This ill-conceived bit of Euro-madness would put the Panel on a statutory footing and turn every contested bid into a lawyer's paradise.
Whereas the present voluntary arrangements allow the Panel to police behaviour during takeovers in a fast and flexible manner, the EC directive would usher in an era where every ruling was subject to legal challenge. Needless to say, the interests of shareholders would be trampled in the resulting rush to the courts.
The directive has been rattling around Brussels for two and a half years, held at bay by a rearguard action led by Britain which has cobbled together enough votes to block the proposal under the system of qualified majority voting.
Up until very recently, the coalition ranged against the directive has remained intact largely for reasons of self interest. The Belgians oppose it because it would remove the poison pill defence which underpins commercial life in Belgium while the Dutch have an even more protectionist system. Only the Swedes oppose it on the same grounds as Britain - that they have a perfectly adequate system of self-regulation.
Now, however, there is a distinct danger of the British government being outflanked. The Germans, who hold the presidency of the EC, have helpfully inserted an opt-out clause, known as article 4.5, into the directive which would effectively allow the Takeover Panel to continue functioning exactly as before.
The amended version of the directive, containing the relevant article, was duly rubber-stamped yesterday by the committee of permanent representatives to the EU and sent on its way to the Council of Ministers where it will be voted on later this month.
If it clears the Council of Ministers, which it is likely to do, it will be packed off to the European Parliament. That is where the fun begins.
The Parliament is almost certain to reject article 4.5 in which case the directive will enter what is euphemistically known in Brussels as a conciliation procedure run by a French MEP who has been instrumental in getting the directive where it is today.
There is a sneaking suspicion that the Germans have known all along that the opt-out clause would not survive. However, having given its general backing to the directive, it would be very difficult for Britain to withdraw its support.
This smells to some like a stitch up designed to drive a wedge through the bloc of countries opposed to the directive.
Stephen Byers, the Trade and Industry Secretary, is said to have strong feelings on the matter, believing that the directive could breach the principal of subsidiarity - that, wherever possible, member states should be left to run their own affairs.
He needs to make that point forcibly when the Council of Ministers meets on 21 June to prevent this directive seeing the light of day.