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Dutch govt proposes law to block telecom takeovers

(Updates with quote, background)

AMSTERDAM, Feb 16 (Reuters) - The Dutch government on Thursday proposed legislation that would give it power to block or undo mergers in the telecommunications sector.

The Netherlands is gearing up for a national election on March 15 in which the ruling conservative VVD Party is facing a strong challenge from the far-right nationalist Party for Freedom of Geert Wilders.

In a statement, the Economic Affairs Ministry said telecommunications, including data hosting centres and other Internet infrastructure, was vital to national security and the law was permissible under European Union rules.

"The Netherlands profits from the fact that we have an open economy," said Minister Henk Kamp in a statement. "We take over more companies abroad than vice versa."

However, the minister said "our country is not helped by takeovers by foreign companies that are linked to criminal activities, that are financially weak or that have a non-transparent ownership structure."

He said the new law was needed to give a legal basis to prevent such takeovers.

Separately, Kamp said the government was seeking further powers over the national mail company, including insuring it remains headquartered in the Netherlands and makes sufficient infrastructure investments.

Last month PostNL (Swiss: PN6.SW - news) rejected a takeover offer from Belgian rival Bpost (EUREX: BPO.EX - news) under pressure from the Dutch government.

Attempts by America Movil, owned by Mexican tycoon Carlos Slim, to take over Dutch telecom KPN (Amsterdam: KPN.AS - news) in 2013 foundered as the company took poison pill measures to prevent it.

In 2015, Britain's NCC (BSE: NCC6.BO - news) bought Dutch cyber security firm Fox-IT, which is responsible for securing Dutch government communications, for 133 million euros.

Now (Frankfurt: 11N.F - news) that Britain has voted to leave the European Union, a Dutch newspaper reported the government has sought to have parts of Fox-IT's business ring-fenced in a division called Fox Crypto that the Dutch government would exert considerable control over.

Those controls would include a veto right on board appointments and right of first refusal to purchase it if it was put up for sale.

(Reporting by Toby Sterling; Editing by Michael Perry and John Stonestreet)