Nowadays, more and more companies operating on a free market are getting na- tionalised by governments or acquired by state owned or state-controlled companies – within states or crossing the boarders. States are constantly increasing their power as a result. To limit a state’s power is a liberal’s highest interest, though.
On the one hand we see active governments investing directly in free market sectors. This push can have geostrategic reasons (e.g., protecting an industry important for security reasons). Other governments are feeling pressure from international actors and are trying to protect local jobs. Governments are also directly pushing to influence economies (discussed with investments in Africa from China and other actors).
We also see state owned / controlled companies actively pursuing acquisitions. Those companies have a different understanding of economies and also answer to govern- ments (e.g., acquisitions from Chinese state-controlled companies in Europe) some companies are also leaving their original spaces (e.g., train companies acquiring real estate, post services acquiring health care companies). This is a push to compete against privately owned companies and can also have a controlling influence on the legislation or the legal and economic situation in that state in general.
As our world is becoming even more complex, it also gets more difficult to determine the ultimate beneficial owner of a company. This is most prone in authoritarian coun- tries, where a businessman may be controlled or influenced heavily by governments.
As just illustrated, corporate takeovers have a significant impact on the free market if the buying company is legally/economically or actually controlled by a state. This push of government actors to acquire private companies undermines the free market. Ultimately, this leads to the fact that privately organized companies cannot assume a competitive market position and state economies can drive other national economies into complete dependency. This results in a non-liberal market dismantling as well as an imperialism-like behaviour of states.
Legal/economic control can be assumed if the state or a unit of the community holds over 50% of the shares/voting rights in the company in question. Actual control, on the other hand, is to be assumed if state functionaries can exercise a majority influence on the corporate strategy, including any corporate takeovers (e.g., party functionar- ies as members of a one-party autocracy).
In the case of corporate takeovers by a company that is directly or indirectly con- trolled by the state, as described above, a market restriction with effects like antitrust law arises. Establishing measures against certain market players or states would be random and as such, not a liberal measure. A liberal solution to maintain the free mar- ket is thus the following: Today, antitrust authorities regularly examine corporate take- overs only reactively. In the case of takeovers by companies directly or indirectly con- trolled by any state, the competition authorities should have to be asked in advance whether a takeover by a company in which the state directly or indirectly holds a majority stake can be approved or not. In other words, it should be up to the national authorities to determine whether a takeover would restrict the free market. In the first case, the competition authority would have the right to prevent such a takeover.
Thus, a takeover would be contrary to the principles of the free market and a liberal economic order if it primarily or exclusively serves power-political interests; is aimed at significantly reducing or eliminating market competition; or is intended to strengthen the market position of the state’s own economy in technological and scientific terms to the detriment by the target company’s the country of origin. The procedure as shown can re-establish the principles of a free market and it is totally in accordance with liberal values: The state’s first duty is to guarantee freedoms and protect free mar- kets from players or actions which undermine those principles – such as governments themselves.