Foreign Direct Investment Review Regimes in Europe

Key Jurisdictions and Case Studies

EU: New framework for screening of foreign direct investments

• The new EU FDI Framework adopted in Regulation (EU) 2019/452 applies from 11 October 2020
• The Framework consists of 4 key elements:

Maintenance of national screening mechanisms
Cooperation mechanism
“Security and public order”
Transparency and information requirements

EU: New framework for screening of foreign direct investments

• Potential impact of the FDI Regulation:
• No requirement to implement FDI control
• Dual-track system of merger control and FDI control
• Closer scrutiny of transactions in a larger number of jurisdictions
• Potential alignment of procedural and substantive reviews
• Longer review periods
• Increased transparency and deal security

• In response to Covid-19, the Commission issued strong guidelines:
• To use all available tools to avoid the loss of strategic assets
• Urging Member States to use existing or introduce new review mechanisms
• Where no review mechanisms are in place, to use other measures, such as restrictions on capital movement or golden shares

Germany – Leifeld case

• Transaction: Yantai Taihai (China) intended to acquire Leifeld via the French company Manoir Industries
• Target information:
• Leifeld produces tooling machines for chipless metal forming
• > 200 employees in Germany, USA, China and Russia
• Revenue 2018: EUR 43.2 mn
• Competition concerns: None
• FDI concerns: Leifeld’s products are used in the aerospace and nuclear industries
• Filing: Yantai submitted a voluntary request for issuance of a certificate of non-objection
• Result: First case ever blocked in Germany

Germany – Applicability and thresholds