UPDATE: Economy and National Security Review Bill

On September 14, 2020, I informed you by means of a news item about, among other things, the Economy and National Security Review Bill, which was submitted for internet consultation shortly before, on September 8, 2020. In this news item, I will first summarize the purpose and the main features of the bill, after which I will provide an update on the current status.

Main features of the bill
The purpose of the bill is to ensure that the risks arising from acquisitions of and investments in (i) the vital infrastructure or (ii) companies that develop high-quality technology that affects national security can be assessed and mitigated as effectively as possible. In particular, this involves preventing the following risks:

  • impairment of continuity of service of vital services and processes or sensitive technology;
  • impairment of the integrity and exclusivity of knowledge and information connected with the above; and
  • the creation of strategic dependencies.

To achieve the above, the government has initiated legislation consisting of the following two main components:

  1. introducing new investment tests in conjunction with existing investment tests embedded in sectoral legislation, such as in the energy domain and in telecoms; and
  2. the introduction of a broad investment test that serves as a safety net for investments that cannot be properly covered by sector-specific legislation.

With this bill, the government is following up on the protection of national security and the ever-increasing importance of protecting companies operating in vital sectors from undesirable foreign influences.

Current status
The consultation period for the Economy and National Security Review bill ended on October 7, 2020. The various responses have been quite critical of the bill. These reactions have shown, among other things, that there is a lack of clarity about the scope and enforceability of the bill, and about the relationship between the broad investment test and the existing investment tests that are already embedded in sectoral legislation. It is not yet clear how the responses will be incorporated into the version of the bill that will be submitted to the Lower House of Parliament.

On 18 December 2020, the cabinet agreed to send the bill to the Council of State for advice. On 10 February 2021, the Council of State adopted its advice and sent it to the Ministry of Economic Affairs and Climate. Both the bill and the advice of the Council of State will become public when submitted to the Lower House. To date, this has not yet happened.

In view of the great importance of this bill, it is expected that it will enter into force by mid-2021. We will keep you informed of any developments.

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