Given the challenges of the coronavirus pandemic to maintain operational capabilities, especially in the healthcare sector, and following the European Commission’s Guidance to the Member States concerning foreign direct investment and free movement of capital from third countries and the protection of Europe’s strategic assets (see Communication OJ 2020/C 99 I/01), the German Federal Government today passed the Fifteenth Amendment to the German Foreign Trade Ordinance (“Außenwirtschaftsverordnung” – AWV) (see press release, in German language).

In a nutshell, the Amendment tightens the Foreign Direct Investment control regime by implementing a mandatory filing for acquisitions of domestic companies, or divisions of such companies, that develop or manufacture personal protective equipment, certain drugs, medical goods for the treatment of highly infectious diseases, and in vitro diagnostics. In addition, companies providing services required for the functioning of communications infrastructure for security forces are included in the list of assets triggering mandatory filing. This mandatory filing requirement applies to acquisitions by third country acquirers, i.e. non-EU/EFTA residents, from a threshold of 10 percent of the voting rights in the company. This means that even investments in start-up companies (e.g., in the med- and biotech sector) may henceforth be subject to a filing requirement.

More specifically, the scope of transactions with mandatory filing is now extended to acquisitions of domestic companies, or divisions of such companies, that

• develop or manufacture personal protective equipment;
   
• develop, manufacture, place on the market or are holder of a corresponding marketing authorisation for medicinal products, including their raw materials and active pharmaceutical ingredients (APIs), which are essential for ensuring the provision of health care for the population;
   
• develop or manufacture medical devices which are intended for the diagnosis, prevention, monitoring, prediction, prognosis, treatment or alleviation of life-threatening and highly contagious infectious diseases;
   
• develop or manufacture in vitro diagnostics which are used to provide information on physiological or pathological processes or conditions or to determine or monitor therapeutic measures in connection with life-threatening and highly contagious infectious diseases.

Beyond the healthcare sector, filing obligations are extended to the acquisition of domestic companies or divisions of such companies that provide services required to ensure the freedom from interference and functionality of state communications infrastructures.

When examining whether the acquisition poses a threat to public order or security, particular consideration may be given to whether the acquirer is directly or indirectly controlled or financed by the government of a third country, whether the acquirer has already been involved in activities which have had a negative impact on public order or national security in the Federal Republic of Germany or another member state of the European Union, or whether there is a substantial risk that the acquirer or the persons acting on his behalf have been or are involved in activities which would constitute certain criminal offences or administrative offences in Germany.

Even further amendments to the German Foreign Trade Act („Außenwirtschaftsgesetz“ – AWG) have already been proposed to the parliament (see press release, in German language). These amendments also aim at implementing the provisions of the EU Screening Regulation, provide for a lowering of the prohibition criterion according to which a probable impairment of public order or national security is sufficient to stop a deal, and even include a prohibition of execution of acquisitions with mandatory filing, e.g. facilitating the execution of voting rights, profit distributions, or disclosure of certain information. Violations of these provisions, and/or of administrative orders by the competent authority in this context, will be treated as criminal offences. The proposed amendment to the AWG will likely be accompanied by another amendment to the AWV. A Sixteenth Amendment to the AWV is thus to be expected in the near future.