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Horst Henschen

Horst Henschen has been advising international companies on their significant strategic antitrust and competition matters for over 25 years. He acts for buyers, sellers, and financial investors in merger control proceedings including in Joint Venture scenarios and defending companies against unsolicited takeovers. Horst advises companies in significant (international) cartel investigations and on dominance issues.

In addition, Horst has advised numerous investors and target companies in international and German Foreign Direct Investment (“FDI”) proceedings helping in building up the firm’s ex-US FDI initiative.

Horst is a member of the firm’s global antitrust and competition team and heads the firm’s German competition practice. He is part of our cross-office FDI team that works in close cooperation with the firm’s CFIUS colleagues.

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In quick succession on 7 and 15 November 2023, the Administrative Court of Berlin (Verwaltungsgericht Berlin, the “VG Berlin”) has ruled on procedural matters in foreign direct investment review proceedings of the Federal Ministry for Economic Affairs and Climate Action (the “BMWK”) in two hearings. Because court rulings on these non-public administrative proceedings – which are non-public because they concern national security and public order – have been very rare to date, the court’s clarifications will contribute to legal certainty for companies involved in the proceedings and the BMWK.

Key takeaways

  • In its rulings, the VG Berlin overturned two BMWK decisions on purely formal grounds without having to deal with material law questions (such as the standards of assessment of the BMWK’s or individual case groups of sensitive activities).
  • In the future, the BMWK will need to adhere to the formalistic procedure to be able to effectively enforce its decisions in the event of security concerns regarding foreign investments.

From a practical perspective, it would be regrettable if the open, direct and easily accessible communication channels with the BMWK, which have been appreciated by all parties involved in the proceedings to date, would have to give way to a much more formalistic administrative practice. The BMWK’s open communication has significantly reduced the average duration of investment review procedures and made it easier for companies and legal practitioners to work with the (still developing) German investment review regime.…

Continue Reading Berlin court clarifies significant German FDI issues

Das Verwaltungsgericht Berlin (VG Berlin) hat in zwei kurz aufeinanderfolgenden Verhandlungen vom 7. und 15. November 2023 zu Verfahrensfragen bei Investitionsprüfverfahren des Bundesministeriums für Wirtschaft und Klimaschutz (BMWK) geurteilt. Da Gerichtsentscheidungen zu diesen nichtöffentlichen Verwaltungsverfahren – es geht um die nationale Sicherheit und öffentliche Ordnung – bisher sehr rar sind, werden die gerichtlichen Klarstellungen zur Rechtssicherheit für verfahrensbeteiligte Unternehmen sowie das BMWK beitragen.

Wesentliche Punkte

  • In seinen Urteilen hat das VG Berlin zwei Entscheidungen des BMWK aus rein formellen Gründen gekippt, ohne dass es sich mit materiell-rechtlichen Fragen befassen musste (etwa zum Beurteilungsmaßstab des BMWK oder einzelnen Fallgruppen sicherheitsrelevanter Aktivitäten).
  • Das BMWK wird künftig wahrscheinlich stärker auf eine formal-korrekte Verfahrensführung achten, um seine Entscheidungen bei Sicherheitsbedenken gegenüber Auslandsinvestitionen wirksam durchsetzen zu können.

Aus Praxissicht wäre es bedauerlich, wenn dadurch die – von allen Verfahrensbeteiligten bislang geschätzte – offene Kommunikation mit dem BMWK mitsamt kurzer Dienstwege und guter Erreichbarkeit einer deutlich formalistischeren Verwaltungspraxis weichen müsste. Denn durch die offene Kommunikation hat das BMWK die durchschnittliche Verfahrensdauer von Investitionsprüfungen deutlich reduziert und Unternehmen sowie Rechtsanwendern die Arbeit mit dem (noch jungen) deutschen Investitionsprüfungsregime erleichtert.…

Continue Reading VG Berlin zu Verfahrensfragen bei der Investitionsprüfung

Based on the 11th Amendment to the German Competition Act (Gesetz gegen Wettbewerbsbeschränkungen, “GWB”) that was passed by the German parliament (Bundestag) on 6 July 2023, the GWB will undergo significant reform (the “Reform”). Among other Reform amendments, attention has focused on the Federal Cartel Office’s (Bundeskartellamt, “FCO”) new powers in the context of sector inquiries (Sektoruntersuchungen). According to the Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz, “BMWK”), the amendments intend to strengthen business opportunities for competitors, start-ups and small / medium sized entities.

For the first time under German competition law, the FCO will obtain powers to take remedial measures following sector inquiries, even where the addressee has not been found to have engaged in anti-competitive conduct. Under the Reform, the FCO will be able to take measures where it identifies a significant and continuing ‘disruption of competition’ (Störung des Wettbewerbs) in the relevant market. Such measures will include – as ultima ratio – divestment orders (new Section 32f of the GWB).

In this blog-post we: explain the concept of sector inquiries under the GWB in general; and analyse the key amendments to the FCO’s sector inquiry powers, the most significant changes under the Reform.…

Continue Reading Sector Inquiries and the German new (and complicated) Competition Toolbox

On the heels of Russia’s invasion of Ukraine, pandemic-induced supply chain disruptions, and U.S.-China tensions over Taiwan, 2022 accelerated a sweeping effort within the U.S. government to make national security considerations—especially with respect to China—a key feature of new and existing regulatory processes. This trend toward broader national security regulation, designed to help maintain U.S. strategic advantage, has support from both Republicans and Democrats, including from the Biden Administration. National Security Advisor Jake Sullivan’s remarks in September 2022 capture the tone shift in Washington: “…[W]e have to revisit the longstanding premise of maintaining ‘relative’ advantages over competitors in certain key technologies…That is not the strategic environment we are in today…[w]e must maintain as large of a lead as possible.”

This environment produced important legislative and regulatory developments in 2022, including the CHIPS and Science Act (Covington alert), first-ever Enforcement and Penalty Guidelines promulgated by the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) (Covington alert), President Biden’s Executive Order on CFIUS (Covington alert), new restrictions under U.S. export control authorities targeting China (Covington alert), and proposals for a new regime to review outbound investments by U.S. businesses (Covington alert). The common thread among these developments is the U.S. government’s continuing appetite to use both existing and new regulatory authorities to address identified national security risks, especially where perceived risks relate to China.

With a Republican majority in the U.S. House of Representatives riding the tailwinds of this bipartisan consensus, 2023 is looking like a pivotal moment for national security regulation—expanding beyond the use of traditional authorities such as trade controls and CFIUS, into additional regulatory domains touching upon data, communications, antitrust, and possibly more. In parallel, the U.S. focus on national security continues to gain purchase abroad, with foreign direct investment (“FDI”) regimes maturing in tandem with CFIUS, and outbound investment screening gaining traction, for example, in the European Union (“EU”). It is crucial for businesses to be aware of these developments and to approach U.S. regulatory processes with a sensitivity towards the shifting national security undercurrents described in greater detail below.…

Continue Reading Will 2023 Be an Inflection Point in National Security Regulation?

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.…

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

The European Commission (“Commission”) has repeatedly urged EU Member States to set up foreign direct investment (“FDI”) screening mechanisms. To date, 18 out of 27 Member States have adopted FDI screening powers, providing for the review of M&A transactions and other investments on national security and public policy grounds. Recently, Belgium and Ireland have each announced draft proposals which, once implemented, will enlarge the group of Member States reviewing transactions on FDI grounds.

Against this background of increasing FDI screening for local and global M&A transactions, some voices call for broader reforms. The European Parliament has launched an initiative aimed to address a future EU international investment policy and recently adopted a resolution with far-reaching proposals for FDI screening in Europe.

We provide an update on these developments in this blog post and consider the current outlook for FDI screening.…

Continue Reading Belgium and Ireland to introduce new FDI screening powers – European Parliament calls for broader reforms

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.…

Continue Reading FDI regulators show their teeth – Close scrutiny and firm intervention in response to Russia’s war against Ukraine

In M&A and other transactions, conditions associated with foreign direct investment (“FDI”) filings are becoming more common place, and investors are adjusting to the diligence, disclosure and time associated with obtaining FDI clearances. In the EU, the introduction of wider-ranging FDI laws has been rapid, and freshly empowered national regulators in the Member States are already demonstrating their willingness to use the tools at their disposal where they believe that is necessary. For investors, the deal execution risks are sobering in circumstances where a failure to obtain mandatory clearance may  render a transaction void (in addition to other possible sanctions). Transaction costs are also rising as longstop dates lengthen to accommodate sometimes unpredictable FDI review periods, especially for deals in the most sensitive sectors.

Marking one year since the full implementation of the EU FDI screening regulation (the “EU FDI Regulation” or the “Regulation”), this blogpost considers the first annual report on FDI (the “Report”) published by the European Commission on 23 November 2021 and reflects on M&A in the current EU FDI landscape.…

Continue Reading Foreign Direct Investment Regulation: EU M&A after one year of the FDI Regulation

On 27 April 2021 the German government adopted the 17th amendment (“Amendment”) to the Foreign Trade and Payments Ordinance (“AWV”) aligning the German Foreign Direct Investments (“FDI”) regime with the EU Screening Regulation. The Amendment significantly extends the number of sectors and target activities that require mandatory notification in Germany and brings significant procedural changes and clarifications. The revised Ordinance entered into force on 1 May 2021 and will apply to all transactions signed thereafter.

The Amendment follows a series of prior legislative changes. In light of the COVID-19 pandemic, the German government previously adopted the 15th AWV-Amendment in June 2020, which introduced far reaching filing obligations in the healthcare sector. Subsequently, the first amendment of the Foreign Trade and Payments Act introduced standstill obligations backed by fines and criminal charges in July 2020. Together with the 16th AWV-Amendment in October 2020 the German FDI regime was also aligned with the requirements of the EU Screening Regulation.

Our blog provides an overview of the German FDI regime and highlights the key changes introduced by the Amendment.
Continue Reading Technology Sector under Closer Scrutiny – German Government Significantly Extends the Scope of Foreign Direct Investment Review in Germany

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.
Continue Reading Significant Revamp of German FDI Regime – German Government Presents New Rules on FDI Screening