On 22 January 2021 the German Ministry for Economic Affairs and Energy (“BMWi”) published a draft for the 17th amendment (“Draft Amendment”) of the Foreign Trade and Payments Ordinance (“AWV”). While the Draft Amendment remains subject to comments and further consultation, it already provides early guidance on sectors that may come under close Foreign Direct Investments (“FDI”) scrutiny in future. Among other changes, the Draft Amendment defines a number of additional sensitive activities triggering mandatory and suspensive filing requirements.

The new rules can be expected to have significant impact on transactions in particular in the technology sector and will lead to a significant increase in mandatory FDI filings in Germany.

Background of the Draft Amendment

The screening of FDI into Germany on grounds of public order or security is governed by the Foreign Trade and Payments Act (“AWG”) and the AWV. Both pieces of legislation have been subject to recent amendments in order to, among other purposes, comply with Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union (“EU Screening Regulation”).

On 11 October 2020, the EU Screening Regulation entered into full effect, and the German legislator had already adapted the German FDI law to some of the requirements of the EU Screening Regulation through two recent initiatives. The First AWG Amendment introduced statutory provisions required for the adaption of the German FDI law to the EU Screening Regulation, and the 16th AWV Amendment implemented the EU-wide cooperation mechanism between the European Commission (“Commission”) and the EU Member States.

The Draft Amendment is now the third step to align German FDI law with the EU rules. In particular, it defines how the broad terms of critical technologies contained in Article 4(1)(b) Regulation 2019/452 will be interpreted in Germany. Moreover, the Draft Amendment addresses some couple of procedural aspects and translates the BMWi’s decisional practice from previous years into written law.

Additional Sectors Will be Subject to Mandatory Filing Obligations

A transaction requires mandatory FDI notification in Germany if it amounts to a relevant acquisition of a domestic undertaking active in one of the key listed sectors. German FDI law thereby distinguishes between two forms of FDI screening:

  • First, transactions relating to the defence sector require mandatory filing under the provisions of the so-called sector-specific examination (current Sections 60-62 AWV).
  • Second, transactions concerning a target company active in one of the key listed sectors subject to the cross-sectoral examination, such as operators of critical infrastructure, also fall under a mandatory filing requirement (current Sections 55-59 AWV).

The envisaged Draft Amendment seeks to extend the list of activities for both types of screening. As regards defence related activities under the sector-specific examination, mandatory filing requirements will be extended to cover all companies that develop, manufacture, or are in possession of goods that are contained in the Export List or fall into the scope of classified IP rights.

For the cross-sectoral examination, the Draft Amendment introduces 16 new categories of sensitive activities. These new categories particularly seek to define the rather broad and vague terms contained in Article 4(1) of the EU Screening Regulation:

  • In regard to artificial intelligence (“AI”), robotics, semiconductors, cybersecurity, aerospace, quantum and nuclear technology, the Draft Amendment lists specific activities and goods falling into these categories. For instance, in regard to AI the Draft Amendment pertains (only) to goods that could be misused to automatically (i) conduct cyberattacks; (ii) imitate individuals for targeted disinformation; (iii) perform or evaluate voice communication or biometric remote identification of individuals for the purpose of surveillance or internal repression; or (iv) analyse movement, location, traffic or event data for the purpose of surveillance or internal repression.
  • The Draft Amendment adds further activities to the list of critical technologies and thereby goes beyond Article 4(1) of the EU Screening Regulation. In this regard, the Draft Amendment lists autonomous driving and flying, optoelectronics, and additive manufacturing (like 3D printing). The German legislator expressly affirms that these technologies are considered of fundamental importance for the future and resilience of the German (and EU-wide) economy, and that their role is expected to increase in future.

It is worth noting that the Draft Amendment does not transfer all sensitive activities listed in the EU Screening Regulation into national law. In regard to the access to, or control of “personal data”, the Draft Amendment concludes that since almost every company processes a substantial amount of personal data, the introduction of such a category could have led to an almost unlimited notification obligation. Nor does the Draft Amendment introduce separate categories for biotechnology, nanotechnology, energy storage, or defence, but finds that those technologies are sufficiently addressed within other categories.

Clarifications for the assessment of the investment thresholds

The Draft Amendment clarifies that in line with the decisional practice of the BMWi, as soon as an investor reaches the relevant investment thresholds (10% of the voting rights in a Target active in a sector requiring mandatory filing) any additional acquisition of voting rights is notifiable to the BMWi.

Moreover, the Draft Amendment sets out that there is no safe harbour for ex-officio investigations into acquisitions below the 10% investment threshold (or 25% respectively in a Target not active in a sector requiring mandatory filing) and that control rights outside of formal voting rights have to be included within the threshold assessment. This relates to investor or shareholder agreements that may allow the acquirer influence by means other than through the acquisition of voting rights. The Draft Amendment refers to the appointment of supervisory bodies or management as well as to veto rights in strategic business decisions or granting of information rights.


The Draft Amendment will result in a significantly increased number of cases for the BMWi. While the authority handled 106 cases in 2019, the number of cases increased to 159 in 2020, without including the cases that were transferred through the EU cooperation mechanism (which amounted to 47 already since 11 October 2020 until 6 January 2021). The BMWi believes a further significant increase will be caused by the introduction of the 16 new sensitive categories.

From an EU perspective it will be interesting to observe how the catalogue of sensitive activities as defined in the EU Screening Regulation will be interpreted by other Member States. The Draft Amendment provides a number of useful clarifications in that regard, but with direct effect to Germany only. As the interpretation of what constitutes a sensitive activity remains with the individual Member States, the EU-wide assessment whether a specific transaction falls within the scope of the various national FDI regimes, remains a challenge.

The BMWi has launched a consultation process on 22 January 2021 and is giving relevant stakeholders the opportunity to express their views in the following weeks. Based on that, an amendment of the current AWV should be expected to be adopted soon.

Photo of Peter Camesasca Peter Camesasca

Peter D. Camesasca is a partner in Covington’s Brussels and London offices, with 25 years of experience in all major aspects of EU competition law. Peter also co-chairs the firm’s Foreign Direct Investment Regulation initiative, and, has a particular focus on in-…

Peter D. Camesasca is a partner in Covington’s Brussels and London offices, with 25 years of experience in all major aspects of EU competition law. Peter also co-chairs the firm’s Foreign Direct Investment Regulation initiative, and, has a particular focus on in- and outbound aspects of the Asia/Europe interface.

Peter’s experience includes cases under Articles 101, 102 and 106 TFEU, national and multijurisdictional merger and joint venture notifications (including FDI assessments), investigations by multiple enforcement authorities and global antitrust litigation and monopolization issues (including IP cross-over issues). In addition, he advises and litigates on horizontal and vertical cooperation issues, prepares and executes various compliance and dawn raid programs and participates in the installation of in-house training programs, and heads a vibrant private enforcement practice.

Peter has acted before the European Commission, the European courts, the German Bundeskartellamt, the UK Office of Fair Trading and the Competition and Markets Authority, the Belgian Competition Council, and various national courts.