Against a backdrop of increasingly protective foreign investment measures across the world, the new EU regulation on the screening of foreign direct investment (FDI) became fully operational on 11 October 2020 (the Regulation). 

The Regulation introduces a framework for cooperation between member states, allowing national authorities to exchange information and coordinate their approaches when reviewing investments from outside the EU, as well as giving the European Commission the opportunity to issue opinions where it considers that the FDI in question is likely to affect the security or public order of the EU or its members.

The Regulation has gained significance since its adoption in 2018. In March 2020, the European Commission adopted guidance  urging all member states to strengthen existing foreign investment screening regimes – or adopt new mechanisms where required – to avoid a loss of critical assets and technology in the context of the COVID-19 crisis. An increasing number of EU member states (currently 15 of the 27) already have FDI regimes, and we expect more to follow in light of the guidance and the Regulation.

In our latest Essential Antitrust podcast, host Jenn Mellott is joined by Frank Röhling, co-head of the firm’s FDI practice, and EU regulatory specialist Amaryllis Müller to discuss the practical implications of the new EU framework for cross-border M&A involving non-EU investors. Frank and Amaryllis provide an overview of the political background and context, and explain what we can expect from the new cooperation mechanisms in terms of the type of transactions likely to be affected and the impact on deal planning and timetables.

To listen to the podcast, click here.

For additional reading on the key features of the cooperation mechanism, our more detailed briefing is available here.