Development and Impact of the Mandatory Bid Rule in Europe

The European mandatory bid rule (‘MBR’) was a key factor in the controversy surrounding the legislative proceedings concerning the Takeover Directive (‘TOD’). The MBR has had an eventful history, characterised by political compromises, the active influencing of legislative procedures (regulatory capture) and ongoing controversies about the economic rationale of the MBR. This chapter traces the history of the MBR and its development. Additionally, it highlights the crucial issues that led to the enactment of the MBR and ultimately the adoption of the TOD. The core thesis is that the changing mood in the Member States was primarily responsible for the shift in opinion that created the potential for the introduction of the MBR at a European Union Level in the first place. However, the influence of the MBR on the capital markets of the Member States has been limited. The TOD has failed to achieve its regulatory objective at any rate. The assessment may only be different for smaller Member States without a long tradition of takeover law and/or strong capital markets. In these countries, for example Poland, the MBR might have had a greater influence.