Implementation Study on Cross-Border Mergers released
The European Commission has just released an external study on the implementation of the Cross-Border Mergers Directive (CBMD) in the EU and EEA Member States. While the study claims that the CBM Directive is a success overall, nevertheless further policy actions are needed. With regard to employee participation, the study identifies a number of problems and outlines some options to deal with these.
The CBMD, which was passed in 2005, was intended to create a clear legal framework for mergers between limited liability companies based in different EU and EEA member states, and to thereby encourage cross-border company activity. A key issue in the long history of this directive was the question of what provisions should be made for worker involvement in the merged company. Trade unions were concerned that the CBMD might be used as a tool to avoid worker participation, since the company law of the country in which the newly merged company registered would apply. The CBMD draws on the “before and after” principle in the SE legislation, but in a number of ways the provisions for worker involvement are weaker than in the SE Directive.
The implementation study, which is required by the CBMD, was done by the law firm Bech-Bruun and the international consultancy Lexidale. The study argues that the CBMD has been successful in introducing a “new age” of activity in cross-border mergers. The CBMD and its implementation in national law, however, suffers from a number of gaps, inconsistencies and other problems, and the study outlines various options for dealing with these. With regard to worker participation, the study notes a strong divergence in opinions. On the one hand, trade unions argue for a strengthening of “stakeholder protection”, which at a minimum would strengthen worker involvement provisions, at least to the level of the SE directive. On the other hand, another group of participants in the study emphasized (similar to the SE situation) the complexity and cost of the negotiation procedure, and demand a “high mobility” option which would restrict worker involvement rights. Without elaborating, the study mentions a “middle way” in which only worker involvement provisions brought up by stakeholders would be involved in negotiations.
The study can be downloaded here.