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EU Launches FDI Screening Mechanism

The European Union on Oct. 11 officially launched its foreign direct investment (FDI) screening mechanism for member states to coordinate on screenings to prevent suspicious transactions and acquisitions involving EU companies, the EU said Oct. 9. The mechanism establishes a “framework” for “formal contact points and secure channels” between member states and introduces procedures for member states and the European Commission to “quickly react to FDI concerns and to issue opinions.” The move comes as the U.S. pushes its allies, including the EU and Japan, to increase scrutiny of foreign investments from China (see 2002260042). The EU has encouraged member states to increase their investment screenings (see 2003260003) and recently implemented new criteria for screening investments, including transactions involving critical technologies and dual-use items (see 1903210049).

Commission Executive Vice President Valdis Dombrovskis said an EU-wide screening mechanism is “essential,” and called on member states to work more closely. “The EU is and will remain open to foreign investment,” he said. “But this openness is not unconditional.”