Legal alert

European Commission announces screening of takeovers from third countries

September 20, 2017
Legal alert

The European Commission has taken concrete steps to address foreign investments in the EU. Parallel to proposing a regulation establishing an EU framework to screen foreign direct investments, the Commission will immediately proceed with the following measures:

  • By the end of 2018, conduct further in-depth analysis of foreign direct investment flows into the EU
  • Set up a coordination group composed of member state representatives and chaired by the Commission to exchange information on foreign direct investment flows and screenings

Jyrki Katainen, vice-president of the Commission, said that in certain cases, foreign takeovers can be detrimental to European interests. Furthermore, the absence of a comprehensive legal framework at the EU level and the lack of an EU-wide screening mechanism creates uncertainty for foreign investors facing different screening regimes from member states. To address this, the Commission has come up with these proposals.


The proposed regulation establishes a framework for the screening of foreign direct investments into the EU on security or public order grounds. The regulation includes transparency obligations and a list of factors that may be taken into account in determining whether foreign direct investment may have an impact on security or public order. The draft regulation also establishes a mechanism for cooperation between member states.


The new measures are linked to foreign direct investments in the EU in strategic sectors (for example, energy, space, transport) or assets (technologies and inputs linked to strategic sectors, critical infrastructures across sectors, sensitive data). The focus is on investors owned or controlled by governments of third countries (that is, non-EU countries).


The EU proposals are at an early stage, but will affect governments and companies active in those strategic sectors. The Dutch government is also independently exploring ways to protect certain vital industries. As a first step, a draft bill to intervene in the telecommunication sector has been put forward for public consultation.


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