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international regulatory enforcement

EU Screening of Foreign Investments

December 20, 2018

By Dr. Regina Engelstaedter & Dr. Sebastian Klein

The European Union negotiators reached a political agreement on an EU framework for screening foreign direct investment and introduced an alert mechanism enabling to act on short deadlines and utmost confidentiality.

The core element of the agreement is a “cooperation mechanism" for foreign direct investments through a combination of data collection and information exchange. While the ultimate power of approving deals away remains with the individual member state, the EU will be allowed to provide comments and therefore introduce peer pressure.

In addition, the threshold for initiation of the screening procedure has been decreased to 10% in Germany. Transaction security can be obtained in advance by applying for a clearance certificate.

  • M&A practitioners need to consider the legal framework for political intervention relating to foreign direct investment in the EU.

  • The threshold for initiation of the screening procedure has been decreased to 10% in Germany.

  • Transaction security can be obtained in advance by applying for a clearance certificate.