On September 13, 2017, the European Commission published its proposal for a Regulation establishing a framework for screening of foreign direct investments into the European Union. As new investment trends are appearing, with some emerging economies playing an increasing role as providers of foreign direct investment, the European Commission has found it necessary to be able to act when such foreign investment patterns change.

This is especially relevant in cases when foreign investors seek to acquire control of or influence in European businesses whose activities have repercussions on critical technologies, infrastructure, inputs or sensitive information. Nearly half of the EU Member States already have screening mechanisms in place, but they differ from one another. The mechanism now proposed by the European Commission would establish a framework for screening on grounds of security or public order, while providing a non-exhaustive list of factors that may be taken into account in determining whether a foreign direct investment may impact security or public order. At the same time, the proposal maintains the necessary flexibility for Member States in screening foreign direct investments, allowing them to adapt to changing circumstances and their specific national context.

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