EU strengthens foreign investment screening to bolster security

The European Union is intensifying efforts to screen foreign direct investments (‘FDI’) that may pose risks to security or public order, according to a report released by the European Commission on 17 October.

It reveals that ‘the number of notifications to the EU cooperation mechanism increased by 18% since the EU framework was put in place in 2020,’ a rise reflecting growing concerns about potential security risks associated with investments from third countries.

The document highlights ‘the increased levels of attention being paid to the risks that certain investments from third countries may present to the security or public order in the EU and/or to EU projects and programmes of common interest,’ the Commission said in a press release.

The report notes that ‘of the 488 cases notified in 2023, the vast majority (92%) were closed by the Commission within 15 days, while just 8% required a so-called second phase involving a more detailed security assessment.’

It also emphasises progress in implementing screening mechanisms across the EU: ‘After six more Member States enacted relevant legislation in 2023, 24 EU Member States currently have screening mechanisms in place, with the remaining three (Croatia, Cyprus and Greece) having taken concrete steps to this effect.’

The report also points out disparities in notification rates: ‘not all Member States are notifying transactions at the same rate – in 2023, 85% of notifications came from seven Member States.’

Valdis Dombrovskis, Executive Vice-President and Commissioner for Trade, emphasized the critical role of FDI screening: ‘FDI screening has become a critical part of our broader Economic Security Strategy. This 4th Annual Report is further evidence to the increasing importance of the EU cooperation in assessing and addressing risks to our collective security,’ he said.

https://ec.europa.eu/commission/presscorner/detail/en/ip_24_5327