EU Takeover Regulation: Some ‘Hot’ Research Topics

Since the adoption of the Takeover Directive 2004/25/EC (TOD) in April 2004 and its subsequent implementation by the Member States, two decades have passed. The declared Leitmotif was the achievement of a level playing field in the European Union by means of a minimum harmonisation of the regulatory regimes on cross-border takeover bids (Art. 3.2 TOD) in order to ensure the efficient functioning of the internal market for corporate control (Art. 26 TFEU). The TOD has generated countless and insightful scholarly contributions since its enactment. Still, not all issues are fully settled.

In my recent paper, I identify two ‘hot’ research topics by following a functional and comparative bottom-up approach. The first concerns the debate on public versus private enforcement of minority shareholders’ rights; the second, the relationship between collusive (mandatory) takeover bids and the highest-price-paid rule. Both topics have been addressed in the previous literature, but the missing piece is the failure to properly consider the takeover law in action. Only the latter provides access to the nuances of practical application of a legal regime.

What has emerged from the analysis is a significant lack of homogeneity at the national level, as  shown by both the issue of bidders’ liability for damages in case of breach of the statutory duty to make a full takeover bid (with Italy and Germany, as emblematic benchmark cases, at the antipodes) and the issue of how to interpret the concept of collusion (with Italy being an outlier in the comparative landscape). More precisely, with regard to the former, Italian case law, as a result of the judgments made in the Fondiaria-SAI ‘saga,’ grants a private right of action to minority shareholders in the event of a breach of the mandatory bid rule. On the contrary, the German takeover regulation, as stated in the BKN leading case and subsequently refined in the Postbank and Celesio rulings, denies an individual private right of action and limits the target shareholders’ claims to the right to get adequate consideration for the shares tendered in an offer actually made. Similarly, with reference to the latter issue, the Italian enforcement experience, shaped by two very prominent takeover cases (Camfin and Ansaldo), embraces a narrow notion of collusion (ie. requiring the subjective intention to circumvent the highest-price-paid rule). Other European policymakers (Austria, Germany, France, Spain) opt instead for a broad interpretation of the notion of collusion, thus considering sufficient for the purpose of an upward price adjustment the objective suitability of the collusive behavior to alter the proper functioning of the highest-price-paid rule by means of parallel transactions.

From a policy perspective, when looking at the remedies available to ensure a more uniform level playing field, which is ultimately the objective of the minimum harmonization directive on takeover bids, it seems coherent to avoid solutions that could lead to the opening of Pandora’s box. In fact, further harmonization efforts of the TOD, irrespective of their highly unlikely political feasibility, should in any case be carefully weighed on a case-by-case basis against the benchmark of efficient functioning of the internal market for corporate control. From this perspective, with specific reference to the first of the two issues examined, and following the examples offered by adjacent regulations (ie., the Prospectus Regulation (EU) No 2017/1129 and the Transparency Directive (EU) No 2004/109), I recommend the introduction of a rule recognizing a private right of action against the bidder for failure to launch a mandatory bid. With reference to the second issue, no specific regulatory intervention is deemed necessary, except eventually for the introduction of a white list of non-collusive practices.

The author's article,  EU Takeover Regulation: Some ‘Hot’ Research Topics,’ forthcoming in P. Giudici / J.A. McCahery, Research Handbook on European Securities Regulation, Edward Elgar, 2024, can be found here.

Peter Agstner is an Assistant Professor at the Free University of Bozen-Bolzano (Faculty of Economics and Management).