Investment Screening in Practice: the Prohibition of the Acquisition of Solvinity

Last week, the Dutch government decided to prohibit the proposed acquisition of the Amsterdam-based IT company Solvinity by the US IT company Kyndryl. Solvinity is the company behind DigiD, the Dutch government’s digital identity verification system that enables citizens to securely access a wide range of government and public services online. 

The prohibition was announced in a letter to the House of Representatives from State Secretary Aerdts of Economic Affairs and Climate Policy, following a recommendation from the Bureau for Investment Screening (Bureau Toetsing Investeringen, “BTI”). While prohibitions of this nature remain relatively uncommon (see further details below), it is worth to examine the legal basis for this prohibition and how the assessment process is structured.

Bureau for Investment Screening (BTI)
The prohibition of Kyndryl’s acquisition of Solvinity follows a recommendation from the BTI. The BTI forms part of the Ministry of Economic Affairs and is responsible for assessing investments that may pose risks to national security or the public interest on the basis of, inter alia, the Investments, Mergers and Acquisitions Security Act (Wet veiligheidstoets investeringen, fusies en overnames, “Vifo Act”).

For investments in the telecommunications sector, such as the proposed acquisition of Solvinity, a sectoral investment assessment applies under the Undesirable Control of Telecommunications Act (Wet ongewenste zeggenschap telecommunicatie, “WOZT Act”). Based on the criteria set out in the WOZT Act, the BTI concluded that the acquisition of Solvinity may pose a risk to the public interest and accordingly recommended a full prohibition of the transaction.

Undesirable Control of Telecommunications Act (WOZT Act)
The WOZT Act is elaborated in Chapter 14a of the Telecommunications Act (Telecommunicatiewet). The purpose of the WOZT Act is to assess acquisitions and other forms of obtaining control in the telecommunications sector against the public interest, with a particular focus on security interests. The WOZT Act is designed to prevent undesirable parties from acquiring such a degree of control over telecommunications infrastructure or services that it could be exploited.

The core of the WOZT Act consists of a notification requirement and a substantive assessment. A party intending to acquire a controlling interest in a telecommunications entity must notify the BTI of this intention if such control would result in significant influence in the telecommunications sector (Art. 14a.2 par. 1 Telecommunications Act). The Minister may subsequently prohibit the acquisition or retention of such a controlling interest if it could pose a threat to the public interest. This requires, at a minimum, that the controlling interest leads to significant influence in the telecommunications sector (Art. 14a.4 par. 1 and 2 Telecommunications Act).

The term "public interest" is in Article 14a.1 of the Telecommunications Act defined as the interest of public policy or public security as referred to in the Treaty on the Functioning of the European Union. The Explanatory Memorandum to the WOZT Act identifies two categories of risk that could affect the public interest in the context of an acquisition. The first risk concerns the use of infrastructure as a means of leverage, through (the threat of) infrastructure failure or the suspension of services. The second risk concerns a breach of the confidentiality of communications, whereby a malicious owner could gain access to the content of such communications.

The State Secretary’s letter prohibiting the acquisition of Solvinity by Kyndryl does not specify which risks to the public interest are at play in the case of Solvinity. Due to the sensitive nature of the information and national security interests involved, the investigations and advices of BTI are in principle not made public.

It is uncommon for the BTI to conclude that an investment or acquisition should be prohibited. In 2024, only one transaction resulted in a prohibition. The BTI's 2025 annual report indicates that 76 notifications were concluded in the past year without any prohibitions or conditions being imposed. These primarily concerned investigations under the Vifo Act.

Available Remedies
The decision to prohibit the acquisition of Solvinity was communicated to Kyndryl on 26 May 2026. Kyndryl may, pursuant to Article 6:7 of the General Administrative Law Act (Algemene wet bestuursrecht), file an objection to this decision within a period of six weeks.

If Kyndryl wishes to have the prohibition suspended pending the objection proceedings, it may file a request for provisional relief with the preliminary relief judge. Filing an objection does not automatically suspend the effect of the decision. In the event that the objection is rejected, an appeal may then be filed with the Rotterdam District Court, with further appeal available before the Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven).

Conclusion
The prohibition on Kyndryl's acquisition of Solvinity shows that the Dutch government has the authority to prevent undesirable control in the Dutch telecommunications sector, in particular where the public interests are at stake.

Although the substantive reasoning of the BTI has not been disclosed, the decision signals that investments in the vital telecommunications sector remain welcome, provided they do not create unacceptable risks to national security or other protected public interests. In view of that, prospective investors are advised to assess at an early stage which screening regimes may apply to the contemplated transaction and where appropriate to enter into informal discussions with the relevant governmental authorities.