News Update Competition

On 18 July 2022 two draft orders in council (links to first order and second order) were published that complement the Dutch Investment Screening Bill (ISB). One of these is very important, as it adds new technologies to the scope of the ISB, notably semiconductor and quantum mechanics technologies. The order also creates a separate category of very sensitive technology, which are subject to a duty to notify already when an investor acquires 10% of the shares.

On 17 May 2022, the Dutch Senate passed the Investment Screening Bill (Wet Veiligheidstoets investeringen, fusies en overnames (Wet Vifo), "ISB"). The ISB introduces an ex-ante screening mechanism for investments in companies involved in vital processes or working with sensitive technologies in the Netherlands (see our previous updates of 20 April 2022 and 6 July 2021).

On 18 July 2022, the draft orders in council (Algemene Maatregelen van Bestuur) containing (i) rules on the scope of application of sensitive technologies (Besluit toepassingsbereik sensitieve technologie) and (ii) further technical rules (Besluit veiligheidstoets investeringen, fusies en overnames) were published for consultation. This News Update outlines the main elements of the draft orders.

The long-awaited first order (in Dutch) specifies the scope of the sensitive technologies category and the applicable filing thresholds. Some key takeaways are:

• The main types of sensitive technologies caught under the ISB are military technologies and dual-use items as defined in the recast EU Dual-Use Regulation (EU 2021/821) and the EU Military Goods List (2020/C 85/01).
• The order excludes from the scope of the ISB a small number of technologies that are included in the Dual-Use Regulation: certain graphite and ceramic materials, and certain composite structures and laminates, based on their abundant availability.
• Importantly for business, the order now also designates the following four technologies as sensitive:
  • Quantum technologies
  • Semiconductor technologies, including know-how regarding production, industrial production machines and design software
  • High Assurance identification technologies
  • Photonics
• Most sensitive technologies are only subject to a notification obligation when control is acquired ("decisive influence"). However, this order adds a category of "highly" sensitive technologies for which the lower threshold of "significant influence" applies as well.
  • Highly sensitive technologies include notably the four newly added areas of quantum technologies, semiconductor technologies, high assurance technologies and photonics, as well as a relatively limited list of technologies from the Dual-Use Regulation and the Military Goods List.
  • Significant influence is already present when 10% of the voting rights in a general meeting are obtained. Subsequently, successive notifications must be made when 20% and 25% of the voting rights or equivalent influence is obtained.
• There is no retroactive effect applicable to this order. Transactions closed in the field of the four new relevant technologies before the entry into force of the ISB and this order are unlikely to be called in retroactively, unless they already fell within the scope of the Dual-Use Regulation or the Military Goods List.

The second order (in Dutch) further elaborates on several technical aspects that are necessary to implement the ISB. The order includes:

• A specification of the information that must be included in the notification
• Detailed provisions regarding the forced divestment of a business by the government in the event that the acquirer does not cooperate with a divestment order of the Dutch Investment Assessment Agency (Bureau Toetsing en Investeringen, "BTI")
• Provisions regarding the sharing of information by the Netherlands Authority for Consumers and Markets (ACM) and the Ministry of Finance (tax authorities) to verify the veracity of a filing to the BTI
• Provisions safeguarding the compliance of the BTI with the General Data Protection Regulation (GDPR)

Input on the public consultation can be submitted until 22 August.