On 28 April 2020, the German government published a ministerial draft for an amendment of the Foreign Trade and Payments Ordinance (“Draft Ordinance”). The amendment supplements the existing Foreign Direct Investment (“FDI”) regime in order to tighten it with respect to acquisitions of critical companies in the healthcare sector by purchasers from third countries. The Draft Ordinance comes shortly after the German government proposed a new draft bill on 31 March 2020 reforming the current Foreign Trade Act (the “Draft Bill”). For more information on the Draft Bill please see our previous blogpost.

Peter Altmaier, the German minister for economic affairs stated that the competent authorities must learn about such critical acquisitions in the healthcare sector early enough to be able to examine them and that the new rules are intended to allow the authorities to prevent a flowing abroad of “medical know-how and production capacity, which are essential for the health care of the population”.

The Draft Ordinance is a direct reaction to the current Covid-19 crisis and will come into force ahead of other, broader amendments to the Foreign Trade and Payments Ordinance that were previously planned in connection with the Draft Bill.  These broader amendments to the Foreign Trade and Payments Ordinance can still be expected later this year.

Draft Ordinance Expands the List of Sectors Requiring Mandatory Filing

Under the current FDI regime, the German authorities can investigate acquisitions in any industry sector where an acquisition by a foreign investor poses a threat to public order or security. However, mandatory filing of transactions is only necessary for certain key listed sectors.

The new Draft Ordinance extends the list of those sectors that require a mandatory filing. It further lowers the acquisition threshold from 25% to 10% for transactions within those sectors.

The new sectors include the development, manufacture or distribution of:

  • services necessary to ensure the functioning of the German public safety digital radio network;
  • personal protective equipment (or “PPE”), and including the materials and components required to manufacture PPE – inter alia protective masks (e.g. FFP2 and FFP3 masks), protective gloves or protective suits which ensure the protection of the health and safety of users;
  • pharmaceuticals that are essential to guarantee the provision of health care of the population, and including the active ingredients for such pharmaceuticals;
  • medical devices intended for the diagnosis, prevention, monitoring, prediction, prognosis, treatment or alleviation of life-threatening and highly contagious infectious diseases – inter alia surgical masks and respirators; and
  • in vitro diagnostic medical devices used to provide information on physiological or pathological processes or conditions or to establish or monitor therapeutic measures in relation to life-threatening and highly contagious infectious diseases – inter alia diagnostic tests for the detection of an infectious agent.

Additional Clarifications

The Draft Ordinance further clarifies some existing FDI rules, including the following:

  • Regarding the application of FDI screening to asset deals, the Draft Ordinance clarifies that FDI screening also applies to asset deals, in particular, where the acquisition includes (i) separable business units or (ii) essential business resources, which are required to maintain the operation of the undertaking or a separable part of it.
  • In examining whether an acquisition by a foreign investor poses a threat to public order or security, the Draft Ordinance introduces a new provision (similar to Article 4(2) EU FDI Screening Regulation), allowing the German regulator to take into account the specific characteristics of the investor. This may include, for instance, whether the foreign investor is directly or indirectly controlled by the government, including state bodies or armed forces, of a third country.

No Expiry Date

Even though the draft ordinance arose in the light of the COVID-19 crisis, it will not have an expiry date. As the Draft Ordinance explicitly states, the new rules also address future crisis situations and aim to maintain the functioning of the public health care sector within Germany at all times.


The Draft Ordinance introduces new sector categories for which an FDI filing will be mandatory. It should be noted that the Draft Bill amending the Foreign Trade Act proposes to introduce a gun-jumping provision, i.e. a prohibition on implementing transactions prior to receiving a clearance decision, applicable to all transactions for which a filing is required. This gun-jumping provision will also apply to the above-mentioned new categories covered by the Draft Ordinance. As a consequence, acquisitions in the categories listed above will fall under the scope of the gun-jumping prohibition and under the new rules of the Draft Bill, a breach may ultimately result in criminal sanctions.

With the introduction of these new emergency measures, the German government joins a number of other EU countries reacting to concerns relating to takeovers by foreign investors of “critical” companies. While Italy and Spain have adopted emergency matters for a broad range of industry sectors, the German proposal has a clear focus on the health care sector and reserves additional FDI rules covering other sectors for the already expected forthcoming revision of the Foreign Trade and Payments Ordinance.