Cherry picking

Think Chanel, not Carrefour; the Waldorf, not WalMart. Chinese investors are increasingly fussy, plucking only the juiciest fruit in Western Europe, writes Paul Campbell

With China’s economy slowing and many assets in Europe remaining relatively cheap even as the region is starting to see the early glimmers of recovery, it’s an opportune time for Chinese buyers to be investing.

Especially since streamlined approval processes and liberal investment laws at the supranational level often combine with country-sized welcome mats laid out by national leaders such as UK Prime Minister David Cameron or Switzerland’s President Ueli Maurer.

The European Commission (EC) in December announced further streamlining of the merger approval process, raising the market concentration thresholds that initiate antitrust reviews, for example, and cutting out paperwork for takeovers and joint ventures that don’t affect European consumers. Since most Chinese buyers are relative newcomers to developed markets, their acquisitions are unlikely to lead to competition issues in the EU.

However, Chinese buyers need to be wary of assuming they don’t now need to get EC approval. The General Court on 12 December 2012 upheld a US$20 million commission fine against Electrabel, a GDF Suez unit, for failing to seek a review of its purchase of Compagnie Nationale de Rhône, even though the takeover was approved because no antitrust issues were raised, Herbert Smith Freehills lawyers Kyriakos Fountoukakos, Craig Pouncey and Julia Tew wrote in Global Competition Review 2014.