EU FDI screening framework

Last updated
FDI screening Regulation
  • 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
Territorial extentEuropean Union
Status: In force

The European Union's foreign direct investment screening framework is defined in its FDI screening Regulation.

Contents

The Regulation applies in all member states directly. It does not currently harmonise the FDI screening procedures of the EU member states; they may conduct FDI screening as they wish. However, they must make their screening policy transparent by notifying the European Commission and the other member states. This is to ensure that the FDI screenings operate fast, yet do not discriminate between different non-EU countries and do not disclose confidential and commercially sensitive information.

In 2024, the European Commission made plans to oblige its member states to follow a minimum set of FDI screening standards, using minimum harmonisation. [1]

Current regulation

When an EU member state conducts an FDI screening, it must notify the Commission and other member states as soon as possible. The other states and the European Commission can then submit comments if they consider the screening to affect security or public order in their country or in the other member states. FDI screening is defined as a procedure to "assess, investigate, authorise, condition, prohibit or unwind FDIs". [2]

One FDI that was likely screened and notified was the acquisition of Swedish Volvo Cars by the Chinese car manufacturer Geely. [3] In terms of overall screening volumes, for example, Germany screened (and notified the Commission of) 570 foreign direct investments in 2022. [4]

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States use foreign direct investment (FDI) screening to prevent foreign investors from buying national assets at bargain prices or reducing competition, and to protect national security and critical infrastructure. As of 2023, FDI screening mechanisms are employed by around 50 countries among those participating in OECD discussions on freedom of investment. FDI screening methods include procedures to assess, investigate, authorise, condition, prohibit or unwind FDIs.

References

  1. Brzozowski, Alexandra (19 January 2024). "LEAK: EU to ask member states to screen foreign direct investments". Euractiv .
  2. "Screening framework for foreign direct investments | EUR-Lex". eur-lex.europa.eu. Retrieved 2024-01-24.
  3. Abdulrahman, Jovan; Sun, Likun (2023). The potential effects of the new FDI screening mechanism on Chinese FDI in Sweden.
  4. BMWK Öffentlichkeitsarbeit (September 2023). "Bericht des Bundesministeriums für Wirtschaft und Klimaschutz. Evaluierung des Ersten Gesetzes zur Änderung des Außenwirtschaftsgesetzes und der 15.–17. Verordnung zur Änderung der Außenwirtschaftsverordnung" (PDF). Federal Ministry for Economic Affairs and Climate Action : 15.