Regulation of Screening of Foreign Direct Investments in the European Union

Abstract

This paper examines the framework and cooperation mechanisms set up by Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union. The Regulation merely gives a framework for the coordination of national legislation, and member states can still decide if they want to set up screening mechanisms and to screen foreign direct investments. The pandemic has accelerated these processes, and more and more European Union member states enacted legislation relating to the screening of foreign direct investments in strategic branches of the economy. The Commission has also issued a Guidance at the end of March 2020, in which it warns about the risk that the Coronavirus related economic shock might have on strategic industries, especially on healthcare related industries. At the same time, recognizing the importance of foreign direct investments for the economy, it pointed out in the Guidance the necessity to find a balance between the need for foreign capital and the protection of European Union strategic industries using appropriate screening tools.