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Mon, Sep 12, 2005 - Page 12 News List

Critics slam French plan to utilize veto power in takeovers


French plans to veto foreign takeovers in newly defined "strategic" sectors are coming under fire from critics -- including companies the government had vowed to protect.

A soon-to-be-published decree, touted by ministers after rumors of a PepsiCo Inc bid for French company Danone SA provoked a political outcry in July, would give the government a veto over takeovers in 10 industries sensitive to national security.

Sectors on the list, already confirmed by the finance ministry, include several over which most states retain tight control, such as arms manufacturing and encryption.

But the decree also covers companies with activities in biotechnology, data security, casinos and antidote production -- fueling concern that it could lead to a broader kind of protectionism.

French Prime Minister Dominique de Villepin, who vowed publicly to defend Danone from US-based PepsiCo in July, unveiled the new measures in a speech in which he also called for greater "economic patriotism."

EU Internal Market Commissioner Charlie McCreevy said he would "vigorously pursue" breaches of EU law during attempts to thwart foreign takeovers.

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