EU FDI control
EU FDI control

The following Competition practice note provides comprehensive and up to date legal information covering:

  • EU FDI control
  • 1. What is the applicable legislation?
  • 2. Which government or other body (or bodies) reviews foreign investments?
  • 3. What is the scope of the foreign investment regime? Does it only apply to specific sectors or types of investors (eg foreign or non-EU / non-WTO)? Are there specific rules for certain types of investors (eg state-owned enterprises)?
  • 4. What are the triggers or thresholds for the regime to apply? What types of transactions are caught? Is there a minimum level of shareholding or a control test that applies?  Are there any other thresholds that need to be met (e.g. based on turnover or market shares)?
  • 5. Are there any exceptions that may apply?
  • 6. Is there any discretion to review transactions that do not meet any thresholds for review?
  • 7. What are the grounds for review, eg public or national security or other grounds?
  • 8. What level of discretion do the relevant authorities have to approve or reject transactions? Is there scope for any other body to intervene?
  • 9. Where a transaction is caught by the regime, is notification mandatory and must closing be suspended pending clearance?
  • More...

A conversation with Kai Neuhaus, partner, and Jacqueline Vallat, senior associate at international law firm CMS on key issues on foreign direct investment (FDI) control in the European Union.

1. What is the applicable legislation?

The applicable legislation is Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union (the Regulation).

The Regulation was published on 21 March 2019 and entered into force on 10 April 2019, but its provisions only fully applied from 11 October 2020 (following an 18-month transition period).

As a preliminary note, the Regulation does not establish a fully-fledged new foreign investment control regime at EU level nor replace existing national rules. Instead, it introduces a framework for screening foreign direct investment (FDI) into the EU, designed to complement national rules, and includes:

  1. a mechanism for cooperation and information exchange between Member States in the EU, and between them and the European Commission

  2. a process to allow the Commission and Member States to issue opinions for certain investments, and

  3. a set of minimum requirements for national foreign investment control regimes (whether pre-existing or adopted following the Regulation).

It is based on a European Commission proposal (under Jean-Claude Juncker’s Commission) put forward as part of a Trade Package in 2017 in the face of rising concerns

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