Case | HBS Case Collection | October 2001 (Revised December 2001)

EU Takeover Directive

by Guhan Subramanian and Michelle Kalka

Abstract

The draft 13th Company Law Directive, originally written in the 1980s and first formally proposed in 1990, was intended to harmonize the takeover laws of the member states of the European Union (EU). From its inception, though, this bill was controversial. Nations without a history of corporate takeovers, such as Germany, feared that the legislation would disrupt the social contract between labor and management. Nations more familiar with takeovers, such as the United Kingdom, worried that the directive would upset their established system of regulation. EU officials, therefore, had to craft a delicate balance between these competing interests to achieve an EU-wide takeover policy. This challenge has proven extremely difficult--so difficult, in fact, that nearly two decades after first being proposed, the EU Takeover Directive still has not been enacted into law. This case follows the attempts to get the law passed, from its approval by the EU ministers in June 1999 to its ultimate failure, largely at the hands of Germany, in July 2001. A copy of the directive is also included.

Keywords: Conflict of Interests; Mergers and Acquisitions; Laws and Statutes; Policy; Problems and Challenges; Cross-Cultural and Cross-Border Issues; Germany; United Kingdom; European Union;

Citation:

Subramanian, Guhan, and Michelle Kalka. "EU Takeover Directive." Harvard Business School Case 902-066, October 2001. (Revised December 2001.)