Screening of Foreign Direct Investments in the EU Under the New FDI Regulation

On 21 March 2019, 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 ("FDI Regulation") was published in the Official Journal of the European Union. The FDI Regulation will enter into force on 10 April 2019 and will apply to transactions from 11 October 2020 onwards. As explained in more detail below, any transaction that is not undergoing screening in the EU and is completed on or after 11 July 2019 can in principle still be commented on by Member States or be the subject of the opinion of the European Commission ("Commission") when the FDI Regulation becomes applicable (on 11 October 2020).

The FDI Regulation represents a fundamental evolution. It is the first time that the screening of foreign direct investments ("FDI") is regulated at European Union ("EU") level. It has the potential to significantly impact those investors from third countries that consider investing in the EU. Importantly, it can also be of relevance to those EU investors interested in EU target companies that have reason to believe that they compete with third country investors.