France to Toughen Controls on Foreign Investment in Local Firms

French Finance Minister Bruno Le Maire pledged to reinforce controls on foreign investment in the country’s businesses in order to protect strategic industries and technologies.

(Bloomberg) — French Finance Minister Bruno Le Maire pledged to reinforce controls on foreign investment in the country’s businesses in order to protect strategic industries and technologies.

The sectors covered will be expanded to include companies involved in the extraction and processing of critical raw materials, he said. Controls will also be extended to the French branches of foreign firms to crack down on buyers bypassing checks.

“The potential for preying on our technologies and know-how has never been so high,” Le Maire told business leaders Thursday during a visit to the Haute-Savoie region of southeastern France in his first speech since the summer break.

French President Emmanuel Macron has been pushing Europe to become more autonomous following the Covid pandemic and Russia’s invasion of Ukraine. France and other European countries are also asserting national oversight of businesses and re-thinking some of their supply chains to bring production of key equipment and technologies back to the region.

The committee that reviews foreign investments in France examined 325 dossiers last year, up from 137 in 2017, Le Maire said. He also reaffirmed that the 10% threshold at which controls are triggered on non-European entities taking stakes in strategic companies, reduced in 2020 from a prior level of 25%, would remain in place.

“This is about protecting the interests of national security, this is not about protectionism,” according to Pascal Bine, a partner at Skadden, Arps, Slate, Meagher & Flom LLP. “France, the UK, Germany, Italy. All these countries now have more effective tools to control foreign investment.”

Earlier this month, Italian Prime Minister Giorgia Meloni’s cabinet approved legislation that gives the government extra powers to control what can be transferred abroad in fields including artificial intelligence, semiconductors, cybersecurity, aerospace and energy. 

In the Netherlands, new legislation will enable the Dutch government to limit the size of investments or block a deal entirely on the basis of national security. The legislation is aimed at protecting “knowledge-intensive companies against unwanted knowledge transfer,” according to the Defense Ministry.

Bine added that he doesn’t expect the measures announced by Le Maire to harm the economy. “Look at the US, which is the country with the most restrictions on foreign investment and at the same time the most attractive nation for foreign investment,” he said.

The number of notices reviewed by the Committee on Foreign Investment in the United States, or CFIUS, rose to 286 last year from 97 in 2013, according to its annual report.

Delayed Deal

France has recently started looking at ways to prevent Velan SAS, a domestic supplier of parts for nuclear reactors, from falling into US hands as it aims to protect a strategic industry. The business is a French unit of Quebec-based Velan Inc., which is being taken over by Flowserve Corp. The deal was expected to close by the end of the second quarter and has been delayed.

French nuclear-submarine parts supplier Segault SAS has already been carved out of that deal following government efforts to bring a key technology into domestic ownership, with a fund lined up to buy it in the coming weeks, according to people familiar with the matter.

Two years ago, France objected to a non-French investor taking over a grocery chain when it balked at an attempt by Canada’s Alimentation Couche-Tard Inc. to buy Carrefour SA.

In his speech on Thursday, Le Maire said that France won’t invest money in cutting-edge technologies and training its best scientists just for it all to be stolen.


(Updates with analyst comment starting in sixth paragraph.)

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