A hard pill to swallow

It was expected and planned and now it has been passed. French companies now have legislative backing for the use of poison pill defence to deter a potential hostile takeover bid from a foreign company.

"France's national assembly has approved a law allowing companies to use "poison pill" defences against takeover bids. The move triggered charges of protectionism, but lawyers said it left French companies more vulnerable than similar measures expected elsewhere in Europe.

The law, to be approved by the Senate next week, reflects rising alarm among political and business leaders about the risk of foreign raids. These sharpened after rumours of a bid for the French food group Danone last year, and grew with Mittal Steel's bid for Luxembourg-based Arcelor."

The use of poison pills is not new but the recent flurry about the defensive business strategy mirrors a protectionist discourse amongst European governments and if there is something we do not need in Europe it is protectionism.