The start of 2024 has seen the European Commission announce a new EU-wide legislative proposal, and the Italian and UK governments both issued two noteworthy enforcement decisions. In the EU, the European Commission published a proposal to update the 2019 EU Foreign Direct Investment Screening Regulation. The aim of the reform is to enable a clearer and more open line of communication between a national FDI authority and companies that have submitted an FDI filing. Companies will be able to rely on new harmonized procedural rights, including duties for Member States to (i) ensure judicial revi ..read more

FDI enforcement in 2023 has been caught between two different public policy aims: the first is a willingness of authorities to expand their FDI regimes to review more investments; and the second, is a greater interest in and attention to the consistency and proportionality of such intervention. We have set out below the three main trends for companies to be aware of in relation to the enforcement of FDI rules and how they may affect their investments, followed by key FDI developments in Europe. Do expect an increasing interaction between Member States and their national governments in relatio ..read more

As a result of national security concerns, the decision-making of national FDI regimes in the EU is not transparent and there are no obligations for  authorities to publish their decision or the reasons behind it. However, authorities will often publish annual reports which provide a better understanding of national trends and decision-making. Two such reports were published at the end of September/October 2023. In September 2023, the German Federal Ministry for Economic Affairs and Climate Action published its report evaluating the national FDI screening legal framework and exploring opt ..read more

FDI enforcement in Europe continues to increase, with authorities focusing on acquisitions relating to strategic assets and infrastructure. Companies and advisors should take this increased scrutiny into account when drafting corporate documents, and ensure that they have a clear strategy in place to obtain FDI clearances in a timely manner. The two major FDI investigations in Europe in September both concerned share acquisitions of strategic assets. First, in the face of concerns raised by national politicians, the Spanish Ministry of Industry, Commerce and Tourism scrutinized an acquisition ..read more

On 13 July 2023, in Case C-106/22, the European Court of Justice (ECJ) delivered its decision in relation to a preliminary reference submitted by the Budapest High Court. In the context of companies that often have a cross-border ownership structure extending outside of the EU, the ECJ concluded that the fact that a parent company registered in a third country has a majority control over an EU-based investor does not mean that the EU FDI Screening Regulation (EU FDI Regulation) applies. Amid growing criticism of foreign investment regimes in the EU, the ECJ also confirmed that national screeni ..read more

On 4 July 2023, the Spanish Government approved Royal Decree 571/2023 on Foreign Investments (“Royal Decree”), with immediate effect from 1 September 2023, which introduces amendments to and provides further details on the screening mechanism for certain foreign direct investments (“FDI”) in Spain. The main changes to the screening mechanism are summarised below: Review process The Royal Decree includes the following amendments: Introduction of a new consultation regime: The investor may submit a voluntary consultation to the Directorate General for International Trade and Investment (“DGCII ..read more

Samantha Mobley and Farin Harrison • In recent years, the investment policy landscape has become more complex as nations respond to national security threats, state development strategies and geopolitical risks. Covid-19 created a major economic shock worldwide, prompting some countries to take an even more stringent approach, with a focus on protecting the security of supply of inputs. • Many jurisdictions continue to tighten their screening rules or are introducing robust new measures to protect strategically important or sensitive national assets, creating a wave of increased regulation. Th ..read more

On 23 March 2021, the EU opened a public consultation (the “Consultation“) on its plan to introduce a new mechanism to deter and counter potentially coercive actions by non-EU countries which seek to pressure the EU or its member countries into taking or withdrawing particular policy measures, and which impact the economic and geopolitical interests of the EU and its Member States. According to the EU, the new legal instrument will be designed to “empower the Commission to apply trade, investment or other restrictions towards any non-EU country unduly interfering in the policy choices of the E ..read more

In brief In June 2022, the governments of Belgium’s nine federated entities have, after lengthy negotiations, agreed on the text of a cooperation agreement (Cooperation Agreement) implementing a screening mechanism of general application for foreign direct investments into Belgium. The screening mechanism is expected to enter into force on 1 January 2023. While the text is still subject to change[1], the fact that an agreement on a screening mechanism of general application has been reached is a milestone as Belgium has traditionally been an open economy with hardly any restrictions on incomin ..read more

On 2 September 2022, the European Commission published its second report on FDI screening, and the first one to cover an entire calendar year following the commencement of the EU FDI Screening Regulation in October 2020 (see our previous posts here and here). Since then, the Commission notes that it has screened over 740 transactions under its FDI mechanism and found that the “vast majority” of transactions did not pose a problem from a security or public order perspective, with less than 3% of transactions resulting in a Commission opinion. The assessment of FDI transactions notified by Membe ..read more