously announced 2 June 2020). Accordingly, the Minister may, within eight months after the entry into force, call in all activities carried out between this date and the entry into force of the regime if there is a reasonable suspicion that they pose a threat to national security.

Given that the regime is coming closer, and its retroactive effect, we advise companies to add the assessment of whether the future regime may have an impact on pending M&A deals to their M&A checklist.

For a detailed explanation of the proposal, please see our Corporate Update of 12 July 2021 (in Dutch).

This article was published in the Competition Newsletter of August 2021. Other articles in this newsletter:

Are your distribution contracts ready for the revised VBER?

Horizontal cooperation: from the dark side to the light?

ACM issues first excessive pricing fine in pharma

Court rules ACM can use accidental evidence found in dawn raids

CJEU clarifies jurisdiction for follow-on damage claims

Amsterdam Court of Appeal rules on the applicable law to air freight

Court assesses threshold for substantiating cartel damage plausibility


Related news

07.10.2021 NL law
Commission’s record fine for gun jumping upheld

Short Reads - Pre-closing covenants protecting the target’s value or commercial integrity pending merger clearance from the European Commission must be drafted carefully. The General Court confirmed the Commission’s record-breaking fines on Altice for violating the EU Merger Regulation’s notification and standstill obligations. According to the General Court, the mere possibility of exercising decisive influence over the target can result in a gun jumping breach.

Read more

07.10.2021 NL law
ACM walks the walk: first-ever vertical price coordination fine

Short Reads - The Dutch Competition Authority (“ACM”) has claimed a first victim in its vertical restraints battle. Samsung Electronics was fined nearly EUR 40 million for having meddled in the online resale prices for televisions at seven retailers. Compared to the European Commission’s fines on four consumer electronics producers for resale price maintenance (“RPM”), the ACM’s summary decision seems to refer to a ‘light’ version of RPM: systematic price coordination without any threats, sanctions or incentives for the retailers to stick to the price.

Read more

07.10.2021 NL law
Commission reveals first piece of antitrust sustainability puzzle

Short Reads - The European Commission has published a Policy Brief setting out its preliminary views on how to fit the European Green Deal’s sustainability goals into the EU competition rules. Companies keen to be green may be left in limbo by a looming clash with more far-reaching proposals from national competition authorities. More pieces of the antitrust sustainability puzzle will fall into place as soon as the ongoing review of the guidelines on horizontal cooperation is finalised.

Read more

13.09.2021 NL law
Adopting the new Standard Contractual Clauses to secure international personal data transfers

Short Reads - Recently, the European Commission issued an implementing decision on standard new contractual clauses (“SCCs”) for the transfer of personal data to countries outside the European Economic Area. Organisations need to use the new SCCs from 27 September 2021 and onwards. Transitional periods apply for existing international data transfer agreements. To meet their obligations under the General Data Protection Regulation, organisations need to make the appropriate changes in time.

Read more

07.10.2021 NL law
Court of Appeal provides guidance for further course of proceedings in prestressing steel litigation

Short Reads - On 27 July 2021, the Court of Appeal of Den Bosch issued an interim judgment in the Dutch prestressing steel litigation, ruling on three issues: (i) the obligation of claimant to furnish facts; (ii) the assignment of claims; and (iii) the liability of the parent companies. In short, the Court of Appeal allowed the claimant Deutsche Bahn another opportunity to supplement the facts needed to substantiate its claims in the next phase of the proceedings.

Read more

09.09.2021 BE law
Digital Law Up(to)date: (1) Parliamentary initiatives about cyber attacks; (2) ‘Zero tariff’ options before the CJEU; and (3) Council of State, GDPR and encryption

Articles - In this blog, we briefly present three interesting news in the field of digital law: (1) Parliamentary initiatives to tackle cyber attacks (2) "Zero tariff" options and open internet access do not mix! (3) Council of State, GDPR and encryption: validation of a decision of the Flemish Authorities

Read more