EU industry ministers voted Thurs-day in favor of harmonizing rules on corporate takeovers, in a fresh slap for the European Commis-sion, which had wanted more investor-friendly provisions.
The vote was the second time this week that the commission, the EU executive body, has seen its proposals rejected by EU ministers -- after finance ministers suspended disciplinary measures against France and Germany for breaching budget rules.
In the industry ministers' vote, 14 of the bloc's 15 member states voted in favor of a compromise proposed by the EU's Italian presidency which waters down commission proposals aimed at protecting shareholders' rights.
EU Competition Commissioner Frits Bolkestein "noted" the vote, but he underlined the commission's disagreement with the compromise, which he said diluted key elements of his proposals, originally made in October 2000.
The EU has been working on a takeover law for 14 years. A previous proposal by Brussels was rejected by the European Parliament in 2001 under pressure from EU heavyweight Germany. German members of the parliament had been instrumental in the rejection of the vote, saying the proposal would make car giant Volkswagen vulnerable to a hostile takeover.
The latest version proposed by the commission last month last year, which appeared to draw its inspiration from the US, sought to boost shareholder power in the matter of takeovers.
When he launched the initiative, Bolkestein described it as a key element in the drive to make the EU the most competitive economy in the world by 2010, a central aim agreed at an EU summit in Lisbon three years ago.
The commission proposals would have aligned Europe more closely with US corporate practices that enshrine the rights of minority shareholders rather than company bosses. Smaller stakeholders have long complained that their interests get squeezed out by company boards in Europe, many of which are family-controlled and on cosy terms with rival firms.
But the text agreed by ministers Thursday made compliance with crucial clauses optional, including one which prevents boards of directors of firms from taking key decisions on hostile takeover bids without shareholders' backing.
Another clause from which companies will be able to opt out would lift restrictions on voting rights during a hostile takeoever.
For the new law to be definitively adopted it still has to be agreed by a plenary session of the EU assembly scheduled for mid-December.
Adoption even on a first reading was possible, several sources said.