New revised rules for screening foreign investments in the EU, adopted by the EU Parliament’s trade committee, identify and address security risks relating to foreign investment.
The current foreign direct investment screening framework entered into force in 2020 as a response to growing concerns about certain foreign investors seeking to acquire control of EU firms that supply critical technologies, infrastructure or inputs, or hold sensitive information, and whose activities are critical for security or public order at EU level. The rules are designed to help identify and address security or public order risks relating to foreign direct investment involving at least two Member States or the EU as a whole.
Under the new rules, more sectors, such as media services, critical raw materials and transport infrastructure, will be subject to mandatory screening by Member States, in order to identify and address foreign investment-related security or public order risks. The procedures applicable to national screening mechanisms will also be harmonised and the Commission will have the power to intervene on its own initiative or where there are disagreements between Member States about potential security or public order risks emanating from a specific foreign investment.
If the screening authority finds that the planned foreign investment project is likely to have a negative effect on security or public order, it will either have to authorise the project subject to mitigating measures, or prohibit it.
“This reform will establish a more predictable system that ensures foreign investments do not compromise our security. Investors will benefit from greater clarity on procedures, while a harmonised scope and a reinforced role for the Commission will help ensure consistency across the Union,” said Parliament’s rapporteur for the legislation Raphaël Glucksmann MEP.
Procedure file, European Parliament
Annual Report on the screening of foreign direct investments (FDI)
