Recently, we have summarized the positions of various political parties in Germany regarding the upcoming election, which will be held this Sunday (see here). Although neither antitrust nor FDI are likely to be decisive factors for voters, I have examined the parties’ stances on FDI. To provide some context, this post first summarises the latest statistics on German foreign investment control, published by the German Federal Ministry for Economic Affairs and Climate Action (it will be interesting to see whether this designation for the Ministry of Economic Affairs survives the election).
German FDI in 2024 – the numbers
In 2024, the German Federal Ministry for Economic Affairs and Climate Action (BMWK) reviewed 261 cases, an increase of four compared to 2023. The vast majority of these cases (223) were reviewed under the broader cross-sectoral regime, while only 38 cases (approximately 15%) were reviewed under the so-called sector-specific regime. This ratio has remained relatively unchanged for years.
In 112 cases, the investors came from the US, with the UK (29) in second and China (27) in third place. This aligns closely with the origins of investors throughout Europe. While notifications from US and Chinese investors increased compared to 2023, those from the UK (including the Canary Islands) declined. The rise in Chinese investments is somewhat surprising, given the expectation of a decrease in foreign investments from China. It remains to be seen whether the new US government and potential frictions with its European partners will lead to a decrease in US investments.
With regard to the sectors concerned, Information & Communication Technology is clearly in the lead (65 cases), followed by Health & Biotech (34 cases), Energy (27 cases), Engineering (18 cases) and Automotive (13 cases). The sectoral split of cases is therefore roughly the same as in previous years.
In 25% of the cases, the review period lasted between 31 and 40 days, while a similar proportion of cases were resolved within 30 days. Encouragingly, in less than 10% of the cases the review extended beyond 70 days.
Only 14 cases ended with remedies, including, as far as publicly known, one prohibition. In July 2024, the German government blocked the sale of MAN Energy Solutions’ gas turbine business to a Chinese shipbuilding company.
Does that cover everything from the past?
Almost. The current legislative period ended quite abruptly, though not entirely unexpectedly. While some remained optimistic until the very end that a new FDI regime could be agreed upon by the then-governing parties, this did not come to pass. According to a key issues paper by the BMWK, potential changes were to include:
- Adjustments to investment thresholds and the definition of ‘acquisition’
- Expansion of existing case groups, including ‘atypical control’ cases
- Broader scope to encompass greenfield investments, R&D cooperations, and the transfer of critical know-how
- Broader exemptions for internal restructurings
- Shortened review periods
- Reversal of the burden of proof in high-security areas (e.g., quantum technology, advanced semiconductors, AI)
So, what outcomes can we expect from the election with regard to FDI?
Predicting election outcomes is challenging. However, it seems reasonable to assert that there are more urgent issues for a new government to address than reforming the current FDI regime. This is evident in the election programs of the parties that were part of the current and previous governments. Among the CDU/CSU, SPD, Green Party, and FDP, only the Green Party mentions FDI in its election program. Their statement, “we will protect strategically important sectors from takeovers with a new FDI regime,” is quite vague, as it merely outlines the general objectives of the FDI regime.
But let’s be frank: In an era of escalating global turmoil, protectionism and shifting alliances FDI will play an even more important role. Any new government will recognize this and take (appropriate) action.
Phote by chutipon Pattanatitinon on Unsplash
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