Regulation (EU) 2019/452 establishing a framework for screening of foreign direct investments into the European Union

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Publication Date 21/03/2019
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Regulation of the European Parliament and of the Council of 19 March 2019 setting up a framework for screening foreign direct investment (FDI) into the European Union.

Further information:

The proposed Regulation, presented by the European Commission on 13 September 2017, includes:

  • a European framework for screening of foreign direct investments by Member States on grounds of security or public order;
  • a cooperation mechanism between Member States and the European Commission;
  • screening on grounds of security or public order for cases in which foreign direct investment in Member States may affect projects or programmes of Union interest.

This draft law responds to concerns about foreign investors, notably state-owned enterprises, taking over European companies with key technologies for strategic reasons, in a scenario where EU investors often do not enjoy the same rights to invest in the country from which the investment originates.

While the proposed Regulation was going through the ordinary legislative procedure, the European Commission decided to immediately proceed with two additional measures: setting up a coordination group on inward foreign direct investment, chaired by the Commission and comprising representatives from Member States; conducting an in-depth analysis of foreign direct investment flows into the European Union.

This proposal was adopted alongside the accompanying Communication on welcoming foreign direct investment while protecting essential interests. Following the adoption of their respective negotiating positions, the European Parliament and the Council of the European Union reached an informal agreement on a compromise text on 20 November 2018. The European Parliament formally endorsed it on 14 February 2019, followed by the Council in March. The Act was signed on 19 March and published in the Official Journal on 21 March 2019.

The FDI Screening Regulation entered into force in April 2019. The operational requirements would have to be in place for the full application of the Regulation starting on 11 October 2020. Following recommendations by the European Commission in guidance published in March 2020, Member States also agreed to cooperate informally on FDI screening where a foreign investment could have an effect on the EU single market.

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Commentary and Analysis
EurActiv, 21/09/2017: Don’t protect us from doing business!
EPRS: At a Glance, February 2019: EU framework for FDI screening
EPRS: Briefing, April 2019: EU framework for FDI screening
DLA Piper: Publications, 08/08/2019: Impact of the new Foreign Direct Investment (FDI) Screening Framework of the EU for foreign companies in Austria
White&Case: Insight, 27/12/2019: Foreign direct investment reviews 2019: A global perspective

Reuters, 13/09/2017: France, Germany, Italy welcome EU push to curb foreign takeovers
EUObserver, 14/09/2017: EU preparing to screen Chinese investments
EurActiv, 16/07/2018: China set to fully control Portugal’s power grid amid Europe’s inertia
EurActiv, 14/02/2019: Europe strengthens monitoring of foreign investment
Bloomberg, 14/02/2019: Europe's investment-screening plan clears final political hurdle
France24, 14/02/2019: EU lawmakers greenlight screening of Chinese investment
Kathimerini, 14/02/2019: EU lawmakers back investment screening
Reuters, 14/02/2019: With eyes on China, EU lawmakers back investment screening

EUR-Lex: COM(2017)487: Proposal for a Regulation establishing a framework for screening of foreign direct investments into the European Union
EUR-Lex: SWD(2017)297: Commission Staff Working Document accompanying COM(2017)487
European Parliament: Legislative Observatory: Procedure File for Proposal on screening of foreign direct investments into the European Union
European Parliament: Legislative Train: Screening of foreign direct investment in strategic sectors
European Commission: Press Release, 14/09/2017: Trade Package: European Commission proposes framework for screening of foreign direct investments
United Kingdom: House of Lords: EU External Affairs Sub-Committee: EU Foreign Direct Investment screening framework (November 2017)
European Parliament: Press Release, 26/01/2018: Ensuring foreign direct investment does not harm Europe's interests
Council of the European Union: Press Release, 13/06/2018: Screening of investments: Council agrees its negotiating stance
European Commission: Press Release, 14/02/2019: Commission welcomes European Parliament's support for investment screening framework
European Parliament: Press Release, 14/02/2019: EU to scrutinise foreign direct investment more closely
European Commission: Press Release, 10/04/2019: EU foreign investment screening regulation enters into force
European Commission: Press Release, 09/10/2020: EU foreign investment screening mechanism becomes fully operational

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