Solvinity acquisition ban upheld by Rotterdam judge

A Rotterdam judge has upheld a government ban on the acquisition of Dutch IT company Solvinity by American company Kyndryl, meaning the acquisition cannot go ahead for now.

The American company announced its plans to acquire Solvinity last year, but junior minister for digital sovereignty Willemijn Aerdts blocked it in May, saying there’s a risk the US government could gain access to sensitive data via US legislation.

Under its Cloud Act, US authorities can force American-owned companies to hand over stored data, even if the servers are in Europe.

Solvinity provides IT services to the police and the justice ministry, among others. But its management of the infrastructure for the national DigiD login system is where the €100 million takeover faced the most criticism.

Ruling

Solvinity went to court seeking to overturn the ban, arguing that Aerdts doesn’t have the authority to block the takeover. But the judge ruled the Telecommunications Act does indeed provide a legal basis for the junior minister to act if she sees the acquisition as a threat to national security or public interest.

While the judge hasn’t ruled on the lawfulness of the ban, they did say the ministry must still investigate whether other, less far-reaching measures can be implemented to eliminate perceived security risks in lieu of a total ban.

Solvinity insists the acquisition poses no public risks.

Aerdts has promised to make a decision on Solvinity’s separate objection to the ban by the end of September. The court ruled the ban won’t cause Solvinity irreversible harm before then, so the company can wait.

Solvinity told broadcaster NOS that it’s positive the judge emphasised the September deadline, while a spokesperson for the junior minister said they are pleased the judge’s ruling provides clarity.

If Solvinity loses its objection to the government ban, it can still appeal in court.