REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Second Annual Report on the screening of foreign direct investments into the Union
Date: 2022-09-01
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: EU Member State, activity report, direct investment, financial control, foreign capital, foreign investment, investment policy, third country

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 1.9.2022  COM(2022) 433 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Second Annual Report on the screening of foreign direct investments into the Union {SWD(2022) 219 final}  
 
 
INTRODUCTION  

This Report is the second Annual Report by the European Commission on the application of the 
EU Foreign Direct Investment (FDI) Screening Regulation (the “FDI Screening Regulation”, or 
the “Regulation”).  

The Report covers the year 20211 and provides transparency around the operation of FDI screening 
in the EU, and developments in national screening mechanisms. It contributes to the accountability 
of  the  Union  in  an  area  where,  given  the  security  interests  at  stake,  transparency  regarding 
individual transactions is neither possible nor appropriate.  

It is based on reports by the 27 Member States and other sources and consists of four chapters: 

  Chapter 1 on trends and figures for FDI into the EU;  
  Chapter 2 on legislative developments in Member States;  
  Chapter 3 on FDI screening activities by Member States;  
  Chapter 4 on the EU cooperation mecanism on FDI screening. 

This  Annual  Report  is  adopted  simultaneously  with  the  Annual  Report  on  Dual  Use  Export 
Controls.  Both  FDI  Screening  and  Export  Controls  are  important  tools  for  strategic  trade  and 
investment controls to ensure security in the European Union.  

1 

The first annual report covered a shorter period, i.e. from 11 October 2020 to 30 June 2021. Hence, there is an 
overlap with the present report which encompasses the period from 1 to 30 June as well. 

1 

 
 
 
 
 
                                                           
CHAPTER  1  –  FOREIGN  DIRECT  INVESTMENT  INTO  THE  EUROPEAN  UNION  – 
TRENDS AND FIGURES 

In  2021,  global  foreign  direct  investments  (FDI)  rebounded  from  the  COVID-19-induced 
slowdown in 2020. Global inflows reached EUR 1.5 trillion in 2021 (Figure 1), recording a +52% 
increase with respect to 2020 and a +11% increase with respect to the pre-COVID-19 levels of 
2019. 

The EU contributed to 2021’s global recovery with EUR 117 billion of inward FDI, 8% of the 
world level (it was 27% in 2019), which represents a 31% decrease with respect to 2020 levels and 
a -68% decrease compared to 2019. The EU result is driven by the decreases of inward FDI in 
Ireland, Germany and Luxembourg and by disinvestments in the Netherlands2. 

Figure 1: World and EU inward FDI flows  

Tot world inward

EU27 inward

1.849 

1.496 

1.504 

1.353 

1.269 

992 

315 

241 

302 

362 

170 

117 

R
U
E
N
O
I
L
L
I
B

2.000

1.800

1.600

1.400

1.200

1.000

800

600

400

200

0

Source: OECD data, extracted 29 April 2022. Data refers to inward FDI flows. 

2 0 1 6

2 0 1 7

2 0 1 8

2 0 1 9

2 0 2 0

2 0 2 1

In 2021, strong equity markets and a recovery in business confidence led to increased mergers & 
acquisitions (M&A) and greenfield transactions globally but not yet in the EU273 (Figure 1), in 
spite of the drop in aggregated FDI inflows. The number of acquisitions and greenfield investments 
increased in the EU by +32% and +12%, respectively, compared to 20204. 

2 OECD FDI IN FIGURES, April 2022. 
3 Pitchbook, Global M&A report, 2021. 
4 GLOSSARY: We use the term foreign investor to identify non-EU entities (companies or persons) acquiring equity 
stakes or initiating greenfield investment projects (in short: ‘greenfields’ or ‘greenfield investments’) in the EU. The 
terms  foreign  and  non-EU  are  used  interchangeably.  Throughout  the  text  the  term  acquisitions  will  identify  the 
acquisitions of equity stakes in EU companies, be it M&A or stakes below 50% but above 10% of the capital, and the 

2 

 
 
 
                                                           
 
Acquisitions remained however 9% below the level reached in 2019. For greenfield investments 
the difference with the pre-pandemic year reached -39%. 

The upward trend in cumulated flows of foreign transactions in the EU27 confirms the openness 
of EU countries to foreign investments, despite the slow-down caused by the COVID-19 pandemic 
(Figure 2), with an average rise of over 2 100 acquisitions and 3 200 greenfield investments per 
year in the past five years. 

 Figure 2: 2015-2021 yearly cumulative number of transactions into the EU27 

s
n
o
i
t
c
a
s
n
a
r
t

f
o
r
e
b
m
u
n

25.000

20.000

15.000

10.000

5.000

0

2015

2016

2017

2018

2019

2020

2021

M&As

GFs

Source: JRC elaboration based on Bureau van Dijk data, extracted on 22/02/2022. Data for 2015 corresponds to the flows of FDI in 2015, while 
data for the subsequent years correspond to the cumulated sum of yearly flows.   

Year-on-year data by foreign jurisdiction shows an increase in the number of deals and projects 
for  most  origin  countries  in  2021  (Figure  3).  The  US  was  the  top  foreign  investor  in  2021, 
accounting for 32.3% of all acquisitions and 39.4% of the greenfield investments, followed by the 
UK with 25.6% and 20.9%, respectively. Notable exceptions are China and Japan, both remaining 
below their 2020 levels. China, in particular, with 2.3% of all foreign acquisitions in 2021 (down 
from 3.4% in 2020) and 6% of the greenfield investments (down from 7.1% in 2020), failed to 
take off in dealmaking, despite some large announced M&A and greenfield investments driving 
up the value of Chinese investments to EUR 9 billion in 2021 (from EUR 6.5 billion in 2020). 

term transactions will be referred to the sum of acquisitions and greenfield investments. Foreign transactions refer to 
operations where the investor has an ultimate owner outside the EU. The ultimate owner is an entity owning, directly 
or indirectly, at least 50.01 percent of direct investor’s shares. 

3 

 
 
 
 
 
 
                                                           
 
 
Strict  Chinese  capital  controls  and  the  concentration  of  investment  activities  in  core  industry 
sectors  were  negatively  influencing  Chinese  dealmaking  in  2021.5  While  in  2021  most  of  the 
jurisdictions reached the pre-COVID-19 levels of acquisition of equity stakes, some of them even 
improving  on  2019  levels6,  greenfield  investment  projects  remained  lower  compared  to  2019 
levels. The only exception here being offshore countries7 (grouping 133 projects in 2021, up from 
106 in 2019) and Russia8 (with 46 projects in 2021, up from 20 in 2019). 

Figure 3: Number of acquisitions of equity stakes* (left) and greenfield investments (right) in 
2021 and 2020 – Detail by foreign jurisdiction (top ten investors) 

Source: JRC elaboration based on Bureau van Dijk data, extracted on 22/02/2022. Offshores: Offshore financial Centre9. RoW: Rest of the World. 
(*) Acquisitions of equity stakes above 10% of the capital of the EU business. 

Despite  analysts’  positive  outlook  for  2022,  arising  from  the  expectation  that  the  worst  of  the 
pandemic had been left behind, hopes are rapidly vanishing with the uncertain business climate 
stemming from Russia’s unprovoked and unjustified invasion of Ukraine. The economic effects 
of the sharp increase in the cost of energy (which was already having an effect prior to the invasion) 
and raw materials, and the extent of the economic repercussions of supply chain disruptions, in 
particular for critical raw materials and critical technologies, and weaker global activity and trade, 
which are still not fully assessed, will influence the dealmaking momentum in the EU, potentially 
leading to a downward revision of the initial positive stance for 2022. 

5 See the analysis of Chinese investments, Rhodium (2022). 
6 This is the case e.g. for the US, the Offshore Countries, Canada and Norway. 
7 The main offshores by number of M&A or GFs are (in alphabetical order): Bermuda, British Virgins Islands, Cayman 
Islands, Mauritius and the United Kingdom Channel Islands. For the full list of Offshore Financial Centres, see e.g. 
Commission  Staff  Working  Document  -  Following  up  on  the  Commission  Communication  “Welcoming  Foreign 
Direct Investment while Protecting Essential Interests” – SWD(2019) 108 final – 13 March 2019. 
8 More information under “Russian shareholding in Europe (EU27)” in the accompanying Commission Staff Working 
Document. 
9 See footnote 7. 

4 

 
 
 
 
                                                           
The number of transactions by target EU country showed a widespread rebound in the number of 
foreign transactions in 2021 compared to 2020 (Figure 4). Germany, with a share of 16.4% of all 
acquisitions done by foreign investors, was the top destination in 2021 and recorded a 20% increase 
in the number of transactions with respect to 2020. Spain, France and the Netherlands followed 
with a share of foreign transactions standing at 13.8%, 10.7% and 10.5%, respectively, and double-
digits yearly growth rates compared to the previous year. In 2021, Spain led the EU ranking of top 
foreign  greenfield investments’ recipients  (22.2% of the total), preceding  France and Germany 
with 12.7% and 11.2%, respectively. These last two countries, together with Italy, were the only 
top  ten  greenfield  investments’  recipients  where  foreign  projects  failed  to  take  off  in  2021 
compared to 202010.  

Figure 4: Number of acquisitions of equity stakes* (left) and greenfield investments (right) in 
2021 and 2020 – Detail by destination country (top ten EU recipients) 

Source: JRC elaboration based on Bureau van Dijk data, extracted on 22/02/2022. RoEU stands for Rest of EU. (*) Acquisitions of equity stakes 
above 10% of the capital of the EU business. 

A  closer  look  to  the  sectors  targeted  by  foreign  investors  shows  that  ICT  (Information  and 
Communications Technology) and Manufacturing are driving the rebound of foreign transactions 
in the EU (Figure 511). ICT ranked first in acquisitions and second in greenfield investments (after 
Retail)  with  30%  of  the  new  acquisitions  and  15.4%  of  new  greenfield  investments  in  2021, 
representing  a  growth  of  34%  and  15%,  respectively,  compared  to  2020.  Manufacturing 
accounting  for  25.9%  of  total  foreign  acquisitions  and  12%  of  foreign  greenfield  investments, 
came next recording in 2021 a +38% and +12%, respectively, compared to the year before. 

Foreign transactions gained new momentum in all the main sectors compared with 2020, reaching, 
or even surpassing, pre-COVID-19 levels in some categories. For acquisitions of equity stakes, 
2019 levels have been hit in ICT, Professional and Scientific activities and Construction, among 
others,  with  +27%,  +8.3%  and  +10%  increases  in  2021  compared  to  2019.  Foreign  greenfield 
investments are instead more resilient to recovery. 

10 The rebound in greenfield investments shown by the group Rest of EU is driven by Hungary, the Czech Republic 
and Greece. Hungary hosted in 2021 2.4% of all foreign greenfields in the EU, showing an increase of 38% compared 
to 2020. The Czech Republic, with 1.5% of all foreign greenfield investments, recorded in 2021 a +50% compared 
with 2020 and Greece (1.4% of all foreign greenfield investments) a +63%. 
11 The categories used refer to the NACE Rev. 2 Broad Structure, see: https://ec.europa.eu/eurostat/web/nace-rev2.  

5 

 
 
 
 
                                                           
With the exception of the Hospitality sector, greenfield investments in 2021 are lagging behind 
2019 levels, although in a positive track after the plunge of 2020. 

Figure 5: Number of acquisitions (left) and greenfield investments (right) in 2021 and 2020 – By 
NACE sector (top five categories) 

Source: JRC elaboration based on Bureau van Dijk data, extracted on 22/02/2022. PST stands for professional, scientific and technical activities 
(Nace. Rev2, section M), it contains among other things R&D facilities. ICT stands for Information and communication (Nace. Rev2, section J). 

Further details 
More details on the above figures are provided in the accompanying Commission Staff Working 
Document, Section 1. There, additional data is provided on the impact and recovery per Member 
State and sector, on the origin of foreign investors in the EU, and on foreign state participation in 
foreign investors in the EU. 

6 

 
 
 
 
 
 
CHAPTER 2 – LEGISLATIVE DEVELOPMENTS IN MEMBER STATES IN 2021 

The EU FDI Screening Regulation and EU Member States’ FDI screening mechanisms 

While the EU FDI Screening Regulation does not require Member States to establish a national 
screening mechanism12, the European Commission continues to encourage Member States, both 
at political and technical level, to  adopt, adapt, and implement national screening mechanisms. 
Most  recently,  the  European  Commission  called  upon  Member  States  to  set  up  a  fully-fledged 
screening mechanism in the 2020 Guidance to  Member States on how to use FDI screening in 
times of public health crisis and economic vulnerability in the EU13 and in the 2022 Guidance to 
Member States on FDI from Russia and Belarus14. 

The European Commission is actively fostering this development in all Member States, facilitating 
the  progress  and  alignment  of  national  legislative  processes.  Throughout  2021,  the  European 
Commission has assisted Member States with technical and policy guidance, technical meetings 
and information exchange including exchanges of best practices. 

Nevertheless,  despite  this  regular  cooperation  and  a  number  of  important  similarities  between 
national screening mechanisms, Member States continue to show significant degrees of variation 
in terms of what constitutes a formal screening of an FDI, applicable timelines, sectoral coverage, 
notification  requirements  and  other  elements.  Therefore,  the  European  Commission  remains 
dedicated to support the alignment of national screening mechanisms and expects that all 27 EU 
Member States will soon have a national FDI screening mechanism in place.  

A  national  screening  mechanism  in  all  27  Member  States  is  necessary  to  safeguard  the  Union 
against  potentially  risky  foreign  investments  from  third  countries.  It  would  ensure  that  all  27 
Member  States  and  the  European  Commission  screen  relevant  FDI,  thereby  protecting  the 
collective security of the Member States and the Union, as well as the security of the Single Market 
and the very high level of economic integration which it allows. 

12 However, Article 3 of the FDI Screening Regulation sets out an obligation for any EU Member State with an FDI 
screening mechanism to ensure that such mechanism:  
• has defined timeframes;  
• is transparent and non-discriminatory;  
• allows for taking into consideration any comments by other Member States and the opinion of the Commission;  
• allows the relevant parties to seek recourse against an adverse decision by an FDI screening authority;  
• maintains measures to prevent the circumvention of FDI screening mechanisms and related decisions. 
13  Guidance  to  the  Member  States  concerning  foreign  direct  investment  and  free  movement  of  capital  from  third 
countries, and the protection of Europe’s strategic assets, ahead of the application of Regulation (EU) 2019/452 (FDI 
Screening Regulation), OJEU C 99I, 26.3.2020, p.1-5: “(…) the European Commission calls upon Member States to: 
- Make full use already now of its FDI screening mechanisms to take fully into account the risks to critical health 
infrastructures, supply of critical inputs, and other critical sectors as envisaged in the EU legal framework; 
- For those Member States that currently do not have a screening mechanism, or whose screening mechanisms do not 
cover all relevant transactions, to set up a full-fledged screening mechanism and in the meantime to use all other 
available  options  to  address  cases  where  the  acquisition  or  control  of  a  particular  business,  infrastructure  or 
technology would create a risk to security or public order in the EU, including a risk to critical health infrastructures 
and supply of critical inputs” 
14 Communication from the Commission - Guidance to the Member States concerning foreign direct investment from 
Russia and Belarus in view of the military aggression against Ukraine and the restrictive measures laid down in recent 
Council Regulations on sanctions, OJEU C 151 I, 6.4.2022, p. 1-12. 

7 

 
 
 
                                                           
 
Overview of Member States with a screening mechanism or in the process of setting one up 

The global pandemic and recent disruptions in global supply chains have brought into focus the 
criticality  of  certain  key  industries,  such  as  healthcare  and  energy.  Consequently,  many  EU 
Member States have either adopted new national screening mechanisms, or updated and expanded 
existing ones. In 2021, three Member States adopted a new screening mechanism and six Member 
States amended their existing one. By the end of 2021, seven Member States had already initiated 
consultative or legislative processes to establish a national screening mechanism. In total, in 2021, 
two thirds of all EU Member States had an FDI screening legislation in place. FDI Screening is 
increasingly gaining momentum in the EU.  

The map below gives an overview of the legislative status quo of EU Member States.  

8 

 
 
 
 
Developments in EU Member States in 2021 – FDI screening mechanisms 

So far, 25 out of 27 EU Member States either: 

  had a national FDI screening mechanism in place; or 
  adopted a new national FDI screening mechanism; or 
  amended an existing mechanism; or 
 

initiated a consultative or legislative process expected to result in the adoption of a new 
mechanism or amendments to an existing one. 

The  following  table  gives  an  overview  of  all  27  Member  States’  legislative  situation  and 
developments in 202115. 

National FDI screening mechanism in place  Austria,  Finland,  Malta,  Poland,  Portugal, 

Have amended an existing mechanism 

Had  a  consultative  or  legislative  process 
expected to result in updates to an existing 
mechanism 
Have adopted a new national FDI screening 
mechanism 
Had  a  consultative  or  legislative  process 
expected to result in the adoption of a new 
mechanism 
No publicly reported initiative underway 

Slovenia, Spain 
France,  Germany,  Hungary,  Italy,  Latvia, 
Lithuania 
The Netherlands, Romania 

Czechia, Denmark, Slovakia 

Belgium,  Croatia,  Estonia,  Greece,  Ireland, 
Luxembourg, Sweden  

Bulgaria, Cyprus 

Most  amendments  to  national  legislation  revolved  around  three  topics:  upgrading  screening 
procedures, expanding covered sectors, and prolonging the validity of national mechanisms. For 
instance, France lowered the threshold at which investments of non-EU investors are screened 
and  now  also  requires  investors  to  submit  the  EU  Notification  “Form  B”16  alongside  other 
documents. Germany introduced a variety of procedural changes (e.g. the addition of 16 new case 
groups17 relating to emerging/sensitive technologies), applied new thresholds on the acquisition of 
capital and voting rights that require a notification, and introduced new requirements for investors. 
Italy extended the applicability of its existing screening mechanism. Latvia, inter alia, extended 
the national authorities’ power to request further information from investors. Lithuania, inter alia, 
adjusted  its  list  of  enterprises  and  strategic  infrastructure  that  it  considers  important.  Hungary 
added to their legislation further activities of target companies that require a notification of the 
planned transactions. Finally, several other Member States have indicated that they are currently 
planning amendments to their existing mechanisms.  

15 See accompanying Commission Staff Working Document for more details. 
16 The EU notification form serves as a suggestion for Member States on how transactions could be notified to the EU 
cooperation mechanism.  
17 In the German legislation, case groups describe sectors. As such, if the business associated with a transaction relates 
to any of these sectors, investors are required to notify the transaction to authorities and the execution of the transaction 
(“closing”) is invalid until approved by the German authorities.  

9 

 
 
                                                           
More detailed information on the legislative developments in Member States’ national screening 
legislations can be found in the accompanying Commission Staff Working Document. Also, a list 
of national legislative updates is maintained by the European Commission18. 

18  The 
https://trade.ec.europa.eu/doclib/docs/2019/june/tradoc_157946.pdf  

screening  mechanisms 

notified 

list 

of 

by  Member 

States 

is 

available 

under: 

10 

 
 
 
 
 
                                                           
CHAPTER 3 - MEMBER STATES’ FDI SCREENING ACTIVITIES 

The FDI Screening Regulation establishes a cooperation mechanism for FDI screening among the 
European Commission and EU Member States. However, the decision on which investments to 
screen, approve, condition, or block, is taken by the Member States where the investment takes 
place. This chapter relies on - and aggregates - data provided by Member States on cases screened 
under their legislation and screening mechanisms during 2021.  

Overall, there has been a considerable number of requests for authorisations received in 2021at 
national level19. Pursuant to Article 5 of the Regulation, which organises their reporting obligation, 
Member States have reported 1 563 requests for authorisation and ex-officio cases in 202120. 

Figure 6 - Member States’ FDI Screening Activity 

Source: Member States’ reporting. 

There  is  an  apparent  trend  towards  screening  more  cases  formally.  Indeed,  out  of  the  1  563 
authorisation requests and ex-officio cases, roughly 29% of the cases were formally screened. This 
seems to mark an increase in the proportion of formally screened cases from 2020.21 It could be 
explained by a greater attention of what national authorities consider as potentially “critical”, as 
well  as  a  change  in  overall  investment  trends.  About  71%  of  all  applications  were  deemed 
ineligible or did not require formal screening because of an evident lack of impact on security and 
public order.  

19 Some Member States did not report any cases under their screening legislation. Also, one Member State reported a 
general figure on the number of requests for authorisation and two (partial) figures on outcomes. Another Member 
State communicated a considerably lower number of cases screened in 2021 - compared to numbers communicated 
for the first report - as it performed a pre-evaluation of files before its legislation entered into force. Some Member 
States also reported ‘consultations’ on the eligibility of the cases, which are included in this number. 
20 It is important to note that  Member States  have  different screening procedures in place,  meaning that the cases 
reported depend on the domestic procedures (scope, eligibility check upfront or later, etc.). For instance, some Member 
States  declare  cases  ineligible  before  a  formal  screening  procedure  is  carried  out,  while  others  are  first  formally 
screening cases and only then declare them as ineligible. Hence, the graphs and numbers reported in this chapter aim 
at accurately reflecting Member States’ screening activities as reported by them, regardless of their domestic system. 
21 It was 20% in the first annual report for the whole year 2020. 

11 

 
 
 
 
 
                                                           
The number of authorisation requests is also very unevenly distributed across EU Member States. 
Indeed, four Member States accounted for roughly 70% of all authorisation requests and ex-officio 
cases in 2021.  

Out  of  the  cases  formally  screened  in  2021,  and  for  which  Member  States  have  reported  a 
decision22,  the  majority  (73%)  were  authorised  without  conditions,  which  means  that  the 
transaction was approved without any additional action required from the investor. 

However, 23% of the decisions involved an approval with conditions or mitigating measures. In 
these  cases,  national  screening  authorities  have  negotiated  certain  actions,  assurances,  and 
commitments from the investors before approving the planned foreign direct investment.  

Finally, national authorities ultimately blocked transactions in only 1% of all decided cases, while 
for a further 3% the transaction was withdrawn by the parties. 

Figure 7 – Notified decisions on FDI cases 

Source: Member States’ reporting. 

In summary, the above findings give rise to the following key take-aways: 

 

In comparison to 2020, Member States have considered the requests received as more sensitive 
in 2021, as the proportion of formally screened cases has increased. 

  Authorisation requests are unevenly distributed across EU Member States, with four countries 
accounting for roughly 70% of all applications received. It was 86.5% in the first annual report. 
This speaks for a diversification of screening among Member States. 

  Throughout 2021, the majority of transactions, where a decision was reported, was authorised 

without any conditions (73%, it was 79% in the first report). 

22 From the total reported cases formally screened, a number of cases were subtracted to produce the data shown in 
Figure 7. Indeed, Member States reported the outcome of decisions in 68.5% of the cases. Moreover, some cases were 
carried-over in 2022 and hence their outcome was unknown in 2021. Also, the subtracted cases were reported by one 
Member State, which only indicated two of the four possible outcomes of these cases. 

12 

 
 
 
                                                           
  23% of the decided cases did entail mitigating measures (this is a significant increase compared 

to the last report, with 12%). 

  Only  1%  of  the  transactions  were  blocked  by  Member  States  (compared  to  slightly  more 
before, i.e. 2% in the first report), confirming that the European Union remains open to foreign 
direct investments and Member States only deny cases that pose very serious threats to security 
and public order.  

13 

 
 
 
 
 
CHAPTER 4 – EU COOPERATION MECANISM ON FDI SCREENING 

1.  Notifications and other actions taken under the FDI Screening Regulation 

Chapter  3  summarised  the  level  of  screening  activity  at  a  national  level.  It  captures  those 
investments caught at a national level that met the conditions to be subject to screening under the 
FDI Regulation.  

In 2021, 13 Member States submitted a total of 414 notifications23, pursuant to Article 6 of the 
FDI Screening Regulation, compared to 11 Member States  during the period covered by the first 
annual report on FDI screening24. Five Member States, namely Austria, France, Germany, Italy 
and Spain, were responsible for more than 85% of those notifications. The notified transactions 
vary greatly in terms of sectors of the investment target, origins of the ultimate investor and value 
of the transaction. 

The  five  sectors  with  the  highest  number  of  transactions  were  ICT,  Manufacturing,  Financial 
activities25, Wholesale and Retail - and construction26 (in the first annual report, “construction” 
was incorporated in the category “Other”). The first three sectors are the same ones as in the first 
annual report but in a different order. 

Figure 8- Main targeted sectors overall in 2021 27 

Source: Member States’ notifications. 

This includes 5 cases pre-notified in 2020 but handled in 2021. 

23 
24   See https://trade.ec.europa.eu/doclib/docs/2021/november/tradoc_159935.pdf 
25   Financial activities encompass activities pursued by (or attributable to) holdings, funds or similar actors in the 

26  

financial sector which aim at acquiring a specific (equity) stake or control in a target company. 
In the first annual report it was Manufacturing, ICT, and, Wholesale and Retail, categorised under the NACE 
codes C, J and G respectively. 

27   As cases can encompass several sectors (i.e. NACE codes), the total in the graph is higher than the total number 
of cases notified in 2021. The category ‘other’ encompass all other sectors below 4%, for example, electricity, 
gas, steam and air conditioning supply; transporting and storage. 

14 

 
 
 
 
                                                           
Looking at the transactions’ value, the majority of the transactions had a value28 of29 less than EUR 
500 million yet the biggest part (34%) was over EUR 500 million. 

Figure 9 – Respective value per notified FDI transaction in 202130 

Source: Member States’ notifications. 

The notified transactions show a broad range in terms of value, with the lowest deal-value at EUR 
1 and the highest approximately EUR 29-31 billion.  

The FDI Screening Regulation foresees that an assessment of FDI transactions is undertaken in 
two  possible  phases:  All  notified  transactions  are  assessed  under  Phase  1,  with  only  a  limited 
number proceeding to Phase 2. Phase 2 implies a more detailed assessment of cases that could 
possibly affect security or public order in more than one Member State, or create risks to projects 
or programmes of Union interest. Phase 2 cases could ultimately be concluded by the European 
Commission issuing an opinion on the case in question.  

28   The  value,  where  available,  relates  to  the  target  company  which  may  be  an  EU-based  subsidiary  of  a  larger 

29  

corporate target. 
In the first annual report, the majority of the transactions had a lower value, i.e. within the range of EUR 10-100 
million, with transactions in the ICT sector representing the highest deal value, and transactions in the sector of 
“Other service activities” representing the lowest value range. 
30   N/A includes blanks, not available/not disclosed and not applicable. 

15 

 
 
 
 
 
                                                           
Of the 414 cases notified, 86% of the cases were closed by the European Commission in Phase 1, 
with  the  remaining  11%  (14%  in  the  previous  report)  proceeding  to  Phase  2  with  additional 
information being requested from the notifying Member State. 3% of those cases were still ongoing 
on the cut-off date of this report, i.e. not yet closed in Phase 1 or 2.31  

Additional  information  requested  by  the  European  Commission  when  opening  Phase  2  varies 
considerably, depending on the specific transaction and the detail and quality of the information 
supporting the notification32.  

Figure 10 - Cases closed in Phase 1 and Phase 2 and ongoing ones 

Source: Member States’ notifications. 

The  information  requested  typically  includes  one  or  more  of  the  following  elements:  data  on 
products and/or services of the target company; possible dual-use classification of any products 
involved; customers, alternative suppliers and market shares; the influence of the investor on the 
target company after the transaction; the IP portfolio and R&D activities of the target company; 
and  additional  defining  characteristics  of  the  investor  and  its  strategy.  This  information  is 
requested in order to assess better the criticality of the target or the potential threats posed by the 
investor.  

The  main  sectors  at  issue  in  Phase  2  cases  were  Manufacturing,  ICT,  and  Financial  activities. 
Manufacturing  and  ICT  accounted  for  76%  of  all  Phase  2  cases.  The  ICT  sector  rose  quite 
drastically from 17% in the previous report to 32% in the current one. 

31   As of 31 December 2021, of the 414 cases notified, 11 were still ongoing at the cut-off date of this report. 
32   The notification form for information from an investor for purposes of a notification pursuant to Article 6 of the 
Regulation, and an updated Frequently Asked Questions document, serve to ensure some degree of uniformity 
and minimum level of information about the investor and the investment target provided in notifications under 
the Regulation. Both documents are available at http://trade.ec.europa.eu/doclib/press/index.cfm?id=2006 

16 

 
 
 
 
 
                                                           
Figure 11 - Phase 2 main targeted sectors in 2021 cases33 

Source: Member States’ notifications. 

On the top sector - manufacturing, it encompasses critical infrastructures and/or technologies, i.e. 
defence, aerospace, energy, health (including pharma)  and semiconductor equipments. Defence 
and aerospace account for almost half of the notifications in that sector (45%). 

Figure 12 - Manufacturing sub-sectors in Phase 2 in 2021 cases 

Source: Member States’ notifications 
Nine Member States accounted for 47 Phase 2 cases 34. For all Phase 2 cases, the average duration 
for Member States to provide the requested information has been 22 calendar days (compared to 
31 calendar days in the first report), with a range from 3 to 101 days (compared to 2 to 101 calendar 
days in the first report). 

33 See footnote 25. 
34 It was six Member States for 36 Phase 2 cases in the first report. 

17 

 
 
 
 
                                                           
The FDI Regulation does not set precise timelines within which Member States must respond, but 
the timelines under the Regulation are suspended until full information is received.  

As for the origin of the ultimate investor, in the 414 cases notified to the European Commission in 
2021, the five main countries of origin were the USA, the UK, China, the Cayman Islands and 
Canada. Russia accounted for less than 1.5% of the cases and Belarus for 0.2%. 

Figure 13 - Origin of Ultimate Investors in 2021 cases 

29%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

40%

3%

5%

4%

10%

7%

Others

ARE

CYM

CAN

CHN

GBR

USA

Source: Member States’ notifications. 

Of all the cases notified  in  2021, 28% (compared to  29% in  the first  report) constituted  multi-
jurisdiction  FDI  transactions  because  they  concerned  (and  were  notified  by)  several  Member 
States35. The main sectors that were the subject of such notifications were  ICT, Manufacturing, 
Wholesale and Retail and Financial activities. 

Table - Multi-jurisdiction FDI transactions and main sectors 

ICT 39% 
Manufacturing 20% 
Wholesale and retail 11% 
Financial activities 9% 
Other 32% 

Source: Member States’ notifications 

35  

“Multi-jurisdiction FDI transactions” refers in this context to FDI transactions where the investment target is a 
corporate group with a presence in more than one Member States (and possibly also third countries), e.g. by way 
of subsidiaries in more than one Member State. Depending on the circumstances, and also the particularities of 
the screening mechanism of the relevant Member States such deals are  notified by more than one Member 
State, albeit rarely in a coordinated and synchronised manner. 

18 

 
 
 
 
 
 
                                                           
Besides all the cases notified pursuant to Article 6 of the Regulation, the European Commission 
has in 2021 not made use of Article 7 of the Regulation (but did previously, as stated in the first 
report). Article 7 allows the European Commission to screen ex officio investments of which it 
becomes aware with a Member State and, independent, of the question of whether that Member 
State has its own screening mechanism or not.  

As for the adoption of Commission opinions, pursuant to either Articles 6, 7 or 8 of the Regulation, 
such opinions remain confidential pursuant to Article 10 of the Regulation. Hence, no information 
can be published on individual opinions in this report. 

Opinions have been issued in less than 3% of all cases notified (same figure as in the first annual 
report) and are issued only when and if required by the circumstances of a case, more specifically 
the risk profile presented by the investor and the criticality of an investment target. When issued, 
any recommended mitigating measures are proportionate and specific to the risks and criticality 
identified.  

Commission opinions may also consist of sharing relevant information with a screening Member 
State, and may also suggest potential mitigating measures to address identified risks.  

It  will  ultimately  be  for  the  Member  State  where  the  investment  takes  place  to  decide  on  the 
transaction, while it shall give due consideration to any Commission opinion. 

The data above leads to the same key conclusions as the ones drawn in the first annual report. 

First and foremost, the processing of cases through the EU cooperation mechanism continues to 
function well. Of the 414 cases notified in 2021, the vast majority (86%) were closed in Phase 1, 
i.e. very quickly, with only 11% of the notified cases (compared to 14% in period covered by the 
previous report) closed in Phase 2, and less than 3% of cases resulting in a Commission opinion. 

Second, there is a trend toward more diversification of screening among Member States. Indeed, 
four Member States  accounted  for roughly 70% of all applications received in  2021 but it  was 
86.5% in the first annual report.  

Third, while most cases are assessed rapidly in Phase 1, within the prescribed 15 calendar days, 
the  duration  of  cases  entering  Phase  2  shows  significant  variation  given  the  time  needed  by 
Member States to provide answers to a Commission request for additional information, with them 
often depending on the investor for the requested information. 

Fourth, the main sectors (ICT, Manufacturing, Financial activities and Wholesale and Retail) at 
issue and origin of the ultimate investor (USA, UK, China, Cayman Islands and Canada) involved 
in cases notified under the Regulation, largely reflects the overall investment trends as desceribed 
in Chapter 1 of this annual report and Section 1 of the accompanying Staff Working Document 
regarding main sectors and origin of the ultimate investor. 

Fifth, a significant number of cases notified by Member States involved one or more of the factors 
for consideration listed in Article 4 of the Regulation. This includes notably critical infrastructure, 
technology and dual use items, and access to sensitive information, as well as possible government 
ownership or control of, or influence over, the foreign investor. 

19 

 
 
 
 
2.  FDI from Russia and Belarus in the context of Russia’s invasion of Ukraine  

In response to Russia’s unprovoked and unjustified military agression against Ukraine, supported 
actively by Belarus, the EU  has been adopting in 2022 large and robust packages of restrictive 
measures  (‘sanctions’)  against  both  countries.  The  sanctions  against  Russia  are  designed  to 
undermine the Kremlin’s ability to finance the war, impose clear economic and political costs on 
those in Russia’s political elite responsible for the invasion and diminish their economic base. In 
light of Belarus’ material support to the Russian invasion, the EU has adopted further sanctions 
against Belarus. The sanctions against Belarus are designed to have a similar impact as the ones 
against Russia. 

While FDI screening and sanctions are distinct legal instruments, each with a different purpose, 
and with a different way of operating, Russia’s military agression against Ukraine calls for greater 
vigilance towards Russian and Belarusian direct investments within the Union. This goes beyond 
investments by persons or entities that are subject to sanctions. In the current circumstances, there 
is  a  heightened  risk  that  any  investment  -  directly  or  indirectly  related  to  a  person  or  entity 
associated with, controlled by or subject to influence by the Russian or Belarusian government - 
into critical assets in the EU may pose a threat to security or public order in Member States. 

Against this background, the European Commission in April 2022 adopted Guidance36 to Member 
States  on  FDI  from  Russia  and  Belarus,  in  order  to  ensure  that  particular  attention  is  given  to 
investments  into critical  EU assets  from  entities or  persons somehow  related to  the Russian or 
Belarusian governments. 

3.  Steps taken since 1 January 2021, and looking further ahead 

This report marks the consolidation of a European policy, essential for the protection of security 
and public order in the Union. Indeed, the creation of Member States’ FDI screening mechanisms 
and  their  continuous  improvement,  the  further  development  of  the  EU  cooperation  mechanism 
during  2021,  as  well  as  the  FDI  cooperation  with  partner  countries,  including  with  the  United 
States of America through the Trade and Technology Council Working Group on FDI, has allowed 
the EU to consolidate the foundations of the EU screening system. The EU is already– just over 
one year and half after the entry into force of the Regulation –  a well-established and pro-active 
player in the field of FDI screening. 

The report confirms the clear value-added of the FDI Regulation and the cooperation mechanism. 
It  has  proven  to  be  a  valuable  and  efficient  tool.  There  has  been  no  reported  leaks  regarding 
notifications, opinions or other action under the Regulation. Appropriate handling and protection 
of any information submitted for the purpose of Article 6, 7 and 8 of the Regulation is vital to 
ensure the necessary trust between all parties involved, i.e. the parties to a transaction, the notifying 
Member State, the 26 other Member States and the European Commission. 

To  facilitate  the  effective  implementation  of  the  Regulation  and  ensure  a  higher  degree  of 
conformity and completeness of notifications submitted by Member States, pursuant to Article 6 
of the Regulation, the Commission has provided updated versions of the  notification form for 
investors. It also provided an updated Frequently Asked Questions document (in June 2021).  

As regards best practices, the European Commission continues to facilitate exchanges amongst 
Member States, having organised the very first in-person meeting with representatives from all 

36 See footnote 14. 

20 

 
 
                                                           
Member States in March 2022, after virtual exchanges during the pandemic. Experience shows 
that there is room for further improvement overall, notably in areas identified by Member States. 
However, all  agreed that the functioning of the  instrument and cooperation mechanism is  very 
satisfactory and brings high added value to national authorities in their ultimate decisions on the 
transactions  in  question  and  for  the  protection  of  the  interest  (projects  or  programmes)  of  the 
European Union. 

The  European  Commission  firmly  expects  that  additional  Member  States  will  very  soon 
adopt  and  strengthen  national  FDI  screening  legislation  and  related  mechanisms  for 
potentially risky foreign investments. This position has been expressed already a number of times, 
notably in the 2020 Guidance to Member States on how to use FDI screening in times of public 
health  crisis  and  economic  vulnerability  in  the  EU37  -  and  more  recently  in  the  Guidance  to 
Member States on FDI from Russia and Belarus38. It should be merely a question of time before 
all 27 Member States have such a mechanism in place and hence directly contribute to the shared 
security objective. The increase in the number of Member States with a national FDI screening 
mechanism should lead to an intensification of the cooperation under the FDI screening regulation. 
Yet, as the economic environment is uncertain, the number and nature of future notifications is all 
the more difficult to predict. 

On avenues for future developments, the European Commission launched in 2021 a study on 
the FDI cooperation mechanism. Its objective is to assess the articulation between the screenings 
carried  out  by  the  national  authorities  and  the  European  Commission,  and  to  identify  any 
significant  efficiency  or  effectiveness  issue  in  light  of  the  policy  goals  of  the  FDI  Screening 
Regulation39. The study will contribute to the Commission’s reflections on the potential need for 
a revision of the FDI Screening Regulation in 2023. The study is expected to be concluded in the 
summer of 2022. 

37 See footnote 13. 
38 See footnote 14. 
39 The specific objectives of the study are (i) to present an overview of the existing legislation of the Member States 
which  currently  have  a  screening  mechanism;  (ii)  review  how  the  national  legislations  and  the  FDI  Screening 
Regulation  regulate  the  interaction  between  national  authorities  and  with  the  European  Commission  within  the 
cooperation mechanism set up by the FDI Screening Regulation; (iii) identify any significant problems in the current 
system  of  national  laws  and  the  FDI  Screening  Regulation  which  may  lead  to  less  effective  and/or  less  efficient 
outcomes in light of the policy goals of the FDI Screening Regulation, and, (iv) the need to keep administrative burden 
for investors and other stakeholders proportionate to the policy goals and relevant security or public order concerns. 

21