Pressure mounts on takeover directive

On Monday MEPs voted in favour of a compromise text on the beleaguered takeover directive, putting pressure on the Commission to accept a watered down proposal.

The new text will allow member states to opt for Brussels rules on takeovers or keep their national law.

On Monday MEPs voted in favour of the proposal in a report drafted by UK Liberal Chris Huhne, who later described it as the "only compromise likely in this parliament".

The original commission proposal aimed to ban companies from taking certain defensive measures against potential bidders without consulting shareholders.

The commission is staunchly opposed to any option system and was set to demand unanimity when competition ministers vote on the text on Thursday, knowing this would be unlikely.

But Monday's vote in the parliament's economic committee will add to the pressure on the commission to accept the compromise, especially if it wants to push the directive through before parliamentary elections in 2004.

Before the vote, one MEP asked Internal Market Commissioner Frits Bolkestein whether he would maintain his obstinate stance against the text in the case of a positive outcome.

"I'm hesitant", Bolkestein replied. "This proposal harmonises nothing. The original aim of the commission was to create a level playing field. This is not the case here".

At the same time it has been reported that the US is putting pressure on Brussels to reject the option system, fearing it will make it harder for US companies to take over European firms.

But on Monday internal market spokesman Jonathan Todd played down these fears.

"For us this is a non-issue" he said.

"There is no risk of a massive takeover by US companies. This is being used as a pretext by some delegations to block the directive".

The takeover directive is one of lynchpins of the European Commission's Financial Services Action plan which aims to create a single European financial market by 2005.

It has been 15 years in the making, and a previous attempt to pass it as law was blocked by Germany in 2001.

Though he has previously said "no directive is better than a bad directive", Commissioner Bolkestein insisted on Monday that withdrawing the proposal was "not on the cards".

"Withdrawing a proposal is not something one does lightly", he said.

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