The European Commission is to scrutinise a new French decree that protects certain industries from foreign takeover.
It warned it could "react" if the provisions were found to violate European Union law. A spokeswoman for the Brussels executive said the decree had not been given the go-ahead in spite of extensive consultations between the two sides in recent months.
The decree, which came into effect on December 31st, will give the French government the right to veto or impose conditions on foreign takeovers of domestic companies operating in as many as 11 sensitive industries.
It puts heavier conditions on bidders from outside the European Union.
The decree could also give France a weapon in its fight against the outsourcing of jobs. It allows the government to stop foreign owners of French registered companies transferring production abroad, if they are in any of the protected sectors.
The amendment appears to have its roots in the controversial takeover of Péchiney, the French industrial flagship, by Alcan of Canada. In spite of pledges to maintain French jobs and production, Péchiney's workforce has been scaled back significantly since the takeover in 2003.
This has increased French fears of foreign takeovers, which culminated in last year's public outcry over a rumoured approach for Danone, the yoghurt group, from PepsiCo of the US.
Yesterday the Commission said it would now study the decree.
"We have to examine (it) to see exactly what sectors are protected and how far it goes," a spokeswoman said. Brussels can to challenge member states in court if their national legislation violates European law.
