EU Regulation on the screening of foreign direct investment enters into force

Today, 5 March 2019, the Council of Ministers of the EU officially endorsed legislative proposals for a Regulation to screen foreign direct investment ("FDI") into the EU (the "Regulation"). The Council's endorsement signals the successful passing of the Regulation through the full co-legislative process, having already been approved by the European Parliament on 14 February 2019.

The current President of the Council of Ministers, Ștefan-Radu Oprea, welcomed the introduction of the Regulation, saying "the EU is and will remain one of the world's most open places to invest in. The new rules on the screening of investments will ensure that openness goes hand in hand with sensible protection of our strategic assets".

Whilst the Commission has emphasised its desire for the EU to remain one of the world's most attractive destinations for FDI, this Regulation nevertheless confirms the growing trend of traditionally open economies enacting increasingly protectionist regulation when it comes to foreign investment. In this update, we outline the central features of the new framework for the screening of FDI, including:

• the factors Member States may take into account when screening FDI, along with certain procedural requirements that will apply to their screening mechanisms;
• the extent of the Commission's and other Member States' influence over domestic FDI screening decisions; and
• the interaction of the Regulation with merger control.

Read the full briefing here.

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