MEPs approve embattled takeover law

Date: 18/12/03

THE European Parliament this week bridged a 14-year gap by agreeing to a modified proposal for an EU-wide takeover directive.

MEPs voted by 321 votes to 219 to approve the revised proposal, but amendments by Socialist and Green MEPs on worker consultation were rejected.

The decision will be seen as a blow for Frits Bolkestein, the internal market commissioner, who has said it falls a long way short of ensuring that the future of companies is decided by shareholders.

The proposal, which was watered down by industry ministers last month, allows directors to block hostile bids by using multiple voting shares or "poison pill" defences without shareholder approval.

The MEPs' decision, taken on Tuesday (16 December), was generally welcomed by centre-right and Liberal members, but condemned by Socialist deputies.

UK Liberal Chris Huhne, joint rapporteur on the legislation, said: "This is not anyone's ideal takeover directive, but we can't let the best be the enemy of the good. Unfortunately, the political basis for a level playing field on takeovers simply does not exist in Europe.

"In some member states, notably Germany, foreign takeovers are regarded as a disaster to be resisted, while in others - such as the UK - foreign companies are seen as a benefit for investment and jobs."

Dutch Socialist deputy Ieke van den Burg condemned the decision as being "very poor".

"In three committees of the Parliament there was a consensus that serious consultation of workers in case of a takeover should be obligatory," she said.

"With the agreement adopted this week, this is left open for member states to decide. Instead of guaranteeing consultation of workers, a Conservative-Liberal majority supported a weak compromise. They wanted agreement, no matter what."

Since ministers have already signed off on the deal, final approval of the law will be a formality.

The European Parliament voted on 16 December 2003 to approve the European Commission's new Takeover Directive but with a number of strategic amendments that make key provisions of the legislation optional. MEPs thereby backed the compromise package agreed informally in November 2003 in Council. The long-running attempt to establish standard European Union rules on takeover bids has thus reached its goal, subject to final approval by Council. Opposition to the vote came from Members on the left, who felt the clauses on information and consultation of workers were inadequate.