On 25 April 2024 the Dutch District Court of Rotterdam gave its first (publicly available) ruling regarding the Investments, Mergers and Acquisitions (Security Screening) Act (the Dutch “FDI Act”) and ruled that the Minister of Economic Affairs and Climate (“Minister”), the competent authority, may not require a notification without first establishing the existence of a notifiable acquisition activity.

Facts of the case

The Minister had ordered the company involved (“Applicant”) to submit a notification for a past (alleged) transaction that took place around 2 April 2021. The Applicant refused and contested the decision of the Minister.

The Applicant specialises in micro-optical products such as lenses, lasers, optical coatings and chip-based optical systems. The Minister assumed from public sources that the Applicant engaged in an acquisition activity and concluded – on the basis of the available information – that the acquisition activity was covered by the FDI Act. The Minister ordered the Applicant to submit a notification pursuant to Article 58(1) and 11 of the FDI Act. However, the Applicant did not agree that the acquisition activity is covered by the FDI Act and asked the Court to give its ruling as to whether this order is legitimate.

Ruling by the Court

The legal question in this case (as it concerns an interim relief procedure) is whether the Minister is evidently not competent to order a notification and that, for that reason alone, notifying is too burdensome for the Applicant. 

The Court considers that the Minister must first (properly) investigate whether the transaction is covered by the FDI Act before ordering a notification by the parties concerned. The notification phase cannot be used to determine whether a notification is required. If the transaction was not clear for the Minister, it should have issued a request for information.

The Court furthermore assessed the information submitted by the Applicant to investigate whether there is a competence of the Minister in this case. The Court rules that it is sufficiently clear that the transaction did not lead to a change of control and thus is not an acquisition activity within the meaning of the FDI Act.

Take-aways and practical implications

The Minister (who passed its competence in relation to the FDI Act over to the Investment Screening Bureau (“BTI”)) cannot pressure companies into notifying a past transaction for which it wants to determine whether there actually is a duty to notify. Companies do have the obligation to provide information to BTI on the transaction if so requested. This should allow BTI to establish whether the past transaction is notifiable.

However, the competence of the Minister to order companies to notify past transactions (so between 8 September 2020 and 1 June 2023) has ended. Article 58(1) prescribes that the Minister must give such an order within eight months after the entering into force of the FDI Act (which was on 1 June 2023). The useful take-aways of this ruling for future notifications are thus limited, but it shows that companies must remain critical of the competence of regulatory authorities, especially when such competences are rather new. The ruling also confirms that there must be an acquisition or change of control within the meaning of the FDI Act for a transaction to be covered by it and that the Minister should first use other means, such as requests for information instead of immediately imposing an obligation to notify.

As decisions of the Minister/BTI are not published, the application of the FDI Act remains a bit of a black box. It is a welcome development that this ruling was made publicly available.

If you need more information or further guidance in this area, please contact Janneke Kohlen and Tialda Beetstra.

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