In March 2019, the EU has adopted a Regulation on the screening of foreign direct investment (FDI) which will apply from 11 October 2020. Member States are allowed to use a national screening mechanism for FDI from outside the EU on grounds of widely defined public order or security, including the protection of key technologies. A cooperation mechanism is established between the Member States and the European Commission. The European Commission is authorized to give a non-binding opinion if the FDI affects Union interests.
The Regulation reflects a new attitude of the EU towards FDI, triggered by geopolitical developments especially involving Chinese state-owned enterprises taking over European companies with key technologies. However, the EU’s ambitions are faced by legal and practical challenges. From a legal perspective, the Regulation seems to require an extensive interpretation of the grounds for restriction of free movement as developed by the ECJ and codified in the Regulation. From a practical perspective, making coordination work will not be easy. It requires a significant effort from the Member States and the Commission, and success is by no means guaranteed.
European Business Law Review