19
Significantly, Lamfalussy also emphasized the crucial importance of EU-wide rules on
takeovers.
It is also worth noting that the Takeover Directive is related to efforts to reform
the EU’s competition policy in recent years, particularly the procedure involved in the
approval of big merger deals. The Commission’s powers on competition regulation are
among its most significant powers. It must balance concerns for a level playing field
(avoiding the constitution of oligopolies and monopolies) with concern for efficiency and
flexibility. The landmark decision of the Competition Commissioner to block the GE-
Honeywell deal fell on the very same day that the EP voted down the Takeover Directive
on July 4, 2001 and was usually seen as a further unfriendly signal to foreign investors.
Beyond the importance of the Takeover Directive as a crucial component in
larger EU efforts toward the creation of a unified financial market, the Directive also has
its own specific rationale. By facilitating intra-EU as well as extra-EU takeovers, the
Directive aims at encouraging corporate and financial restructuring. McCahery,
Renneboog, Ritter, and Haller (2003) write:
Takeovers are about increasing efficiency. Their function is to reallocate existing physical and
financial assets. They involve the distribution of funds to shareholders. Furthermore, takeovers act
as an incentive to managers to increase allocative efficiency of investment funds.
37
To sum up, the Takeover Directive became a crucial EU battlefield by 1999 because of
its central position in both the EU’s gradual march toward integration and in the position
of the EU as a mediator of financial globalization. The stakes could not be higher, both
economically and politically. By 1999, the Takeover Directive became the pivotal
regulation around which global investors, EU institutions, and national coalitions would
clash. A rough measure reflects this level of importance: no less than 200 articles on the
Takeover Directive (or with a paragraph referring to the Directive) appeared in the
Financial Times alone between January 1998 and July 2003.
Contents of the Takeover Directive
An important aspect of the Directive is that it was conceived as a framework
directive, which leaves EU governments considerable leeway to impose their own
versions of the rules.
38
So, even if the Directive had passed all bottlenecks in the EU
legislative process, it would still have had to enter 15 national legislative stages.
The Takeover Directive aims at building a “transparent framework for takeover
bids”
39
for the benefit of shareholders (especially minority shareholders), employees, and
all interested parties.
It enshrines five main goals:
1.All holders of securities of the offeree company who are in identical situations must be given equal
treatment
2.The addressees of the bid must have sufficient time and information to be able to reach a properly
informed decision on the bid.
3.The board of the offeree company must act in the interests of the company as a whole.
37
McCahery, Renneboog, Ritter, and Haller 2003: ii
38
FT June 7, 2001
39
Commission Press Report IP/02/1402, 02/10/2002
Convention