On 11 October 2020, the EU screening mechanism for foreign direct investments potentially affecting security and public order in an EU Member State or in the whole EU became fully operational.
This follows the adoption of the EU Foreign Direct Investment Regulation in March 2019 (see our previous updates here and here), when the European Commission (“Commission”) and the Member States established a coordination framework, consisting of various separate national screening mechanisms.
The EU screening mechanism aims to enhance cooperation and information sharing between the Commission and its Member States. Foreign direct investments (“FDI“) in sensitive industries will be scrutinized to avoid the loss of critical assets and technology (e.g. in health, energy, transport, media, defense, financial infrastructure sectors, etc.).
The new mechanism ensures that deals will not only be systematically scrutinised with respect to merger control, but also from the perspective of FDI, notably if these have the potential to raise national security and public order concerns.
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