Germany: Amendments To The German Foreign Trade Regime: Strong Impact On Foreign Investments In Germany

Last Updated: 27 July 2017
Article by Dr. Klaus W. Riehmer, André Schwanna and Stefan Glasmacher
Most Read Contributor in Germany, December 2017

I. Background and recent developments within the German/European Foreign Trade Regime

Amendments to the German/European foreign trade regime have become subject to a broader legislative discussion since "headline-takeovers", in particular involving Asian investors, which raised public attention in 2016. This development reached its climax in October 2016, when the German Federal Ministry for Economic Affairs and Energy ("German Ministry") revoked an already issued clearance permit regarding the EUR 670 million takeover of Aixtron, a German semiconductor equipment supplier, by Chinese investor Fujian Grand Chip Investment Fund (FCG). Prior to this, the competent US authority, the Committee on Foreign Investment in the United States (CFIUS), had issued a recommendation according to which the sale of Aixtron should be cancelled (Please refer to our January 10, 2017 Legal Update for more details and other discussed acquisitions.) In this context, the German Ministry announced its intention to develop a plan to foster "fair competition" and secure "better protection for foreign takeovers". With the amendment to the German Trade Regulation the first component of this agenda has now come to light.

II. Mechanism and Amendment to the German Foreign Trade Regulation

The German Ministry may review and prohibit certain acquisitions of domestic companies by foreign investors. German foreign investment review operates a cross-sector approach, applying to all sectors (please see paragraph 1), as well as a sector-specific approach, focusing on defense- and/ or encryption-related products (please see paragraph 2). Within each respective approach, the German Ministry has to decide (i) whether it initiates an in-depth review, and if it does so (ii) whether it prohibits the acquisition.

An amendment to the German Trade Regulation ("Amendment") proposed by the German Ministry has recently been approved by the German government and has already entered into force.

1. Amendments to the Cross-Sector Approach

Pursuant to the cross-sector approach, the German Ministry had to meet substantial requirements to initiate an in-depth review and further more substantial requirements to prohibit an acquisition. These decisions had to be taken within short time periods. In general terms, the Amendment clarifies what are substantial requirements and extends the time periods for decision making.

The Amendment makes the following changes to the cross-sector approach:

The German Ministry may initiate an investigation regarding an acquisition of at least 25% of the shares in a domestic company by a non-EU or non-EFTA company if the acquisition may lead to risks to public order or security. An acquisition by a domestic acquisition vehicle which does not have its own essential domestic business activity and is held by a non-EU or non-EFTA investor would still be regarded as a foreign investment.

In order to define the broad terms "public order or security", the Amendment gives examples of industries which will be captured by the regulation in any case ("Catalogue"). However, while the Catalogue clarifies these terms, it is not conclusive and therefore, it does not limit the German Ministry's right to initiate investigations on other industries.

According to the Catalogue, a risk to public order or security may arise if the domestic company:

  • Is an operator of a "critical infrastructure" which includes the sectors telecommunication, water and energy, information technology and telecommunication, healthcare, transport and traffic, finance and insurance, as well as nutrition;
  • Develops or amends software to operate such critical infrastructure;
  • Manufactures, has manufactured or is aware of telecommunication technology to implement governmental telecommunication surveillance measures;
  • Delivers certain Cloud-Computing-Services, e.g. server farms; or
  • Holds a permit to deliver telemetrics infrastructure for the health industry.

If the German Ministry is of the opinion that the acquisi - tion may put at risk "public order or security", in particular because the domestic company belongs to an industry mentioned in the Catalogue, the Amendment provides that the German Ministry may initiate an in-depth review within three months after – and this was newly incorporated by the Amendment – it has become aware of the conclusion of the SPA. Accordingly, a new duty to notify the conclusion of SPAs regarding businesses in the Catalogue's industries has been introduced. The right of the German Ministry to initiate such a review process is limited to five years after the conclusion of the SPA. At present, this cut-off period applies to all acquisitions that will not have been notified to the German Ministry. The Amendment, unlike merger control regulations, does not include a prohibition on the completion of an acquisition. The acquisition can be completed taking into account the risk that it may be reversed.

If an in-depth review process is kicked-off, the purchaser must file all documentation in connection with the SPA (presumably in German). The Amendment prolongs the review process from two to four months. The Amendment now expressly allows the German Ministry to negotiate with the parties certain clauses to ensure the deal does not contradict reasons of public order or security. During such negotiations the review period is suspended. As in the past, the review period only starts when the German Ministry has confirmed that the notification is complete which may further prolong the proceeding.

As before the Amendment came into force, the German Ministry may grant a clearance permit. The purchaser has the right to apply for a clearance permit stipulating that the deal does not affect public order or security. The Amendment however prolongs the review process for up to two months.

Aspect Former New
Investor origin Non-EU or non-EFTA company No change, however, clarifications for an indirect acquisition through a domestic acquisition vehicle
Size of investment At least 25% of the shares in a Domestic company No change
Prohibition reasons Risk of public order or security; no further details In addition: clarifying/expanding list with affected industries: "IT-" and/or "key industries"
Notification obligations None Notification requirement re SPA relating to "IT-" and/or "key industries" (Catalogue industries)
Deadline for initiating the review process Three months after conclusion of the SPA Three months after becoming aware of the conclusion of the SPA
Period for conducting the in-depth review process Two months Four months
Suspension of the deadline No Yes, during negotiation between the German Ministry and SPA parties
Review period for a clearance permit One month Two months

2. Amendments to the Sector-Specific Approach

The Amendment implements similar measures in relation to the sector-specific approach. Prior to the Amendment, the sector-specific approach had been even more rigid than the cross-sector approach. Now, the list of defense- and/or encryption-related products as well as review periods have been adjusted and extended.

III. Evaluation of the Amendment and Deal Preparation

Although the German Ministry estimates that the Amendment will lead to a moderate increase of ten review proceedings per annum bringing the total amount of cases handled at the German Ministry to about 60, we think that there will be significantly more work for the relevant department of the German Ministry in the future. The Catalogue, although meant as a clarification, in fact significantly expanded the list of relevant industries or businesses. Further, the notification requirement may bring numerous additional M&A matters to the attention of the German Ministry which may trigger additional proceedings. The potential of more and longer in-depth reviews will increase the workload of the German Ministry, also leading to longer waiting periods for affected parties.

The prolongation of the review periods will also lead to less deal certainty during the review process. This may place additional cooperation obligations on the purchaser and the seller. Parties will have to decide if the seller or the purchaser shall bear the risk of non-clearance, similar to hell or high water clauses in the merger control area. In light of the notification obligation regarding an acquisition in the Catalogue industries, the parties must carefully assess the target's industry sector in order to decide if the relevant business is part of the Catalogue or not. Given that the Catalogue only lists examples, parties are likely to choose to notify in order to be on the safe side.

IV. Outlook

The Amendment is part of various attempts to amend the German and European foreign trade regime. The German government has emphasized that it still continues to promote a pan-European approach. In February 2017, Germany, together with Italy and France, addressed in a letter to the European Commission their concerns about the lack of reciprocity and about a possible sell-out of European expertise. In this letter, the parties proposed key points for investment reviews at the European level reflecting measures of reciprocity and vetoes against sell-outs ("Proposal"). The Commission and other European member states are still reviewing the Proposal and the Commission has already announced that it will critically assess whether foreign investments are facilitated by governmental subsidies granted to foreign investors.

The German/European foreign trade regime remains in a state of flux, in particular in light of the Amendment and the Proposal. The Amendment may be subject to court decisions which will provide greater clarity to foreign investors and their acquisitions in Germany, however this will take some time. The current political objectives of the German Ministry in the area of foreign investment control are reciprocity and a "better protection of German key industries". At least the intervention rights have now been expanded. Professional deal preparation and coordination as well as sound legal advice have become even more crucial as notification obligations and further bureaucratic coordination will increase with the Amendment.

Originally published 25 July 2017

Learn more about our Corporate & Securities practice.

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2017. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions