National FDI Screening Office

Before the entry into force of the Regulation in 2019, there was no comprehensive framework at Union level for the
screening of foreign direct investments (FDI) on the grounds of security or public order, while the major trading
partners of the Union had already developed such frameworks. Given the high degree of integration between Member
States’ markets, interconnected supply chains and common infrastructures between Member States, a foreign
investment could pose a risk for security or public order beyond the Member State where the investment
is made. An input, a service or a technology provided by a company established in one Member State may be critical
to the security or public order of another Member State, or to a project of Union interest.

In the past years there have been growing concerns regarding certain foreign investors seeking to acquire
control of, or influence in, European firms whose activities have repercussions on technologies, infrastructure, inputs
or sensitive information critical for more than one Member State, or on a project of Union interest. Such transactions
may put our collective security or public order at risk. This is especially the case when foreign investors are State
owned or controlled including control through financing or other means of direction. The framework for FDI screening
ensures that the EU is equipped to protect its essential interests while remaining open to investment.

Today, more than ever, the EU’s openness to foreign direct investment (FDI) needs to be balanced by appropriate
screening tools to safeguard our security and public order.

Without questioning Europe’s openness to FDI, the Regulation plays an important role in exceptional cases where
foreign investors seek to acquire assets which are critical to our essential interests.1 The Regulation has
equipped the EU with a framework and common criteria to identify risks related to the acquisition or control
of strategic assets, which threatens security or public order. In addition, it entails a cooperation framework between
Member States and the Commission. This underpins the assessment of FDI in Member States, and facilitates the
ultimate decision by the Member State where the FDI is planned or completed.

Even though FDI falls within the exclusive competence of the Union, Member States are allowed by the Regulation to
maintain screening mechanisms necessary to identify risks to security or public order arising from particular
investment transactions. However, without the EU cooperation framework, potential blind spots could exist in relation

The Commission observes that in the vast majority of cases the cooperation mechanism does not delay approval process at
national level (as confirmed by the public consultation undertaken in the summer of 2023 (see Summary results – Targeted
consultation on the evaluation and revision of Regulation (EU) 2019/452 (the ‘FDI Screening Regulation’), p. 20) . The vast majority
of cases are closed within 15 days (Phase 1). For example, in 2023, the Commission closed 92% of the cases in Phase 1 (source:
Fourth Annual Report on the screening of foreign direct investments into the Union; for more details on the annual reports, see
under question 37). to “cross-border impacts” as the screening of an investment by a Member State may only take into account risks to
the national security or public order of the Member State where the investment is planned or completed. Thanks to
the Regulation, Member States and the Commission have a much better overview of foreign investments in
the EU as a whole.

In the internal market, a critical technology or infrastructure in one country may also be critical for its neighbours
and sometimes for the whole Union. Investments in strategic sectors may also have impacts on EU-funded projects,
like the navigation system Galileo, Trans-European Networks in the areas of energy (TEN-E) and transportation (TENT), or the EU’s research and innovation programme Horizon Europe.

The Regulation includes an indicative list of factors that Member States and the Commission may take into account
when assessing whether a foreign direct investment (FDI) is likely to affect security or public order. These factors
include effects on critical infrastructure, technologies (including dual-use items) and inputs, which are essential for
security or public order. Effects of an FDI on access to sensitive information, including personal data, or the ability to
control such information, or on the freedom and pluralism of the media may also be taken into account when making
such an assessment.

Member States and the Commission also take into account the context and circumstances of the FDI, in particular,
whether a foreign investor is controlled directly or indirectly (for example through significant funding, including
subsidies), by the government of a third country, or is pursuing State-led outward investment projects or programmes.

The assessment is conducted on a case-by-case basis.

No specific third country is “blacklisted” or “targeted” and no specific third country is “whitelisted” or “exempted” under
the Regulation. Concerns relating to security and public order can potentially arise from an FDI coming from any
jurisdiction. Non-discrimination among foreign (non-EU) investors is a key principle of the Regulation and the sole
grounds for screening a foreign investment are risks to security and public order, assessed case-by-case, regardless
of the foreign investor’s origin

Specifically, the Regulation defines ‘foreign investor’ as “a natural person of a third country or an undertaking of a
third country, intending to make or having made a foreign direct investment”. An ‘undertaking of a third country’ is
defined as an undertaking constituted or otherwise organised under the laws of a third country, i.e. any non-EU country.

No. The Union and its Member States have an open investment environment, which is enshrined in the Treaty on the
Functioning of the European Union (TFEU) and embedded in the international commitments of the Union and its
Member States with respect to foreign direct investment (FDI).

The Regulation is about identifying and addressing potential threats to security or public order, which may
be caused by certain foreign investments without reducing the EU’s openness to FDI or restraining the activities of
foreign investors in the Union.

It is for Member States and the Commission to assess, on a case-by-case basis, whether a specific investment
threatens security or public order and, if so, to suggest appropriate measures to mitigate those risks. The
prohibition of an FDI should be considered only in cases where the mitigation of identified risks does not seem possible
by carefully considered mitigating measures