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Increased EU Scrutiny of Foreign Direct Investments On The Horizon, says Baker Botts

Media Alert

BRUSSELS, April 11 2019 – Baker Botts, a leading international law firm, comments on the new framework to screen foreign direct investments (FDI) coming into the EU.

“FDI screening regimes are already in place in 14 EU Member States, allowing those Member States to control investments in European firms whose activities affect a range of interests including critical technologies, infrastructure and sensitive information. 

However, there is a wide disparity in the national regimes on criteria for intervention, timing of reviews and levels of transparency.   These new rules aim to provide, for the first time, a common European framework and greater legal certainty for foreign investors in the EU,” said Catriona Hatton, Chair of the Antitrust practice and the Partner-in-Charge of the firm’s Brussels office. 

  1. The new rules will give the European Commission an oversight role on national FDI reviews.  While this should eventually lead to more harmonization around criteria for intervention as well as timing of the reviews, there is the potential to cause additional delays to approval of investments due to information requests and potential for multiple reviews at both an EU and national level.

  2. The new framework for FDI screening enters comes into force today. Member States and the Commission will then have 18 months to put in place the required arrangements for the application of the new framework.

“Whether or not this leads to a more U.S. CFIUS-style approach to EU screening of foreign investments, the new rules on FDI should enhance Member State cooperation and information sharing and will ultimately achieve greater harmonization across the EU,” commented Brian Byrne, a Brussels based Senior Associate at Baker Botts.

Among the main features of the new rules, it is worth noting that it:

  1. Provides a framework for coordination among Member States and between the Member States and the Commission.

  2. Sets minimum procedural (but not substantive) standards for national FDI screenings.

  3. Allows the Commission to issue (non-binding) opinions to Member States conducting the review of an FDI. The Commission, however, does not have jurisdiction to block FDIs itself.

  4. Provides a non-exhaustive list of factors that may be taken into consideration when determining whether an FDI may affect “security and public order”. These factors include the effects on:
    • “critical infrastructure” (e.g. energy, transport, data storage),

    • “critical technologies” (e.g. artificial intelligence, cybersecurity, space technology),

    • “the security of supply of critical inputs”

    • “access to sensitive information”.

  5. Investments from another EU member state do not fall within the framework, although Member States are free to screen such transactions under their national rules.

If you would like to schedule media interviews with Catriona Hatton or Brian Byrne on this topic, please contact Adam Leviton [email protected]

Baker Botts is an international law firm whose lawyers practice throughout a network of offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy, technology and life sciences sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit

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