Dutch ministry working on bill to limit foreign acquisition of vital Dutch firms

The Dutch Ministry of Economic Affairs and Climate is working on a bill against foreign acquisitions in the telecom and ICT sector. The Bill on Undesirable Telecommunications Control was sent to the State Council and will also be presented to Parliament. Parties wishing to take over Dutch telecom facilities must first report their interest to the ministry. This form of active approval was agreed upon in the Coalition Agreement, for companies of vital importance such as providers of telephony, internet or data centres. The government also mentioned PostNL and wants to adjust the legislation for the Post Office and the Universal Service.

The government wants to be able to block or reverse a takeover with an appeal to national security or public order. “For example if the service is unreliable or there is a threat of service,” the ministry said.

Broad definition of telecom companies

In the bill, the telecom sector does not only include providers of mobile, fixed telephony and internet but also companies that supply vital facilities such as internet nodes, data centers, hosting and certification services, because they are important for the continuity, reliability and security of the service and infrastructure in the Netherlands. 

In Europe, it has been legally stipulated that intervention in takeovers by the government is only permitted on grounds of overriding public interest, for example if national security or public order is at stake.

The government is currently investigating whether the protection of various vital sectors is sufficient. This analysis, from the Ministry of Justice & Safety, will be finished this year. The government expects to submit the law after this summer, for consideration in Parliament.

Bill in the making since 2013

The bill is a reaction to America Movil’s bid on KPN. In 2013, the Mexican company took a stake in the former state-owned company. A foundation affiliated to KPN then activated a protective construction with preference shares. In Parliament, there was a call for measures and the government became involved in the process.

The Ministry of Economic Affairs already determined the main features of the current bill in 2014: the state wanted to roll back control. In November, then Minister Henk Kamp reported a delay to the process, and said that the proposal would be consulted in 2017. In February 2017, the Ministry of Economic Affairs added a chapter to the Telecommunications Act.

The country’s major telecom providers are already in foreign hands, ICT Netherlands noted, asking for a more detailed analysis of the effects the new measures will have. Listed companies are arguing for a broader definition of what “for the public interest” means.

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