The Defensive Measures Provisions of the EU Takeover Directive: From Ambition to Resignation to Distrust
This year is the 20th anniversary of the adoption by the European Union of its Directive on Takeovers. A group of scholars associated with the European Corporate Law Experts Group (ECLE) has compiled a set of papers assessing the performance of the Directive. One of these papers is concerned with the Directive’s rules on defensive […]
Paul L Davies is Emeritus Professor of Corporate Law at Harris Manchester College, University of Oxford. Alain Pietrancosta is Professor of Law at Sorbonne Law School, University of Paris. This post is based on their recent working paper.
This year is the 20th anniversary of the adoption by the European Union of its Directive on Takeovers. A group of scholars associated with the European Corporate Law Experts Group (ECLE) has compiled a set of papers assessing the performance of the Directive. One of these papers is concerned with the Directive’s rules on defensive measures in response to tender offers. It assesses them predominantly from an industrial policy perspective.
During the (very lengthy) negotiations among the Member States, the European Commission was enthusiastic about the benefits of removing barriers to takeovers, on the grounds that making the control of companies contestable would both help to solidify the Union’s internal market and strengthen European companies in global competition. Some Member States were less convinced. A notable expression of this opposition was the actions of the German government which in 2001 blocked at the very last minute in the Union’s legislative procedure the adoption of a version of the Directive which contained a prohibition on post-bid defensive measures unless a majority of the shareholders gave their consent in the face of the bid – the so-called board neutrality rule (BNR). This was the result of an assessment in Germany of the implications of the takeover of Mannesmann by the British bidder Vodafone in 1999. This reaction was surprising, since the bid had strong internal market credentials and didn’t give rise to ‘level playing field’ concerns, as the UK’s rules were (and still are) favourable to takeovers.
