Foreign Investment Screening in Hungary and Romania

Abstract

Romania does not yet have a separate law regulating the screening of foreign investments. Therefore, it is difficult to argue that the 2011 amendment to Romania’s Competition Law, which allows the blocking of a takeover for national security reasons, can be considered a comprehensive investment screening mechanism under EU Regulation 2019/452. If it can be considered as such, then the summary procedures described in the Competition Law fall short of the requirements of the EU Regulation. Compared to Romania, Hungary has very recently adopted Law LVII of 2018 and Government Decree 246/2018, which set up a detailed investment screening mechanism for national security reasons, in sensitive economic sectors. The Hungarian mechanism is mostly in line with the Regulation’s mandatory minimum requirements. It only falls short when it comes to better detailing some of the grounds based on which non-EU, non-EEA, or non-Swiss foreign investors can have their investments blocked, and it does not include provisions on the protection of sensitive information. It is to be seen how effective the Hungarian mechanism becomes as a number of foreign investors will be affected by it.