The European Union's framework for FDI screening: Towards an ever more growing competence over energy policy?

Abstract

The European Commission recently released a proposal for a Regulation establishing a framework for screening of foreign investment into the European Union. The proposal aims at introducing a harmonized regulatory framework for the screening of foreign direct investments by Member States on grounds of security or public order, amongst others in the energy sector. The proposal seems to be catered towards deference for Member States, but considering the large amount of EU funding involved, as well as the applicability of EU legislation, in practice many projects will fall under the new screening competence of the Commission. Even though the Commission, according to the proposal, may only give an opinion, it appears to turn the energy competence ever more towards Brussels. This paper aims at determining how the screening mechanism should be seen in light of EU competences in the area of investment and energy. Is this an example of “mission creep” on the part of the Commission? Does this infringe Article 194 TFEU which guarantees the Member States' “right to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply”? Or is this justified and needed action on the basis of the Article 170 TFEU on trans-European networks in the area of energy infrastructure?