• SWI GVT Federal Council set parameters for monitoring investments in Switzerland.
• Aimed to implement motion 18.3021 Rieder Protecting Swiss economy by controlling investments; the project will probably be put for consultation at end of March 2022.
• The Federal Council has so far spoken against the introduction of investment control.
• It considered the cost-benefit ratio unfavorable and the existing regulations sufficient.

Overview

• Federal Council has set the benchmarks for the oversight of foreign investments.
• The policy of openness in terms of foreign investment is crucial for Switzerland as a business location and, therefore, for the prosperity of the population.
• It provides Swiss companies with sufficient inflow of capital and knowledge, thus contributing not only to added value but also to maintenance and creation of jobs.
• As explained in the report Cross-border investments and investment controls of Feb. 13, 2019, following up on postulates 18.3376 Bischof and 18.3233 Stöckli.
• Federal Council opines investment control unfavorable, regulations in force sufficient.
• For these reasons, the Federal Council will ensure implementation of investment controls preserves Switzerland openness to foreign investors, attractiveness for them.
• Investments control must be compatible with commitments to international law.

Possible Threats

• The purpose of investment control is to avoid possible threats to public order or security due to the takeover of a native company by foreign investors.
• It will also have to prevent major distortions of competition in the event of the acquisition of a native company by foreign state investors or close to a state.
• The following dangers threats should in particular be taken into account: failure of a business providing an essential service that cannot be replaced at short notice.
• The critical dependence of the Swiss army on suppliers of essential weapons.
• Critical dependence of state services on providers of key security-related IT systems.
• The critical dependence of international space infrastructures in which Switzerland is a stakeholder on suppliers of essential components.
• Access by malicious actor to a large amount of particularly sensitive personal data.
• Major distortions of competition in takeover of company by foreign state investors.
• As the main threats are expected to come from investors close to a state.

State Secretariat for Economic Affairs (SECO) Review

• Review should be carried out in two stages; the first, which will be short, involves examining need for thorough authorization procedure.
• If no reason to fear acquisition will endanger public order or security or lead to major distortions of competition, acquisition may continue without authorization procedure.
• SECO will be responsible for implementing investment control, ensuring coordination.
• If, during in-depth authorization procedure, there is disagreement between the offices concerned/unanimity re acquisition should not be authorized Federal Council to decide.
• Bill should also include provision allowing cooperation and reciprocal exemptions from investment controls with other states; investments control to be regulated by new law.