Skip to content
Photo of Horst Henschen

Horst Henschen is an of counsel in Covington’s Frankfurt office and a member of the firm’s global antitrust and competition team.

Leveraging over 20 years of experience in antitrust matters, Horst provides advice in complex M&A and joint venture transactions requiring international antitrust merger control approvals both in Europe, including in Germany and worldwide. Horst also represents clients with fine proceedings before the Federal Cartel Office and the European Commission and coordinates immunity/leniency proceedings on a worldwide basis.

In addition, Horst represented a number of non-EU companies in their foreign investment application to the German Federal Ministry of Economic Affairs and Energy securing a Certificate of Non-objection ("Unbedenklichkeitsbescheinigung") for their acquisition of shares in a German company.

Horst has represented companies of a range of sectors, including life sciences and financial services, advising on all aspects of EU, German and international antitrust law, in particular in connection with merger control, cartel investigations and antitrust compliance programs and internal investigations.

On October 26, 2022, the German government permitted (with conditions) an investment by Chinese state-owned COSCO Shipping Group (“COSCO”) in one of Hamburg’s four shipping container terminals. Pursuant to foreign direct investment (“FDI”) laws, the German Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz, “BMWK”) had been notified of the proposed acquisition by COSCO of a 35% minority interest in the port terminal, a strategic location on the German coastline. The BMWK ordered that COSCO’s acquisition of voting rights must remain below 25%. The details of the decision remain confidential, but the BMWK justified its partial prohibition on the grounds that the acquisition of 35% as notified would constitute a “threat to public order and security”. According to the BMWK’s press release, the partial prohibition decision prevents COSCO from acquiring a ‘strategic’ shareholding, and reduces the acquisition to a mere financial participation. As a safeguard in this respect, the decision contains provisions prohibiting COSCO from acquiring any additional influence, for example, through a grant of rights that would be atypical for a holder of a less than 25% interest. Furthermore, under the German FDI regime, any follow-on acquisition of additional voting rights by COSCO would be subject to a new notification requirement.

Facts and Background

According to public sources, the transaction has been highly debated within and outside Germany since the announcement of the transaction in September 2021. Parties closely related to the commercial development of the Hamburg port (including the selling Hamburg port operator, the current mayor of the city of Hamburg, and the trade union) favoured an unconditional approval pointing to the economic significance of the investment. But a number of stakeholders, including apparently the European Commission, which provided an opinion within the framework of the EU FDI Regulation, would have preferred an outright prohibition of the transaction.

Continue Reading COSCO FDI Review: Germany partially prohibits Chinese investment in a Hamburg container terminal – Spotlight on minority investments

Russia’s continued invasion of Ukraine is broadly impacting foreign direct investment (“FDI”) screening. A range of governments have announced they will apply close scrutiny to investments from Russia and its allied countries in general, and not only to investors that are subject to sanctions or other restrictive measures. The European Commission (“Commission”) has published guidance on the screening of investments from Russia and Belarus.

The German government has already intervened, appointing a fiduciary for an operator of critical gas infrastructure. Canada issued a policy statement targeting Russian investors and Italy permanently broadened its FDI regime. Our blog provides a summary of these developments below.

Commission Communication calls for systematic assessment of Russian and Belarusian investments

On 6 April 2022, the Commission published a Communication (“Communication”) with guidance on screening of FDI from Russia and Belarus. The Communication emphasizes greater vigilance towards Russian and Belarusian investments into the EU and stresses that FDI screening goes beyond investments by persons or entities that are subject to sanctions. While the Communication is a direct response to the military aggression of Russia against Ukraine, it also elaborates on more general principles of FDI screening in the EU.

The Commission calls upon Member States to systematically assess and prevent threats related to Russian and Belarusian investments. In particular, the Commission encourages Member States to ensure close cooperation both on the national and EU level in relation to FDI screening activities, as well as in the implementation of EU sanctions. The EU FDI Regulation already provides for such cooperation and facilitates information exchange among Member States and the Commission. In particular, Member States may learn about a transaction through the cooperation mechanism and assess FDI filing requirements within their own jurisdiction. As discussed in our blogpost concerning “One Year of the EU FDI Regulation”, Member States have found the cooperation mechanism to be “a very useful instrument” and to have fostered valuable discussions in relation to transaction screening and critical sectors.

But a number of Member States do not have FDI screening regimes in place, including Belgium, Estonia, Greece, Ireland, Luxemburg, the Netherlands, Portugal and Sweden. Where FDI regimes are not yet in place or do not allow for pre-investment screening, the Commission calls to urgently set up a comprehensive FDI screening mechanism and in the meantime to use other suitable legal instruments to address security or public order risks. For those Member States that are in the process of setting up a screening mechanism, the Commission calls on them to accelerate adoption and prepare implementation, including supporting it with appropriate resources.

The Communication notes the potential screening of FDI after the completion of a transaction. While FDI screening is usually undertaken before closing of a transaction, the EU FDI Screening Regulation also allows for the screening of FDI post-closing. If a Member State launches the formal screening of an FDI, it is subject to EU cooperation mechanism irrespective of its planned or completed status. Furthermore, the cooperation mechanism may be initiated within 15 months after the investment has been completed when an investment is not subject to screening at national level. This may occur when the Member State does not have a screening mechanism or when the Member State maintains a screening mechanism but the specific FDI transaction was not submitted by the parties for ex-ante screening.

The Commission reports that based on 2020 data, Russian individuals or entities control about 17,000 EU companies, and have potentially controlling stakes in another 7,000 companies and minority stakes in a further 4,000 companies. The Commission strongly encourages Member States to apply FDI screening to intra-EU investments that are ultimately controlled by Russian or Belarusian persons or entities. In that context, the Communication describes the conditions under which Member States may be permitted to impose restrictions on the free movement of capital and freedom of establishment.
Continue Reading FDI regulators show their teeth – Close scrutiny and firm intervention in response to Russia’s war against Ukraine

On October 11, 2020, the EU FDI Screening Regulation (EU) 2019/452 – the “Regulation”) entered fully into force.

The Regulation, which was approved and adopted in March 2019, establishes a framework for the screening of foreign direct investments (“FDI”) by EU Member States in which decision-making powers rest at the Member State level. Significantly, from October 11, an element of EU-level cooperation in FDI is introduced and in particular will bring into effect (i) regular information sharing among Member States and the European Commission about transactions subject to national FDI screening, and (ii) a mechanism through which other Member States and the European Commission can coordinate and comment on FDI that has an “EU-dimension”.

In this blogpost, we look at the overall status of national measures in FDI at this juncture and describe in overview the EU-level cooperation and information sharing mechanisms.

National investment screening mechanisms 

While the Regulation does not require Member States to introduce their own screening mechanism at a national level, the European Commission has recommended that all Member States do so – and particularly encouraged this in the context of the COVID-19 pandemic (see our earlier alert and blog post). Accordingly, and in order to fully implement the Regulation, Member State laws have been (or are being) adapted to allow local regulators to take account of national security concerns of other Member States.

Fifteen Member States – Austria, Denmark, Finland, France, Germany, Hungary, Italy, Latvia, Lithuania, Netherlands, Poland, Portugal, Romania, Spain and Slovenia (and Norway and the United Kingdom) – currently have national investment screening mechanisms in place. Several other Member States are in the course of reforming their FDI laws or adopting new FDI screening measures.

Upfront FDI filing analysis becomes crucial – further Member State developments ahead

The FDI landscape in the EU has therefore been very dynamic in recent months and changes continue at pace. Many Member States have introduced mandatory filing requirements with standstill obligations until clearance is received.  Often these filing obligations are triggered at very low thresholds. These FDI filing requirements are so significant and varied that FDI has become a key issue to consider upfront in M&A transactions involving foreign investors – and at the same importance as the merger control filing analysis.. In addition to adopting new long-term measures in FDI screening, several Member States (such as France, Germany, Italy and Spain) adopted emergency measures related to COVID-19, and some of which have temporary application (until the end of the calendar year or for the duration of the pandemic).

Continue Reading New era of FDI in the European Union – EU FDI Regulation now in full force and effect

On 17 June 2020 the European Commission (“Commission”) published a White Paper on new enforcement powers regarding foreign subsidies. This initiative pursues two objectives, first it sets out a general policy approach for foreign subsidies, and second, it provides a number of proposals  to address a perceived regulatory gap. More specifically, the White Paper suggests

The FDI space in Europe remains dynamic. Less than five months from the entering into force of the EU FDI Regulation, and just two months since the European Commission asked the Member States to both strengthen and “vigorously” implement the tools available to them and, where appropriate, introduce new FDI screening mechanisms –on which

The German government has proposed a new draft bill reforming the current foreign direct investment (“FDI”) regime, which is likely to have a significant impact on all M&A transactions involving acquisitions of 10% or more of the voting rights in German companies active in “critical infrastructures” and “critical technologies” by any non-EU investors. Under the

We and the third parties that provide content, functionality, or business services on our website may use cookies to collect information about your browsing activities in order to provide you with more relevant content and promotional materials, on and off the website, and help us understand your interests and improve the website. Privacy Policy

AcceptReject