The French government has announced plans to enhance control measures on foreign investment in French businesses in order to safeguard strategic industries and crucial technologies. French Finance Minister Bruno Le Maire emphasized the need to expand the sectors covered by these regulations to include companies involved in the extraction and processing of critical raw materials. Moreover, the controls will be extended to encompass the French branches of foreign firms, thus preventing buyers from bypassing the necessary checks.
Le Maire, in his first speech since the summer break, highlighted the increasing potential for foreign entities to exploit French technologies and know-how. This move towards stricter regulations comes as President Emmanuel Macron urges Europe to strive for greater self-reliance following the impacts of the Covid-19 pandemic and Russia's invasion of Ukraine. Additionally, several European countries, including France, are reassessing their supply chains and rethinking the production of key equipment and technologies within the region.
Last year, the committee responsible for reviewing foreign investments in France examined 325 dossiers, a significant increase from 137 in 2017. Le Maire also reaffirmed that the threshold triggering controls on non-European entities taking stakes in strategic companies, reduced to 10% in 2020 from a previous level of 25%, would remain in effect.
Contrary to protectionism accusations, experts argue that such measures aim to protect national security interests. Pascal Bine, a partner at Skadden, Arps, Slate, Meagher & Flom LLP, noted that countries like France, the UK, Germany, and Italy have all implemented more effective tools to regulate foreign investment without significantly harming their economies. For instance, the US, which has the most restrictions on foreign investment, remains an attractive destination for such investments.
The move to reinforce regulations on foreign investment follows recent efforts by France to prevent the takeover of domestic companies by foreign entities. For example, the French government is seeking ways to stop Velan SAS, a French supplier of nuclear reactor parts, from falling into the hands of a US company. Similar attempts have been made in the past, such as when the French government opposed the acquisition of Carrefour SA by Canada's Alimentation Couche-Tard Inc.
Ultimately, in his speech, Le Maire emphasized that France cannot invest in cutting-edge technologies and the training of its best scientists, only to see them stolen. The strengthened regulations seek to ensure the protection of strategic industries and safeguard vital technologies from potential exploitation by foreign investors.