The European Union agreed in merger regulation in 1989. This defined circumstances in which a merger would have a European dimension and come under the roles of the European Union, and when a merger would be decided by national bodies.
In one case, in particular, the commission vetoed the takeover of the De Havilland, a Canadian aircraft maker, by a French aerospace company and Alenia from Italy. On the other hand, objections to the Nestlé’s takeover of Perrier had little effect and Nestlé’s and BSN of France now control over 75% of the French mineral water market. In the UK, AirTours abandoned its bid for First Choice in June 1999, following objections from the regulatory authorities in Brussels.
The EU has abandoned the idea of a detailed takeover bid directive in favor of one which outlines principles with which local legislation must comply-for example, equal treatment of all shareholders. However, the problem was stalled for 13 years, despite a clear need for general principles to be adopted. In France, BNP made a bid for Society General and Paribas. The last two can and did deal in BNP shares, but BNP cannot deal in theirs. Gucci, facing a hostile bid from LVMH, sold 40% of new shares to an ally, Francois Pinault. This is only possible due to lax takeover rules in Amsterdam, where Gucci is listed. One current compromise floats the idea of joint jurisdiction, where a company is listed in one country but registered in another.
Finally, in 2002, a new takeover code was agreed by European Union lawmakers. It curbs companies’ use of the poison pill takeover defenses and requires bidders and targets to treat all shareholders equally. Also, predators will be required to make a formal bid once their state reaches a certain threshold. European Union nations had up to a certain point, to implement the roles.
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