Cabinet sends law against unwanted take-over of telecom sector

Apr

19

2018

to advisory body
State Secretary Mona Keijzer of Economic Affairs and Climate has sent the so-called Bill on Undesirable Telecommunications Control to the Council of State. With this law, the Cabinet wants to prevent unwanted acquisitions of Dutch telecom companies.

It is a legislative proposal that gives the cabinet the opportunity to reverse or ban acquisitions in the telecom sector if national security or public order could be jeopardized. In the latter case one has to consider the risk that the service will become unreliable or there is a risk that services will fall out. The State Secretary describes it as a duty to report , requiring a form of active approval for major acquisitions.

In an explanation, Keijzer says that ‘public life is disrupted when internet, data traffic and telephony do not work well’. “Consumers and entrepreneurs also suffer economic damage, the Netherlands benefits from an open economy, but the Cabinet wants to prevent unreliable, non-transparent or criminal companies from coming to our national security, which is why I protect this vital sector”, according to the State Secretary.

The bill , which will amend the Telecommunications Act, now lies with the Council of State, which has to write an opinion about it. These opinions are considered as weighty but are not binding on the government. The Cabinet expects that it will submit the law to the Lower House after the coming summer.

The internet consultation of the bill began in February 2017. The bill not only looks at providers of telephony and internet. It also concerns trust service providers and parties that are important for the technical functioning of the internet, such as data center providers, hosting services, certification services and internet exchanges.

Should the law come into force later this year or sometime in 2019, then the Cabinet is not entirely free to determine on its own initiative whether there is a threat to national security or public order. In making this assessment, the provisions of the EU Act of Operation are important.

If under the proposed law the Cabinet expresses a prohibition on an acquisition, the transfer of control via the shares is null and void. This is different for takeovers via the stock exchange because the annulment of a share transfer via the stock exchange can disrupt the functioning of the securities markets. The transfer of shares is then legally valid, but the acquiring party can not exercise the voting right.

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