Germany toughens rules on foreign buyouts in strategic sectors

Germany's cabinet agreed Wednesday to tighten scrutiny on takeovers of companies in strategic industries by buyers outside the EU, the Economy Ministry said, reacting to Europe-wide disquiet over Chinese takeovers.

New regulations will allow Berlin more time to probe takeover bids, especially in sectors affecting critical infrastructure, and extend the range of deals eligible for examination by the authorities.

"We remain one of the most open economies in the world, but we also have an eye on fair competition. We owe that to our companies," Economy Minister Brigitte Zypries said in a statement.

"In future, reporting requirements and more time to examine deals will provide more protection and reciprocity for companies in critical infrastructure."

The new ruling extends takeover probes to include companies providing services or software to strategic sectors including electricity grids, nuclear power plants, water supplies, telecoms networks, hospitals and airports.

More defence companies manufacturing or developing "key technologies" are also covered than under previous rules.

It doubles the time civil servants have to probe proposed deals by non-European Union or European Free Trade Association (EFTA) buyers from two to four months.

And it makes clear that "indirect" takeovers -- where a non-EU firm creates a company within European borders as a vehicle for a buyout -- will also be subject to examination.