Austria Moves to Tighten Rules on Investment in Critical Assets

(Bloomberg) -- Austria is moving to tighten rules on foreign investment in strategically important companies, following Germany in raising defenses for critical infrastructure or key technologies.

Chancellor Sebastian Kurz’s government is seeking to make stake purchases by non-European Union investors subject to official approval if they exceed 10 percent for the most sensitive areas, according to a draft law approved Wednesday by the cabinet. The threshold remains at 25 percent for companies with lower relevance for public security.

“Recent developments show that investors from third countries, often close to their government and acting strategically, are systematically buying up key companies in industries that are crucial for the future development of the economy and for security,” the draft text said. “A deeper assessment of acquisitions of Austrian companies by foreign investors is needed.”

While the law doesn’t mention China, it comes amid rising concern in Europe that the Asian nation is seeking access to sensitive technology or wants to boost its global influence by acquiring key infrastructure including ports and electricity networks. Germany last year used new powers to block a Chinese acquisition for the first time, and the EU introduced new screening tools for foreign investments earlier this year.

The Austrian 10 percent threshold requiring government approval applies to the networks and information systems for energy, transport, banking, financial markets, health, water and digital infrastructure, some media companies, makers of weapons of war and IT security firms.

A new government holding company, OeBAG, which has a mandate to make acquisitions in key industries, can have a seat in a new body that will monitor applications.

The most-recent major Chinese acquisition in Austria wouldn’t have been affected by the new rules: lingerie maker Wolford AG was bought by Fosun International Holding last year. The biggest Chinese investment in a listed Austrian company is that of Chinese aerospace group Aviation Industry Corp. of China in aircraft parts maker FACC AG.

©2019 Bloomberg L.P.

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