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On October 11, 2020, the EU FDI Screening Regulation (EU) 2019/452 – the “Regulation”) entered fully into force.

The Regulation, which was approved and adopted in March 2019, establishes a framework for the screening of foreign direct investments (“FDI”) by EU Member States in which decision-making powers rest at the Member State level. Significantly, from October 11, an element of EU-level cooperation in FDI is introduced and in particular will bring into effect (i) regular information sharing among Member States and the European Commission about transactions subject to national FDI screening, and (ii) a mechanism through which other Member States and the European Commission can coordinate and comment on FDI that has an “EU-dimension”.

In this blogpost, we look at the overall status of national measures in FDI at this juncture and describe in overview the EU-level cooperation and information sharing mechanisms.

National investment screening mechanisms 

While the Regulation does not require Member States to introduce their own screening mechanism at a national level, the European Commission has recommended that all Member States do so – and particularly encouraged this in the context of the COVID-19 pandemic (see our earlier alert and blog post). Accordingly, and in order to fully implement the Regulation, Member State laws have been (or are being) adapted to allow local regulators to take account of national security concerns of other Member States.

Fifteen Member States – Austria, Denmark, Finland, France, Germany, Hungary, Italy, Latvia, Lithuania, Netherlands, Poland, Portugal, Romania, Spain and Slovenia (and Norway and the United Kingdom) – currently have national investment screening mechanisms in place. Several other Member States are in the course of reforming their FDI laws or adopting new FDI screening measures.

Upfront FDI filing analysis becomes crucial – further Member State developments ahead

The FDI landscape in the EU has therefore been very dynamic in recent months and changes continue at pace. Many Member States have introduced mandatory filing requirements with standstill obligations until clearance is received.  Often these filing obligations are triggered at very low thresholds. These FDI filing requirements are so significant and varied that FDI has become a key issue to consider upfront in M&A transactions involving foreign investors – and at the same importance as the merger control filing analysis.. In addition to adopting new long-term measures in FDI screening, several Member States (such as France, Germany, Italy and Spain) adopted emergency measures related to COVID-19, and some of which have temporary application (until the end of the calendar year or for the duration of the pandemic).


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