COMMISSION STAFF WORKING DOCUMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing a framework for screening of foreign direct investments into the European Union
Date: 2017-09-13
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: capital movement, direct investment, disclosure of information, financial control, foreign investment, public order, third country, threat to national security

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 13.9.2017  SWD(2017) 297 final   COMMISSION STAFF WORKING DOCUMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing a framework for screening of foreign direct investments into the European Union  {COM(2017) 487 final}  
 
 
1. The EU is open to and benefits from foreign direct investment… 

The  EU  welcomes  foreign  direct  investment  (FDI)  because  of  the  substantial  benefits  they 
bring for our economy  and society at large. FDI is a source of growth and jobs. It links EU 
companies  with  global  value  chains  that  drive  the  modern  economy.  It  boosts  productivity 
and  makes  our  companies  more  competitive  by  improving  resource  allocation,  bringing  in 
capital,  technologies  and  expertise,  increasing  competition,  stimulating  innovation,  and 
opening  new  markets  for  EU's  exports.  Furthermore,  it  supports  the  objectives  of  the 
Investment Plan for Europe, and other EU projects and programmes. Outward FDI generates 
similar  gains  as  inward  FDI,  including  for  the  implementation  of  the  2030  Agenda  for 
Sustainable Development. For those reasons, the EU supports liberalisation of investments 
worldwide. 

Indeed,  the  European  Union  has  one  of  the  world's  most  open  investment  regimes,  and 
collectively  EU  Member  States  have  the  fewest  restrictions  in  the  world  on  foreign  direct 
investment.  This  is  expressly  acknowledged  in  the  OECD  FDI  Regulatory  Restrictiveness 
Index  which  measures  statutory  barriers  against  foreign  investment  in  over  60  countries 
worldwide and how they have changed over time (since 1997). 

OECD FDI Regulatory Restrictiveness Index (Section 1 – FDI restrictions de jure) 

2015 - OECD FDI Regulatory Restrictiveness Index 

OECD FDI Regulatory Restrictiveness Index – 2016 

2 

 
 
 
 
Development of OECD FDI Regulatory Restrictiveness Index (1997-2016)1 

1 Lithuania, Latvia (1997), Romania and Serbia (1997&2006) left blank 

This  means  that  there  are  few  obstacles  for  foreign  investors  to  invest  in  the  EU,  and  in 
particular  to  acquire  EU  companies.  The  OECD  FDI  Regulatory  Restrictiveness  Index  also 
shows  that  major  economic  partners  of  the  EU  have  more  investment  restrictions  in  place 
than  is  the  case  for  the  EU.  Despite  improvements  over  the  period  1997-2016,  China  for 
instance  remains  among  the  countries  with  the  highest  restrictive  index  together  with  the 
Philippines and Saudi Arabia. 

The  EU  is  also  the  world's  leading  source  and  destination  of  FDI.  At  the  end  of  2015,  the 
stock of inward FDI in the EU stood at over EUR 5.7 trillion while it reached EUR 5.1 trillion in 
the US and EUR 1.5 trillion in China, including Hong Kong. EU investors held EUR 6.9 trillion 
in  FDI  in  third  countries  in  the  same  year1,  with  inflows  of  EUR  467  billion  and  outflows  of 
EUR 537 billion in 20152. The US is the largest investor in the EU, but its share of EU FDI 
stock fell from 51.3% in 1995 to 41.4% in 2015. The share of Japan also decreased over the 
same period, from 7.7% to 2.9%. At the same time, the shares of Brazilian and Chinese FDI 
have increased significantly from respectively 0.2 and 0.3 per cent in 1995 to 2.2 and 2 per 
cent  in  20153,making  these  two  countries  the  fifth  and  sixth  largest  foreign  investors  in  the 
EU (see chart and table below). 

Share of the ten largest investors into the EU (share of EU inward FDI stocks) 4  

Partner 

United States 

Switzerland 

Canada 

Japan 

1995 

51.3% 

19.7% 

3% 

7.7% 

2005 

47.7% 

13.3% 

4.2% 

4.3% 

2015 

41.4% 

10.8% 

3.8% 

2.9% 

1 Eurostat, based on BPM 6 methodology and BD4, including investment through Special Purpose Entities. 
2
 Source: Eurostat 
3
 Source: Eurostat 
4 Eurostat, data based on BPM 5 for 1995 and 2005, and BPM 6 for 2015. 

3 

 
 
 
 
 
                                                            
incl.  Hong 

Brazil 

China. 
Kong 

Norway 

Russia 

Singapore 

Israel 

Source: EUROSTAT 

0.2% 

0.3% 

2.2% 

0.4% 

0.4% 

0.1% 

0.4% 

1% 

2.5% 

0.6% 

1.6% 

0.3% 

2.2% 

2% 

1.3% 

1.1% 

1% 

0.8% 

While  only  0.4  per  cent  of  EU  companies  are  controlled  by  non-EU  investors,  these 
companies are on average much larger than companies owned by EU investors. As a result, 
they represent about 13 per cent of total turnover, 11 per cent of value added and 6 per cent 
of total employment in the EU.5 

The  US  is  at  the  top  of  the  list  with  26  000  EU  controlled  companies  located  –  in  order  of 
importance – in UK, Germany, the Netherlands, France and Italy. China,  controlled around 4 
000 companies in the EU. 

Regarding  the  number  of  inward  FDI  transactions  in  the  EU,  estimates  point  to  a  range  of 
between  2000  and  4000  per  year.6  In  2016  there  were  1869  announced  FDI  transactions 
involving an extra-EU acquisition of a stake above 10% in an EU enterprise.7 

Regarding  flows  of  cross-border  investment,  non-EU  inward  FDI  increased  sharply  in  2015  to 
EUR  467  bn,  recovering  to  the  levels  reached  before  the  beginning  of  the  financial  crisis.  The 
recent increase and recovery of non-EU FDI flows was largely due to the rapid pace of expansion 
of inward FDI by certain large non-EU economies.  

5 Eurostat, FATS, 2014 figures. 
6 Note that these figures are based on datasets that exhibit limitations in terms of coverage, period under 
analysis and details of information, so should be treated as rough estimates. 
7 DEALOGIC M&As ANALYTICS. 

4 

 
 
 
 
 
 
 
                                                            
FDI net inflows in EU28, 2000-2015 

Source: Eurostat, Notes: Extra-EU refers to investments into the EU from third countries; *Selected non-EU includes BRICS 
countries, US and Japan. 

While  both  main  types  of  inward  FDI,  Mergers  and  Acquisitions  (M&As)  and  Greenfield 
investment,  were  recently  on  an  upward  trend,  the  post  crisis  increase  in  inward  EU  FDI 
flows continued to take the form mostly of M&As, while Greenfield investment remained more 
than six times lower than all other types of FDI. 

Greenfield investment as a share of total non-EU inward FDI 

Source: FDIMarkets; Note: Brownfield investment is calculated as a residual and includes all 
remaining components of FDI (for instance M&As, reinvested earnings and  intracompany loans) 

Even though the EU continues to be traditionally a net exporter of capital with respect to total 
FDI, regarding gross M&As the value of inward flows has been higher than that of outward 

5 

 
 
 
 
 
 
 
flows  since  2012  which  resulted  in  a  positive  net  inward  M&As  balance  for  5  consecutive 
years. 

Flows of Merger and Acquisition FDI transactions into the EU, EUR mn 

Source: Dealogic M&As ANALYTICS, FDI transactions for the acquisition of stakes above 10%. 

2. … but the screening of foreign direct investment may be necessary in certain 
cases 

This being said, in exceptional cases, foreign investments are problematic when they pose a 
threat to security or public order. This point has been made by the European Parliament and 
certain  Member  States,  who  also  raised  concerns  regarding  industrial  policy.  In  such 
circumstances,  FDI  may  need  to  be  assessed  and/or  conditioned  or  prohibited.  This  is  the 
case  where  foreign  investors  –  especially  but  not  only  when  they  are  state  owned  or 
controlled,  including  through  financing  or  other  means  of  direction  –  may  seek  to  acquire 
control  of  or  influence  in  European  undertakings  whose  activities  have  repercussions  on 
critical  technologies,  infrastructure,  inputs  or  sensitive  information.  Such  acquisitions  may 
allow  the  States  in  question  to  use  these  assets  to  the  detriment  not  only  of  the  EU's 
technological edge but also its security and public order. 

The recent increase in non-EU FDI was driven by a sustained increase in investment in the 
high technology sectors both with respect to M&As and Greenfield investment. 

Computers & Electronics is the most targeted sector by third countries acquirers in terms of 
total  value  of  the  stock  of  M&As  which  reached  more  than  EUR  323  billion  in  the  second 
quarter of 2017.8 

In  contrast,  inward  non-EU  FDI  in  traditional  manufacturing  sectors  slowed  down  recently 
again with respect to both components of FDI, M&As and Greenfield investment. 

8 DEALOGIC M&As ANALYTICS. 

6 

 
 
 
 
 
 
 
 
                                                            
Non-EU FDI in high technology sectors and manufacturing 

A. M&As 

B. Greenfield investment 

Source: FDIMarkets and DEALOGIC M&As ANALYTICS 

Notes: High technology is defined here as aerospace, renewables, biotechnology, consumer electronics, electronic 
components,  chemicals,  engines/turbines,  medical  equipment,  pharmaceuticals,  semiconductors,  software/IT 
services,  space/defence;  *indicates  extrapolated  figures;  Manufacturing  is  defined  as  automotive,  beverages, 
building/construction  materials,  business  machines,  ceramics,  coal/gas/oil,  consumer  products,  food,  industrial 
machinery, metals, minerals, paper, plastics, rubber, textiles, wood products. 

3. Existing foreign direct investment screening mechanisms 

Third countries 

Many  EU  partners  have  some  type  of  investment  screening  mechanisms  to  screen  inward 
FDI, including the Australia, Canada, China, Japan, Russia and the United States. The most 
common  reason  for  screening  foreign  investment  is  national  security.  Some  countries  also 
refer to national "economic security" or "strategic sectors". 

EU Member States 

Within the EU, 12 Member States have national mechanisms to screen investment in place: 
Austria,  Denmark,  Germany,  Finland,  France,  Latvia,  Lithuania,  Italy,  Poland,  Portugal, 
Spain, and the United Kingdom9.  

While the common purpose of these mechanisms is to allow the State to intervene in case of 
investments  that  may  pose  threats  to  their  essential  interests,  they  diverge  in  several 
aspects.  

First, with regard to the scope, most of the Member States' screening mechanisms apply to 
both intra-EU and extra-EU investments, in some cases with slightly different rules applying 
to  third  country  investment.  Other  mechanisms  apply  only  to  investments  from  third 
countries.  The  mechanisms  applying  only  to  third  country  investments  normally  include 
provisions  to  tackle  possible  circumvention  of  the  screening,  for  example  to  counter  the 
phenomenon of letter box companies 

Second, with regard to the investments covered, the screening mechanisms normally set out 
qualitative  criteria  or  quantitative  thresholds,  or  a  combination  of  both,  to  identify  the 
investment  to  be  screened.  Qualitative  criteria  require  for  example  acquisition  of  direct  or 

9 The description included in this paper of national screening mechanisms is based on the information currently 
available to the Commission services and their interpretation of the national legal frameworks. 

7 

 
 
 
 
 
 
 
 
                                                            
indirect  control  over  a  company  or  assets.  Quantitative  criteria  are  usually  thresholds 
referring to the percentage of shares or voting rights, which range from 5% to 50%.  

Third,  as  to  the  sectors  concerned,  some  screening  mechanisms  limit  the  screening  to 
investments  in  specific  sectors  deemed  to  be  strategic  (e.g.  telecommunications,  transport, 
energy)  or/and  in  certain  companies  or  activities  considered  of  strategic  importance.  Other 
mechanisms do not provide for such limitation or list sectors only for illustrative purposes. 

Fourth,  as  regards  grounds  for  screening,  in  some  cases  the  screening  is  limited  to  the 
protection of essential interest of national security, especially related to the production of or 
trade in arms, munitions, military equipment, war material, etc. However, in most cases the 
screening  goes  beyond  the  defence  sector  and  the  grounds  for  screening  extend  to  the 
protection of other public interests mainly related to public security and public policy.   

Divergences exist in the design of the screening procedures. The screening mechanisms can 
take  two  main  forms:  -  prior  authorisation  mechanisms  which  require  investors  to  notify  an 
investment covered before it is made and submit it to authorisation; - and ex-post- screening 
mechanisms  which  allow  the  State  to  carry  out  an  ex-post  control  of  investments  already 
completed.  Ex-post  screening  mechanisms  normally  also  allow  the  investor  to  notify  the 
investment voluntarily before it is completed in order to obtain clearance.  

There  are  different  deadlines  for  completion  of  the  screening  procedures  in  the  national 
mechanisms, most of them providing for two to four months. Often, mechanisms providing for 
prior screening set out a system of tacit approval, whereby the investment is deemed to be 
approved if the decision is not taken within the prescribed time limit. 

As regards the types of decisions, the authorities in charge of the screening may approve the 
investment, oppose it or approve it under certain conditions. Normally, the investors have the 
right to legal redress against the decision. 

EU level 

There  is  no  EU-wide  FDI  screening  mechanism.  The  EU  merger  control  regime  may  in 
certain situations allow a review of FDI, in cases where they take the form of concentrations 
falling within the scope of the EU Merger Regulation, but exclusively based on the effect on 
competition in the EU market.  

4. The case for an EU framework 

a) Status quo 

The  absence  of  a  comprehensive  legal  framework  at  EU  level  to  screen  FDI  into  the  EU 
makes it difficult to monitor in detail FDI flows in the EU as well as FDI screening decisions 
taken by Member States that have a screening mechanism, and does not allow cooperation 
to take place at EU level on FDI that may affect the interests of several Member States or of 
the Union as a whole. This situation also creates heightened uncertainty for foreign investors 
that  face  different  FDI  screening  regimes  from  different  Member  States.  The  status  quo  is 
therefore not an ideal option. 

b) More transparency 

More  transparency  on  foreign  investments  in  the  EU  is  a  pre-requisite  for  sound  decision-
making  as  well  as  enhanced  exchange  of  information  at  EU  level.  This  is  why  the 
Commission has decided to immediately: 

  carry  out  further  in-depth  analysis  of  FDI  flows  into  the  EU,  especially  in  strategic 
sectors  (e.g.  energy,  space,  transport)  or  assets  (technologies  and  inputs  linked  to 
strategic sectors, critical infrastructures across sectors, sensitive data) that may raise 
security  or  public  order  concerns,  in  particular  when  the  investor  is  owned  or 
controlled by a third country, and 

8 

 
 
 
  set  up  a  coordination  group  chaired  by  the  Commission,  and  composed  of 
representatives  of  Member  States,  to  exchange  information  on  FDI  flows  and  FDI 
screenings and promote policy convergence on FDI screening policies. 

c) Legal framework 

This  being  said,  in  order  to  ensure  a  more  effective  coordination  at  EU  level  on  FDI 
screenings  and  more  legal  certainty  for  Member  States  and  for  investors,  a  specific  legal 
framework at EU level is necessary. 

One  option  could  have  been  to  propose  an  FDI  screening  mechanism  entirely  operated  at 
EU level. However, such system could be very difficult to operate in practice due to possible 
differences of views amongst Member States and also due to the fact that national security 
remains the sole responsibility of Member States. Such mechanism could therefore generate 
a disproportionate burden for foreign investors subject to screening, additional administrative 
burden, long deadlines for taking decisions and uncertainty. 

The option of a  framework for the screening  of FDI at EU level enabling Member  States  to 
screen FDI based on Article 207 TFEU, setting common criteria and standards to do so, and 
providing  for  cooperation  amongst  Member  States  and  with  the  Commission  on  FDI  that 
affects the interest of several Member States or the Union is preferable. 

It  gives  enough  flexibility  to  Member  States  on  whether  to  maintain  or  not  FDI  screening 
mechanisms, but also would ensure a minimum degree of harmonisation and cooperation at 
EU  level,  whilst  enhancing  the  certainty  and  limiting  the  administrative  burden  for  foreign 
investors. 

This  is  why  the  proposal  for  such  lighter  Regulation  establishing  a  framework  for  the 
screening of foreign direct investments at EU level is being made. The objective is to have an 
EU  system  that  is  politically  acceptable  to  all  Member  States,  adequately  covers  the 
concerns linked to certain FDI,  stays  within the limits of EU and international law, does not 
unduly deter foreign investments, and is efficient and credible. 

9 

 
 
 
 
ANNEX10 

DATA ON FDI IN THE EU 

EU 

FDI Stocks 

  The EU is a net capital exporter worldwide in terms of foreign direct investment (FDI) stocks.  

  Stakes  of  EU  companies  in  non-EU  countries  (FDI  outbound  stocks)  have  increased  in  the  last 
three years (since 2015) to a total of EUR 6.9 trillion. This compares to a total of EUR 5.7 trillion 
of  non-EU  countries  stakes  in  the  EU  (FDI  inbound  stocks)  also  increasing  over  the  last  three 
years. 

FDI Flows 

  FDI  flows  to the  EU  increased  sharply in  2015  to  EUR  467bn,  recovering  to  the  levels  reached 

before the beginning of the financial crisis. 

  According to the OECD, FDI flows to the EU increased in 2016 by 22% against a global decrease 
of 7% (from USD 478 billion to USD 582 billion), reaching their highest level since the beginning 
of the financial crisis. 

Figure 1, FDI net inflows in EU28, 2000-2015 

Source: Eurostat, Notes: Extra-EU refers to investments into the EU from third countries. *Selected non-EU countries: the 
BRICS countries, the US and Japan;  

Main components of the recovery of FDI Flows  

  The  increase  in  non-EU  FDI  was  largely  due  to  the  rapid  pace  of  expansion  of  inward  FDI  by 

certain large non-EU economies (see Figure 1). 

 

It was as well driven by a sustained increase in investment in the high technology sectors both with 
respect to M&As and Greenfield investment. 

10 Note that some graphs of this annex are also present in the body of the document. This repetition is 
necessary for the logic of the presentation of the annex. 

10 

 
 
 
 
 
 
 
 
 
                                                            
 

In contrast, inward non-EU FDI in traditional manufacturing sectors slowed down in recent years 
again with respect to both components of FDI, M&As and Greenfield investment (see Figure 2). 

Figure 2, Non-EU FDI in high technology sectors and manufacturing 

A. M&As 

B. Greenfield investment 

Source: FDIMarkets and DEALOGIC M&As ANALYTICS 

Notes: High technology is defined here as aerospace, renewables, biotechnology, consumer electronics, electronic 
components,  chemicals,  engines/turbines,  medical  equipment,  pharmaceuticals,  semiconductors,  software/IT 
services, space/defence; *indicates extrapolated figures. 

  Non-EU  inward  FDI  in  high  technology  sectors  increasingly  took  the  form  of  M&As,  while 
Greenfield  investment  is  considered  to  have  a  more  direct  positive  impact  on  international 
production growth and jobs as it is entails the creation of new production facilities/enterprises in 
the hosting economies. 

Figure 3, High technology M&As and Greenfield investment, 2012-2016 

Source: FDIMarkets and DEALOGIC M&As ANALYTICS 

Note:  High  technology  is  defined  here  as  aerospace,  renewables,  biotechnology,  consumer  electronics,  electronic 
components,  chemicals,  engines/turbines,  medical  equipment,  pharmaceuticals,  semiconductors,  software/IT  services, 
space/defence 

11 

 
 
 
 
 
 
 
 
 
 
 
Gross flows of M&A / FDI Transactions 

  While EU continues to be traditionally a net exporter of  capital, since 2012 the value of inward 
M&As has been higher than that of outward M&As which resulted in a positive net inward M&As 
balance for 5 consecutive years.  

Figure 4, Flows of Merger and Acquisition FDI transactions into the EU, EUR mn 

Source: Dealogic M&As ANALYTICS, transactions for the acquisition of stakes above 10%. 

  Some of the top 10 countries having the largest stock of inward FDI in the EU continued to expand 
rapidly  their  acquisitions  in  recent  years  (US,  Japan,  China  including  Hong  Kong)  which 
underpinned the rapid increase in inward M&As.  

Figure 5, Gross M&A flows into the EU by selected large non-EU economies 

Source: Dealogic M&As ANALYTICS, transactions for the acquisition of stakes above 10%. 

Note: *Selected non-EU economies: the BRICS countries, the US and Japan. 

12 

 
 
 
 
 
 
 
 
 
 
 
 
 

In  2016  the  largest  acquiring  countries  in  the  EU  have  been  US,  followed  by  China  (including 
Hong Kong) and Japan. 

Figure 6, Ranking of the top 10 non-EU investment countries. 

 by value of their acquisition transactions in the EU in 2016 

Source: Dealogic M&As ANALYTICS, transactions for the acquisition of stakes above 10%. 

13 

 
 
 
 
 
 
 
Sectoral composition of gross inward M&A / FDI Transactions 

  Computers & Electronics is the most targeted sector by third countries acquirers in terms of total 
value  of  the  stock  of  M&As  which  reached  more  than  EUR  323  billion  in  the  second  quarter  of 
2017. 

Figure 7, Total stocks of inward M&As by General Industry Groups, Q2 2017 

Source: Dealogic M&As ANALYTICS, transactions for the acquisition of stakes above 10%. 

14 

 
 
 
 
 
 
 
 
 

It was the most targeted sector as well in 2016 with a record value of gross M&As flows of EUR 
65  billion.  It  also  experienced  the  most  rapid  progression  with  value  of  deals  increasing  almost 
eightfold from EUR 2.25 billion in 1995 to more than EUR 65 billion in 2016.  The value of deals 
in  "Healthcare"  reached  more  than  EUR  30  billion  in  2015,  while  telecommunications  deals 
peaked in 2013 with a volume of deals worth EUR 26 billion and partially recovered in 2016 with 
a deal volume of more than EUR 15 billion .. 

Table 8, Sectoral composition of inward M&As in 1995-2016, EUR billion 

Source: Dealogic M&As ANALYTICS, transactions for the acquisition of stakes above 10%. 

15 

19952007200820092010201120122013201420152016Computers & Electronics2.257.7511.502.065.1519.618.194.948.5525.0465.84Real Estate/Property0.0228.836.896.405.8111.189.3015.5820.6629.4523.10Finance3.1327.2920.7614.329.103.366.353.737.5816.7224.38Healthcare0.4319.254.215.1311.8410.955.2226.4513.2630.9729.43Utility & Energy2.545.191.030.6211.0816.399.968.085.7911.0312.78Telecommunications0.5610.183.051.694.955.9811.1626.2013.939.8115.21Food & Beverage1.039.242.293.5118.701.9510.946.218.325.3318.14Oil & Gas1.375.537.268.454.8612.907.443.672.582.432.45Chemicals0.505.335.561.301.069.054.135.176.627.642.30Construction/Building0.212.025.710.572.873.354.017.272.5628.619.78Consumer Products3.5915.2811.780.451.993.553.210.943.463.822.88Transportation0.273.465.120.695.734.114.114.023.1410.3011.44Retail0.562.066.230.562.594.047.552.2920.8812.982.57Professional Services0.804.393.130.792.153.535.525.332.707.286.16Auto/Truck0.800.861.885.851.441.813.431.501.549.976.51Metal & Steel0.4913.121.540.640.812.431.110.166.002.4810.01Machinery0.351.312.990.970.866.872.821.462.3013.705.20Insurance2.505.025.431.231.382.010.732.063.517.687.82Leisure & Recreation0.070.270.330.421.633.391.791.473.852.493.44Dining & Lodging0.633.342.610.421.941.351.101.352.188.573.16Forestry & Paper0.050.381.000.001.640.301.290.220.510.090.48Mining0.370.8111.971.031.661.043.810.180.270.250.18Publishing0.111.3612.970.405.282.152.030.640.531.260.01Aerospace0.003.810.070.010.000.330.033.432.450.100.33Textile0.070.341.030.042.310.141.000.280.501.131.34Holding Companies0.000.750.780.060.400.860.100.170.000.290.00Agribusiness0.000.030.050.000.060.070.000.102.500.100.01Defense0.000.000.040.000.100.040.000.000.000.000.00Total22.69177.20137.2257.60107.40132.75116.38132.88146.16249.51264.96 
 
 
 
 
 
 
 
Number of inward M&A / FDI Transactions  

  Estimates point to a range for FDI transactions in the EU of between 2000 and 4000 per year11 

  With respect to M&As the EU has become a net importer of capital as of 2009 with the value of 

inward transactions exceeding that of outward transactions. 

 

In 2016 there were 1869 announced FDI transactions involving an extra-EU acquisition of a stake 
above 10% in an EU enterprise  

Figure 9, Number of extra-EU FDI transactions 

Source: DEALOGIC M&As Analytics, Announced deals, acquisitions of stakes above 10%. 

  The UK was the most targeted Member State in 2016 as it was home to 629 deals or more than 
35% of all extra-EU FDI transactions. It was followed by Germany (247 deals or 14% of EU total) 
and France (176 deals or 13% of EU total). 

  Regarding the nationality of acquirers, the US had the largest share in the total extra-EU FDI 

transactions in 2016 (40%), followed by China (12%). 

  More than 85% of these transactions (i.e. acquisition of a stake above 10%) were strategic 

acquisitions to gain control of the companies (i.e. stakes of more than 50%). 

11 Note that these figures are based on datasets that exhibit limitations in terms of coverage, period under 
analysis and details of information, so should be treated as rough estimates. 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Greenfield investment 

  Greenfield FDI shows as well a clear continuation of the increase trend in non-EU FDI sources 

(2012-2017); 

  Similarly  to  M&As  and  total  non-EU  FDI,  the  rise  in  Greenfield  investment  into  the  EU  was 

increasingly due to investment by selected large non-EU economies; 

Figure 10, Non-EU Greenfield investment, 2012-2017 

EURbn 

70

65

60

55

50

45

40

35

30

2012

2013

2014

2015

2016

Extra-EU28

Selected large non-EU source countries*

2017
(extrapolated)

Source:  FDIMarkets;  Notes:  *Selected  non-EU  countries:  the  BRICS  countries,  the  US  and  Japan;  Extra-EU  refers  to 
investments into the EU from third countries. 

  However,  despite  its  increasing  trend  and  its  more  direct  positive  impact  on  the  hosting 
economies,  Greenfield  investment  into  the  EU  still  remains  well  below  the  value  of  M&As  and 
more than 6 times lower than brownfield investment. 

Figure 11, Greenfield investment as a share of total non-EU inward FDI 

17 

 
 
 
 
 
 
 
Source: FDIMarkets; Note: Brownfield investment is calculated as a residual and includes all 
remaining components of FDI (for instance M&As, reinvested earnings and  intracompany loans) 

Foreign controlled enterprises12  

  Third-country foreign-controlled enterprises are small in number in the EU (0.4% of the total) but 
they have a significant economic impact due to  their larger  than average size in terms of added 
value, employment and turnover. 

  The most recent reliable data available (end 201413) shows that out of a grand total of around 22 
million  EU  enterprises,  only  1.2%  were  foreign-controlled  of  which  89  000  (around  one  third) 
have controlling owners from outside the EU (see 0.4% figure in above bullet). 

  The  US  is  at  the  top  of  the  list  with  26  000  EU  controlled  companies  located  –  in  order  of 

importance – in UK, Germany, the Netherlands, France and Italy. 

  China (including Hong Kong) controlled around 4 000 companies in the EU with a third of them 

located in Romania. 

  Although third-country foreign-controlled enterprises are small in number in the EU they have a 
significant economic impact due to their larger than average size: in 2014, they accounted for 10% 
of value added 6% of employment and 13% of turnover in the non-financial business economy in 
the EU (see graph below). 

12 This section is based on EUROSTAT FATS, 2014. 
13 2015 data will be available in the first quarter of 2018 

18 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
  The  weight  of  third-country  foreign-controlled  enterprises  in  selected  strategic  sectors  is  also 
higher along the four dimensions analyzed (number of companies, added value, employment and 
turnover). 

  A  focus  analysis  on  16  selected  strategic  sectors  moreover  shows  that  the  role  played  by 

companies controlled by third-country entities was even higher there. 

  EU  companies  controlled  by  third  country  entities  played  an  especially  significant  role  in 
"Information  service  activities"  (accounting  for  40%  of  the  total)  and  in  "Manufacture  of 
computer, electronic and optical products" (36% of the total). 

  2014 saw a net increase of around 4 000 of EU enterprises whose ultimate controlling company 
was located outside the EU (see table below) with China (including Hong Kong) in the lead. 

19 

Shares of extra-EU controlled companies in strategic sectors (2014)Number of enterprisesTurnoverValue addedEmploymentMining and quarrying2.1%16.5%19.9%10.1%Manufacture of chemicals and chemical products4.8%28.0%26.4%19.4%Manufacture of other non-metallic mineral products0.6%11.2%9.3%8.0%Manufacture of basic metals2.5%17.6%17.7%14.4%Manufacture of computer, electronic and optical products3.1%36.3%21.8%20.9%Manufacture of electrical equipment1.6%17.1%14.7%14.6%Electricity, gas, steam and air conditioning supply0.9%3.5%N/A0.9%Water collection, treatment and supply0.1%6.6%9.1%2.9%Land transport and transport via pipelines0.2%1.8%1.6%1.1%Water transport1.1%N/AN/AN/AAir transportN/A8.7%3.8%8.2%Postal and courier activities0.2%4.6%2.1%1.5%Telecommunications1.8%12.0%11.4%9.1%Computer programming, consultancy and related activities0.8%25.6%23.0%13.7%Information service activities0.6%39.9%31.0%13.3%Scientific research and development1.5%34.3%26.3%12.9%Sensitive sectors total0.7%14.1%14.9%8.5% 
 
 
 
 
 
 
 
 
 
 
 
World 

  According  to  the  OECD,  in  2016  global  FDI  flows  decreased  by  7%  to  USD  1.6  trillion  in 
comparison to 2015, but remains above levels recorded between 2009 and 2014 and comparable 
to 2008. 

  FDI  flows  remained  below  their  pre-crisis  peak,  representing  2.2%  of  global  GDP  compared  to 

3.6% in 2007. 

20