COMMISSION STAFF WORKING DOCUMENT EVALUATION of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 of the European Parliament and of the Council
Date: 2024-01-24
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: EU Member State, European security, direct investment, financial control, financial legislation, foreign capital, foreign investment, public order, third country, threat to national security

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.1.2024  SWD(2024) 23 final  COMMISSION STAFF WORKING DOCUMENT  EVALUATION  of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 of the European Parliament and of the Council {COM(2024) 23 final} - {SWD(2024) 24 final}  
 
 
Table of contents 

1. 

INTRODUCTION ....................................................................................................... 1 

1.1  General introduction ................................................................................................ 1 

1.2  Purpose and scope of the evaluation ....................................................................... 1 

2.  WHAT WAS THE EXPECTED OUTCOME OF THE INTERVENTION? ............. 2 

2.1. Policy context .......................................................................................................... 2 

2.2  Description of the Regulation and its objectives ..................................................... 3 

2.3  Points of comparison ............................................................................................... 4 

3.  HOW  HAS  THE  SITUATION  EVOLVED  OVER  THE  EVALUATION 

PERIOD? ..................................................................................................................... 6 

3.1. Changes in the geopolitical environment ................................................................ 6 

3.2. Trends of FDI in the EU .......................................................................................... 7 

3.3. Policy and legislative developments in Member States: adoption of and updates to 
national screening mechanisms ...................................................................................... 8 

3.4. National trends in FDI screening activity .............................................................. 10 

3.5. Implementation of the core part of the Regulation: cooperation on individual 
transactions ................................................................................................................... 11 

3.6. Implementation of the Regulation’s other rules .................................................... 13 

3.7. Adoption and implementation of screening mechanisms among the EU’s major 
trading partners ............................................................................................................. 17 

4.  EVALUATION FINDINGS ..................................................................................... 17 

4.1. To what extent was the intervention successful and why? .................................... 17 

4.2. How did the EU intervention make a difference and to whom? ........................... 30 

4.3. Is the intervention still relevant? ........................................................................... 31 

5.  WHAT ARE THE CONCLUSIONS AND LESSONS LEARNED? ....................... 33 

5.1  Conclusions ........................................................................................................... 33 

5.2  Lessons learned ..................................................................................................... 34 

ANNEX I: PROCEDURAL INFORMATION ................................................................. 42 

1.  Lead DG, Decide planning / Commission work programme references ............... 42 

2.  Organisation and timing ........................................................................................ 42 

3.  Limited exceptions to the better regulation guidelines .......................................... 42 

4.  Consultation of the Regulatory Scrutiny Board .................................................... 42 

 
 
 
 
5.  Evidence, sources and quality ............................................................................... 43 

ANNEX II. METHODOLOGY AND ANALYTICAL MODELS USED ....................... 45 

1.  Methods and sources ............................................................................................. 45 

2.  Limitations ............................................................................................................. 55 

ANNEX III. EVALUATION MATRIX ........................................................................... 62 

ANNEX IV. OVERVIEW OF BENEFITS AND COSTS ................................................ 76 

ANNEX V. STAKEHOLDER CONSULTATION – SYNOPSIS REPORT ................... 79 

1.  Targeted consultation ............................................................................................ 79 

2.  Call for evidence launched by the European Commission .................................... 79 

3.  Targeted surveys .................................................................................................... 81 

 
 
 
 
 
Glossary 

Term or acronym 

Meaning or definition 

ECA report 

FDI 

FOI 

INTA 

OECD 

OECD report 

Special report by the European Court of Auditors: 
Screening foreign direct investments in the EU: 
First steps taken, but significant limitations remain in 
mitigating security and public order risks effectively 
(published on 6 December 2023)1 

Foreign direct investment as defined in Article 2 of 
Regulation (EU) 2019/452 

The  ‘Freedom  of  Investment’  process  hosted  by  the 
OECD  Investment  Committee  monitors  investment 
policy  developments 
that 
participate in the process 

the  61  economies 

in 

International Trade Committee of the European 
Parliament 

Organisation for Economic Cooperation and 
Development 

Report by the OECD Secretariat: 
Framework for Screening Foreign Direct Investment 
into the EU: Assessing effectiveness and efficiency 
(published in November 2022)2 

TFEU 

Treaty on the Functioning of the European Union 

1 https://www.eca.europa.eu/en/publications/SR-2023-27  
2 https://www.oecd.org/investment/investment-policy/oecd-eu-fdi-screening-assessment.pdf 

 
 
 
 
1. 

INTRODUCTION 

1.1 General introduction 

On 19 March 2019, the  European Parliament and the Council adopted Regulation  (EU) 
2019/452  establishing  a  framework  for  the  screening  of  foreign  direct  investments  into 
the Union (‘the FDI Screening Regulation’ or ‘the Regulation’). The EU market is based 
on  openness  to  FDI.  However,  there  are  certain  risks  that  need  to  be  tackled,  such  as 
where  foreign  investors  seek  to  acquire  assets  critical  to  the  EU’s  security  or  public 
order. The EU is an integrated market: any foreign investor established in one Member 
State can benefit from the internal market as an EU company. Due to the high degree of 
integration between Member States’ markets, interconnected supply chains and common 
infrastructures between  Member States,  a  foreign investment  could  pose  a  security risk 
for  more  than  one  Member  State,  hence  the  need  for  an  EU-wide  response.  In  this 
respect,  the  Regulation  has  played  an  important  role  by  providing  the  EU  with  a 
framework to identify, assess and mitigate security and public order risks related to the 
acquisition or control of these critical assets. 

The  EU  framework  is  not  exactly  the  same  as  a  national  screening  mechanism,  as  the 
latter gives a Member State the power to impose conditions on a transaction, or, as a last 
resort, prohibit its completion. The objective of the Regulation is rather to help Member 
States  in  their  national  screening  decisions,  by  identifying  and  addressing  security  and 
public order risks that affect at least two Member States or the EU as a whole. It provides 
a  cooperation  mechanism  between  Member  States  and  the  Commission  for  exchanging 
confidential  information  and  raising  awareness  about  specific  circumstances  where  an 
FDI  may  affect  security  or  public  order.  It  also  allows  recommending  measures  to  the 
Member  State  where  the  FDI  is  planned  or  has  already  been  completed  to  mitigate  the 
risks identified. 

1.2 Purpose and scope of the evaluation 

Article 15(1) of the Regulation requires the Commission to evaluate the functioning and 
effectiveness of this Regulation and present  a report to the European Parliament and to 
the Council by 12 October 2023, i.e. no later than 3 years after its full implementation. In 
line with the Better Regulation  Guidelines3, the Commission is assessing the relevance, 
effectiveness,  efficiency,  coherence  and  EU  added  value  of  the  FDI  Screening 
Regulation.  Annex  III  lists  in  detail  the  evaluation  criteria  and  questions  for  this 
evaluation. 

The evaluation covers the period from the entry into force of the Regulation on 11 April 
2019  until  30 June  2023  and  covers  the  entirety  of  the  Regulation  (‘reporting  period’). 

3 Brussels, 3.11.2021 SWD(2021) 305 final. 

1 

 
 
 
 
 
Where  the  analysis  involved  sensitive  or  classified  information,  the  main  findings  are 
the  Regulation’s  confidentiality 
aggregated  and  anonymised 
requirements4. 

to  comply  with 

The  evaluation  also  builds  on  the  findings  of  a  report  carried  out  by  the  OECD  at  the 
Commission’s request and co-financed by the EU, which assessed the effectiveness and 
efficiency of the framework for screening  foreign direct  investment  in  the EU  and  was 
published  in  November  20225.  In  addition,  the  Commission  invited  Member  State 
screening authorities, private sector stakeholders and the general public to provide their 
views,  including  through  a  targeted  public  consultation  and  a  call  for  evidence.  Where 
relevant,  this evaluation also  integrates the  findings  of the very  recent special report of 
the European Court of Auditors (ECA) on the screening of foreign direct investments in 
the EU. 

This  Staff  Working  Document  provides  a  qualitative  and  quantitative  analysis  of  the 
application of the Regulation  and looks at lessons learned from  its implementation.  On 
the  basis  of  the  evaluation  and  the  recognition  that  a  ‘chain  is  only  as  strong  as  its 
weakest  link’,  the  Commission  proposes  a  revision  of  the  Regulation  to  ensure  that  all 
Member States have a screening mechanism to address any missing links and proposes a 
number of improvements to  address  shortcomings experienced and loopholes identified 
following  the  3-year  implementation  of  the  Regulation,  during  which  the  Commission 
and the Member States collectively assessed more than 1100 cases. 

2.  WHAT WAS THE EXPECTED OUTCOME OF THE INTERVENTION? 

2.1.  Policy context 

In  the  years  before  the  adoption  of  the  Regulation,  there  had  been  growing  concerns 
about  certain  foreign  investors  seeking  to  acquire  control  of  or  influence  in  EU  firms 
where  those  investments  could  have  had  repercussions  on  technologies,  infrastructure, 
inputs or sensitive information critical for more than one Member State or on a project of 
EU  interest.  Given  the  high  degree  of  integration  of  the  internal  market,  a  foreign 
investment can pose a risk to 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  EU  interest,  such  as  the  EU’s  research  programmes 
(Horizon  2020  and  Horizon  Europe),  the  Space  Regulation  or  the  trans-European 
networks  for  energy,  transport,  and  communication.  This  is  particularly  the  case  when 
foreign  investors  are  owned  or  controlled  by  the  state,  including  control  through 
financing or other means of influence6. 

4 Article 10 of the Regulation. 
5 https://www.oecd.org/investment/investment-policy/oecd-eu-fdi-screening-assessment.pdf 
6 This was recalled in the Commission’s reflection paper on ‘Harnessing Globalisation’ issued on 10 May 
2017. 

2 

 
 
 
The  proposal  for  the  Regulation  was  accompanied  by  a  staff  working  document7 
providing  a  factual  description  of  foreign  takeovers.  In  March  2019,  the  Commission 
presented an in-depth analysis of investment flows into the EU with a focus on strategic 
sectors or assets that may raise security or public order concerns8. The report confirmed a 
continuous rise in foreign-company ownership in key sectors in the EU and an increase 
in  investments  from  emerging  economies,  such  as  China,  Russia  and  countries  of  the 
Gulf Cooperation Council. It also illustrated the need for effective implementation of the 
FDI Screening Regulation. 

2.2 Description of the Regulation and its objectives 

This subsection describes the logic of the Regulation: its objectives, inputs and actions as 
well as the outcomes and impact that were expected to be achieved. It also explains how 
all these aspects are linked to each other. The framework (‘intervention logic’) used for 
this evaluation is summarised below. 

Figure A: Intervention logic 

The  FDI  Screening  Regulation  applies  to  inward  FDI  by  any  non-EU  investor  in  any 
economic  sector.  It  is  not  subject  to  any  thresholds  on  the  value  of  the  investment. 
Recognising  that  concerns  about  security  and  public  order  can  potentially  arise  from 
anywhere, non-discrimination among foreign (non-EU) investors is a key principle of the 
Regulation. The only criteria for screening an FDI are risks to security and public order, 
and the assessment needs to be carried out with due consideration of the circumstances of 
each case in a holistic manner. 

7  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 (SWD/2017/0297 final - 2017/0224) (COD). 
8  Commission  Staff  Working  Document  on  Foreign  Direct  Investment  in  the  EU  Following  up  on  the 
Commission Communication ‘Welcoming Foreign Direct Investment while Protecting Essential Interests’ 
of 13 September 2017 (SWD(2019) 108 final). 

3 

 
 
 
 
 
 
 
To achieve its overall objective to protect security and public order in the context of FDI, 
the Regulation provides six complementary measures. 

1.  Empowering Member States to review FDI on the grounds of security and public 

order and to take measures to address specific risks (Article 3). 

2.  Rules to align national screening rules and policies (Article 3 and, to some extent, 

Article 4). 

3.  A  cooperation  mechanism  on  specific  individual  FDI  transactions  via  secure 
channels  between  Commission  and  the  Member  States,  which  underpins  the 
assessment  of  FDI  and  facilitates  the  ultimate  decision  by  the  Member  State 
where the FDI is planned or completed (Articles 6 to 9). 

4.  A  forum  (expert  group)  for  the  exchange  of  information  and  dissemination  of 
good  practices  on  the  design  and  implementation  of  FDI  screening  mechanisms 
among Member State FDI screening experts (Article 12). 

5.  A legal basis for international cooperation with non-EU countries (Article 13).  

6.  Transparency rules (mainly in Articles 5 and 15). 

The  Regulation  has  been  fully  applicable  since  11 October  2020,  after  an  18-month 
transitional period following its entry into force. While the Regulation is binding on all 
Member  States,  the  decision  on  whether  to  set  up  a  national  screening  mechanism 
remains a national one. Additionally, where a national screening mechanism is in place, 
the  scope,  processes  and  the  decision  whether  to  screen  a  particular  foreign  direct 
investment  is  the  sole  responsibility  of  the  Member  State  where  the  investment  is 
planned  or  completed.  Member  States  are  free  to  adopt  and  maintain  a  screening 
mechanism  (or  not),  determine  the  design  of  the  mechanism  and  decide  whether  a 
particular FDI that falls under the scope of their system should undergo formal screening. 
At the same time, participation in the cooperation mechanism is mandatory to the extent 
that Member States must notify the Commission and other Member States of any FDI in 
their  country  that  they  formally  screen.  Furthermore,  Member  States  have  to  share 
information  requested by the Commission  or other Member States on any FDI through 
secure channels. 

2.3 Points of comparison 

Before  the  adoption  of  the  FDI  Screening  Regulation,  there  was  no  formal  EU-wide 
cooperation among Member States and the Commission on FDI that was likely to affect 
the  EU’s  collective  security.  The  Commission  had  no  role  in  screening  FDI  in  the  EU 
and  there  was  no  instrument  to  identify  security  or  public  order  risks  from  foreign 
investments in EU companies participating in flagship projects of Union interest. These 
projects  or  programmes  relate  to  critical  infrastructure,  critical  technologies  or  critical 
inputs,  which  are  essential  for  security  or  public  order  such  as  the  trans-European 
networks for energy, telecommunication and transport or research funded by the Horizon 
programme.  This  was  because  these  wider  European  aspects  were  not  taken  into 

4 

 
 
 
 
consideration  by  national  screening  mechanisms  when  respective  national  authorities 
considered  authorising  a  foreign  investment  in  their  country.  Furthermore,  there  was  a 
lack of legal certainty under EU law for Member States that maintained an FDI screening 
mechanism on security or public order grounds or intended to adopt such a mechanism. 
This was due to the EU’s exclusive competence in the area of the common commercial 
policy, which includes FDI9.  

The  intervention  logic  described  in  Section  2.2  explains  how  the  inputs  and  activities 
required  to  meet  the  objectives  of  the  FDI  Screening  Regulation  are  expected  to 
generate  outcomes,  namely  short-term  outputs,  medium-term  results  and  long-term 
impacts. These will be used as the main points of comparison to assess the Regulation. 
The following points are directly linked to the evaluation matrix presented in Annex III. 

-  Point 1: relation between the observed results (medium term) and impacts (long 
term)  and  the  objectives  of  the  FDI  Screening  Regulation.  This  is  the  extent  to 
which the main objectives of the FDI Screening Regulation have been achieved – 
measured through the effectiveness criterion (see Section 4.1.1 for the results of 
the evaluation). The analysis considered: (i) the most relevant success factors for 
implementation of the Regulation; and (ii) the gaps and challenges hindering the 
achievement of the objectives. 

-  Point  2:  relation  between  the  inputs  and  activities  put  in  place  for  the 
implementation  of  the  Regulation  and  the  observed  outputs.  The  costs  borne  to 
achieve  the  outcomes  of  the  Regulation  –  measured  through  the  efficiency 
criterion,  i.e.  the  extent  to  which  the  provisions  of  the  Regulation  produced 
outputs at a reasonable cost (see Section 4.1.2). 

-  Point  3:  relation  between  the  inputs  and  activities  conducted  to  implement  the 
Regulation  and  the  problems  to  be  addressed.  This  is  the  extent  to  which  the 
Regulation is complementary to other legislative and policy initiatives at EU and 
national levels – measured through the coherence criterion, i.e. the coherence of 
the  Regulation  with  other  legislative  and  policy  interventions,  identifying  any 
complementarities  or  inconsistencies.  In  addition,  an  evaluation  of  the  internal 
coherence of the Regulation was also carried out (see Section 4.1.3). 

-  Point  4:  the  difference  made  by  the  EU  in  achieving  the  outcomes  of  the 
Regulation.  This  is  the  extent  to  which  EU-level  action  has  produced  outcomes 
that Member States could not have achieved on their own – measured through the 
EU added value criterion (see Section 4.2). 

-  Point  5:  relation  between  the  inputs  and  activities  conducted  to  implement  the 
Regulation  and  the  objectives.  This  is  the  extent  to  which  the  Regulation  is 

9  Foreign direct  investment  falls  under  the  scope  of  the  common  commercial policy pursuant  to  Articles 
3(1)(e) and 207(1) TFEU. 

5 

 
 
 
 
relevant  to  achieve  its  initial  objectives  –  measured  through  the  relevance 
criterion (see Section 4.3). 

For each of these five points, the evaluation matrix10 explains the key questions set out to 
perform  the  evidence-based  assessment  and  describes  the  related  indicators  and  data 
sources used to evaluate the performance of the FDI Screening Regulation. 

3.  HOW HAS THE SITUATION EVOLVED OVER THE EVALUATION PERIOD? 

3.1.  Changes in the geopolitical environment 

In the period covered by this evaluation, we observe a changing security landscape and a 
heightened political awareness of FDI security or public order risks due to the COVID-19 
pandemic and Russia’s war of aggression against Ukraine. 

The COVID-19 crisis revealed vulnerabilities in our critical healthcare-related assets and 
caused serious volatility or undervaluation of significant companies. In its March 2020 
guidance to Member States11, the Commission encouraged all Member States to adopt 
and  use  national  screening  mechanisms12.  In  the  reporting  period,  the  cooperation 
mechanism  assessed  almost  90  health-related  and  more  than  50  biotechnology-related 
transactions, showing the importance of screening in the health sector. 

Soon  after  Russia’s  full-scale  invasion  of  Ukraine,  in  April  2022,  the  Commission 
published guidance for Member States13 on addressing the heightened threats to the EU 
from  Russian  and  Belarusian  investments.  It  called  for  close  cooperation  between 
authorities  involved  in  investment  screening  and  those  responsible  for  enforcing 
sanctions. It also called on Member States to urgently set up comprehensive investment 
screening  mechanisms  if  they  had  not  done  so  already.  Until  the  end  of  the  reporting 
period,  the  cooperation  mechanism  assessed  approximately  a  dozen  Russian  and 
Belarusian cases, which showed the usefulness of the recommendations. 

In June 2023, at the launch of the Economic Security Communication14, Commission 
President  Ursula  von  der  Leyen  stressed  the  importance  of  being  ‘clear-eyed  about  a 
world that has become more contested and geopolitical’. The Communication highlights 
FDI screening  as  one of  the tools that the EU deploys to  protect  itself from  commonly 
identified  risks  that  affect  its  economic  security.  The  Commission  repeated  the  call  to 
Member States who had not yet implemented national FDI screening mechanisms to do 

10 Annex III. 
11  Communication  from  the  Commission:  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) (C/2020/1981). 
12 This call was repeated by the Commission in February 2021 in  its 2021 Communication on the Trade 
Policy Review - (COM/2021/66 final). 
13  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 (C/2022/2316). 
14 Joint Communication to The European Parliament, the European Council and the Council on ‘European 
Economic Security Strategy’ (JOIN/2023/20 final). 

6 

 
 
 
 
so  without  further  delay.  It  also  announced  a  legislative  proposal  to  revise  the  FDI 
Screening Regulation. 

In brief, since 2017 the issue of security and public order has only grown in importance, 
driven by events, such as the COVID-19 pandemic, Russia’s war of aggression against 
Ukraine and other geopolitical tensions. This calls for strengthening the EU framework 
for FDI screening. 

3.2.  Trends of FDI in the EU15 

This  section  highlights  some  key  trends  on  FDI  transactions  (foreign  acquisitions  and 
greenfield  investments)  in  the  EU  between  January  2019  and  June  2023  based  on 
transaction-level  data  extracted,  processed  and  analysed  by  the  Commission’s  Joint 
Research Centre (JRC)16.  

The  analysis  found  that  22.7%  of  foreign  acquisitions  and  20%  of  greenfield  projects 
were in Member States without a fully applicable investment screening mechanism 
(‘non-screening  Member  States’)17.  Based  on  its  own  methodology,  the  ECA  report 
found  that  approximately  42%  of  the  average  FDI  stock  can  be  accounted  for  by  non-
screening  Member  States18.  Most  acquisitions  by  Russian  investors  went  to  non-
screening  Member  States.  It  was  also  found  that  investors  often  use  subsidiaries 
registered in the EU to conduct investments. Between 2019 and the first half of 2023, 
foreign entities invested using their EU subsidiaries in 31% of acquisitions and 28.2% of 
greenfield investments on average. This gives an indication of the volume of transactions 
currently not covered by the cooperation mechanism. 

In  brief,  these  findings  confirm  that  a  significant  share  of  FDI  into  the  EU  goes  to 
Member States  without screening mechanisms; therefore, it is  appropriate to require all 
Member States to have a screening mechanism. 

15 The research carried out by the Commission’s Joint Research Centre for this  staff working document is 
available in Annex II. The annual reports of the Commission on the screening of foreign direct investments 
into  the  EU  and  the  accompanying  staff  working  documents  provide  more  information about  FDI  trends 
into  the  EU.  Ref.  no:  COM(2021)  714  final  and  SWD(2021)  334  final;  COM(2022)  433  final  and 
SWD(2022) 219 final; COM(2023) 590 final and SWD(2023) 329 final. 
16  Raw  data  on  acquisitions  of  equity  stakes  and  greenfield  projects  was  retrieved  from  a  commercial 
dataset (Bureau van Dijk’s Orbis M&A and Orbis Crossborder database respectively), which was further 
elaborated  by  the  JRC.  This  chapter  does  not  rely  on  information  available  in  the  Commission’s 
confidential database for FDI cases notified to the cooperation mechanism. 
17 For the purpose of this analysis, Member States without a screening mechanism between 2019 and the 
first  half  of  2023  are  Belgium,  Bulgaria,  Cyprus,  Estonia,  Greece,  Croatia,  Ireland,  Luxembourg  and 
Sweden. For Member States that introduced mechanisms between those years (Malta in 2020, Czechia and 
Denmark in 2021, Slovakia in 2022 and Slovenia in 2023), the figures include transactions targeting those 
countries in the  ‘screening Member  State’ category from those years  of implementation  on. The analysis 
does  not  take  into  consideration  differences  in  the  scope  (sectors  and  investors  covered)  and  ownership 
thresholds of screening mechanisms, i.e. the fact that a transaction may not be subject to screening despite 
the  Member State maintaining a screening mechanism. Therefore, the share of non-screened FDI is even 
higher. 
18 Point 35 of the ECA report. 

7 

 
 
3.3.  Policy  and  legislative  developments  in  Member  States:  adoption  of  and 

updates to national screening mechanisms 

When  the  Commission’s  legislative  proposal  for  the  FDI  Screening  Regulation  was 
tabled  in  September  2017,  only  14  Member  States  (including  the  UK)  had  a  screening 
mechanism19.  

As  of  June  2023,  eight  additional  Member  States  adopted  screening  mechanisms20,  and 
two  Member  States  with  only  sectoral  mechanisms  enacted  broader  cross-sectoral 
mechanisms21.  

Furthermore,  by  the  end  of  the  period  covered  by  this  evaluation,  all  Member  States 
without  a  screening  mechanism  had  initiated  a  policy  discussion  and,  in  most  cases,  a 
legislative procedure to set up a mechanism.  

The  Commission  has  strongly  encouraged  at  all  levels  and  facilitated  the  adoption  of 
national  screening  mechanisms  by  providing  technical  and  policy  guidance  to  Member 
States.  It  has  also  organised  meetings  and  information  exchanges,  particularly  on  best 
practices.  

Against  this  background,  even  though  the  Regulation  does  not  impose  a  formal 
obligation  for  Member  States  to  adopt  and  maintain  a  screening  mechanism,  there  is  a 
clear trend in that direction.  

The map provides an overview of the legislative situation of Member States as of 30 June 
2023. 

19 Austria, Denmark, Germany, Finland, France, Latvia, Lithuania, Italy, the Netherlands, Poland, Portugal, 
Romania, Spain, and the UK. 
20  Hungary  (2018),  Malta  (2020),  Czechia  (2021),  Slovakia  (2022),  Belgium  (2023),  Slovenia  (2023), 
Estonia (2023, the mechanism started to apply on 1 September 2023), Luxembourg (2023, the mechanism 
started to apply on 1 September 2023). 
21 Denmark (2021), the Netherlands (2023). 

8 

 
 
Figure B: Screening mechanisms and legislative activities of Member States (state of play on 30 
June 2023) 

Source: notifications by Member States to the Commission pursuant to Article 3(7) of the Regulation 

In  addition,  a  number  of  Member  States  revised  their  screening  mechanisms  to  tackle 
emerging  security  and  public  order  risks  from  the  COVID-19  crisis.  Some  Member 
States added biotechnology (e.g. Austria, France, Italy) and critical health infrastructure 
(e.g.  Austria,  Italy)  to  the  sectors  to  which  investment  screening  applies,  while  others 
started to apply tighter procedural rules in health-related sectors (e.g. Germany, Spain).  

Four  Member  States  adjusted  their  screening  mechanisms  to  respond  to  heightened 
concerns about security and public order risks: France (approval is temporarily required 
for acquisitions of 10% interest instead of 25%), Hungary (lower and additional trigger-
thresholds apply temporarily), Austria (extension in 2022 until 31 December 2023 of the 
10% screening threshold for FDI in R&D in pharmaceuticals, vaccines, medical devices 
and personal protective equipment) and Italy (stricter rules temporarily apply to EU and 
European Economic Area  investors). Two countries, Hungary  and Slovenia, introduced 
new  temporary  mechanisms  in  response  to  the  security  and  public  order  challenges 
arising during the pandemic22. Many of these measures were renewed over time.  

22  Source:  Member  States’  annual  reports  to  the  Commission;  Inventory  of  investment  measures  taken 
between  16 September  2019  and  15 October  2020.  Report  prepared  by  the  OECD  Secretariat,  pp.  7-10, 
https://www.oecd.org/daf/inv/investment-policy/FOI-investment-measure-monitoring-October-2020.pdf. 

9 

 
 
 
In  parallel,  several  Member  States  updated  their  rules  to  cover  strategic  assets  (e.g.  in 
2021,  Lithuania  introduced  updates  to  the  list  of  companies  and  strategic  infrastructure 
important  to  national  security)  or  precise  key  definitions  (e.g.  in  2022,  Spain  amended 
some definitions such as ‘critical technologies’ and ‘essential input’). 

In  brief,  the  direction  many  Member  States  are  taking  is  clear,  and  there  has  been  a 
significant increase in the number of Member States with a screening mechanism and an 
extension  of  their  screening  rules.  Yet,  there  remains  a  number  of  missing  links  in  the 
chain of protection against potentially risky FDI transactions due to the fact that not all 
Member State maintain and fully implement a screening mechanism. 

3.4.  National trends in FDI screening activity 

According to Member States’ annual reports submitted to the Commission, the annual 
trends shown in table are observed in screening by national authorities. 

2020 
1 793 
20% 
79% 

Total number of requests for authorisations received 
Share of cases formally screened 
Share of formally screened cases authorised without conditions or 
mitigating measures 
Share of formally screened cases authorised with conditions or 
mitigating measures 
Share of formally screened cases blocked by the national authority 
Share of formally screened cases withdrawn before a decision was 
taken 
Share of top four Member States in the total number of authorisation 
requests 
Source: Member States’ annual reports submitted to the Commission pursuant to Article 5(1) of the Regulation 

2% 
7% 

12% 

87% 

2021 
1 563  
29% 
73% 

23% 

1% 
3% 

2022 
1 444 
55% 
86% 

9% 

1% 
4% 

70% 

66% 

In summary, these findings give rise to the following observations. 

-  Although  the  total  number  of  requests  for  authorisation  has  decreased,  Member 
States  have  examined  the  requests  with  greater  attention  as  the  proportion  of 
formally screened cases has steadily increased over time. This can be explained 
by a higher degree of scrutiny of what national authorities consider as potentially 
‘critical’ as well as a change in overall investment trends. 

-  Authorisation requests have been unevenly distributed across Member States, but 
the share of the top four notifying countries has decreased in the reporting period. 
This  is  due  to  the  increase  in  the  number  of  Member  States  with  a  screening 
mechanism  and  an  expanding  group  of  Member  States  actively  using  their 
mechanisms. 

-  Most  transactions  screened  were  authorised  without  conditions  or  additional 

action required by the investor. 

-  The  proportion  of  formally  screened  cases  where  mitigating  measures  were 
imposed  has  fluctuated  between  9%  (2022)  and  23%  (2021).  In  these  cases, 
national  screening  authorities 
required  certain  action,  assurances,  and 
commitments  by  the  investor  and/or  the  target  company  before  approving  the 
planned FDI. 

10 

 
 
-  Only 1% of the transactions were  blocked  by Member States  in  2021 and 2022 
(compared  to  2%  in  2020).  This  confirms  that  the  EU  is  still  open  to  FDI,  and 
Member States prohibit only a relatively limited number of cases. 

3.5. 

Implementation of the core part of the Regulation: cooperation on individual 
transactions 

For this section, the Commission relied on its own internal confidential database, which 
records  certain  key  information  about  transactions  notified  by  Member  States.  In  the 
period covered by this evaluation (11 October 2020-30 June 2023), the EU cooperation 
mechanism  assessed  1 125  cases  notified  by  Member  States.  Approximately  14%  of 
these  cases  were  FDI  where  the  Commission  could  establish  a  link  with  projects  and 
programmes of EU interest23. In the same period, less than 10 cases were initiated by the 
Commission  or  other  Member  States  on  FDI  that  had  not  undergone  screening 
(Article 7). 

Looking at cases notified, these were highly concentrated in just a few Member States: 
six Member States24 account for 90% of the notifications, whereas the remaining 10% of 
notifications is divided among 11 Member States25. 

Approximately 27%  of the total  notifications  concern  transactions with  a  multi-country 
dimension,  i.e.  a  transaction  that  was  subject  to  a  formal  screening  in  more  than  one 
Member State. While, on average, these multi-country transactions were screened by two 
to four Member States, in some cases, the cooperation mechanism looked at transactions 
screened by up to seven Member States. This phenomenon was not anticipated when the 
Regulation  was  being  prepared,  hence  the  current  rules  do  not  offer  a  solution  for 
handling  these  cases  effectively  and  efficiently.  These  cases  are  assessed  in  parallel  by 
several  national  authorities  based  on  their  own  procedures,  timelines  and  requirements 
without  any  coordination  among  them.  This  requires  investors  and  their  advisers  to 
navigate these uncoordinated proceedings and wait until all of the authorities to approve 
the transaction so that the deal can be closed. 

The  Commission  considered  that  approximately  70%  of  the  notifications  were  eligible 
for their review under Regulation. The other 30% of notifications were either: 

- 

Investments  by  EU  investors  where  the  criteria  for  circumvention,  which  could 
bring it into consideration at EU level, were not met; 

23  According  to  the  Regulation,  projects  and  programmes  of  Union  interest  include  those  projects  and 
programmes that involve substantial EU funding or are covered by EU legislation on critical infrastructure, 
critical  technologies  or  security  of  supply  of  critical  inputs.  They  serve  the  EU  as  a  whole  and  are  an 
important  contribution  to  growth,  jobs  and  the  competitiveness  of  the  EU  economy.  Examples  include 
Galileo, the trans-European networks for energy, transport and telecommunication, Horizon Europe and the 
European Defence Fund. The list of projects and programmes of Union interest is published as an annex to 
the Regulation and is updated by the Commission through delegated acts when necessary. 
24 Austria, Denmark, France, Germany, Italy and Spain. 
25  Czechia,  Estonia,  Finland,  Hungary,  Latvia,  Lithuania,  Malta,  the  Netherlands,  Poland,  Romania  and 
Slovakia. 

11 

 
 
- 

- 

internal  reorganisations  of  companies  without  a  change  to  their  ultimate 
owner/controller; 

investments where the foreign investor’s aim to establish or maintain lasting and 
direct links with the EU target could not be identified. 

Lastly, there were some transactions that were not inward investments. 

The  top  foreign  jurisdictions  from  where  the  direct  investors  came26  were  the  US,  the 
UK, Switzerland, China, Singapore and the United Arab Emirates. Approximately 4% of 
the transactions involved a direct investor from Bermuda, the British Virgin Islands, the 
Cayman Islands, Guernsey and Jersey. 

Approximately 38% of the notifications  were related to investments made directly by a 
single EU investor. The top three Member States where these investors came from were 
Luxembourg, the Netherlands and Germany, accounting for more than half of these intra-
EU notifications. In those cases, where such intra-EU transactions were considered to be 
a  structure  enabling  the  direct  investor  to  circumvent  EU  FDI  controls,  the  case  was 
considered eligible for the Commission’s internal analysis and potentially a Commission 
opinion27. 

The top foreign jurisdictions from where the ultimate beneficial investor came28 were the 
US, the UK, China, Canada, Japan and the United Arab Emirates. Approximately 10% of 
the  transactions  involved  an  ultimate  beneficial  investor  from  Bermuda,  the  British 
Virgin Islands, the Cayman Islands, Guernsey and Jersey. 

Cases  where  the  Commission  considered  that  the  foreign  investor  was  directly  or 
indirectly  controlled  by  the  government  of  a  non-EU  jurisdiction29  accounted  for 
approximately 10% of all notifications received.  

The Commission considered approximately 12% of all the notifications to be potentially 
sensitive30,  and  an  opinion  was  issued  for  less  than  3%31  of  all  notifications.  Of  those 
opinions, approximately 20% were on projects or programmes of Union interest.  In the 
period  covered  by  this  evaluation,  the  Commission  did  not  adopt  any  opinions  on 
investments that it looked at using its ex officio powers and which were not undergoing 
screening.  This  reflects  the  fact  that  either  no  risks  were  identified  in  light  of  the 
information  provided by the Member State or the transaction changed  course  while the 

26 Jurisdictions of origin of foreign investors with more than 20 transactions. 
27 Article 3(6) of the Regulation. 
28 Jurisdictions of origin of foreign investors with more than 30 transactions. 
29 Article 4(2)(a) of the Regulation. 
30 This refers to notifications where the Commission requested additional information from the screening 
Member State pursuant to Article 6(6) of the Regulation. 
31 Pursuant to Article 6(6) of the Regulation, the Commission may issue an opinion where it considers that 
an FDI undergoing screening is likely to affect security or public order in more than one Member State or 
has  relevant  information  in  relation  to  that  FDI.  Therefore,  the  figure  includes  opinions  sharing  relevant 
information with the notifying Member State where the Commission did not establish a view on the likely 
impact on security or public order. 

12 

 
 
cooperation  between  the  Commission  and  the  relevant  national  authorities  of  the  host 
Member State was ongoing.  

Member States submitted comments on approximately 6% of the notifications32, which is 
more than double the number of Commission opinions. These comments came from 12 
Member  States33,  which  shows  that  less  than  half  of  the  Member  States  have  used  the 
cooperation  mechanism  to  formally  signal  concerns  or  provide  information  to  the 
screening  Member  State.  Most  of  these  Member  States  had  a  screening  mechanism  in 
place, which shows that Member States without a mechanism were less active in sending 
comments.  Additionally,  some  comments  were  issued  by  Member  States  on  FDIs  not 
being screened in other Member States. 

In  brief,  the  overall  cooperation  between  all  national  authorities  and  the  Commission 
has  been  intense  and  has  helped  identify  and  tackle  risky  FDI  transactions  that  would 
otherwise have been missed. However, the management of multi-jurisdiction notifications 
is  complex  and  raises  efficiency  issues,  in  particular  for  foreign  investors,  EU  target 
companies, their employees and shareholders. 

3.6. 

Implementation of the Regulation’s other rules 

The Commission Expert Group on the Screening of FDI into the EU was set up under 
the  Regulation  in  November  201734,  shortly  after  the  Commission  tabled  its  legislative 
proposal for the FDI Screening Regulation. The group held 17 formal meetings, and four 
meetings  took  place  before  the  entry  into  force  of  the  Regulation  (between  December 
2017  and  April  2019).  These  meetings  were  instrumental  in  preparing  the  full 
implementation  of  the  Regulation  and  discussing  related  practical  issues  (for  example, 
notification  forms  or  technical  matters  about  the  exchange  of  sensitive  information), 
receiving updates  on  policy and legislative developments in  Member States,  organising 
workshops  with  third  countries  (in  particular,  the  US  and  Japan)  and  exchanging 
information on FDI screening and good practices. In addition to these formal meetings, 
the network of screening  authorities benefited from  informal exchanges coordinated by 
the  Commission  on  good  practices  on  the  design  and  implementation  of  national 
screening rules. To strengthen the spirit of cooperation among the screening authorities 
involved  in  implementing  the  Regulation,  the  Commission  organised  two  in-person 
events  (‘Screeners’  Academy’)  in  March  2022  and  March  2023  with  workshops  and 
presentations covering a wide range of issues. 

The cooperation mechanism described in Section 3.5 enables the Commission to identify 
and, if necessary, propose action when FDI in a project or programme of Union interest 

32  Pursuant  to  Article 6(5)  of  the  Regulation,  where  a  Member  State  considers  that  an  FDI  undergoing 
screening  in  another  Member  State  is  likely  to  affect  its  security  or  public  order,  or  has  information 
relevant for such a screening, it may provide comments to the Member State carrying out the screening. 
33 Austria, Belgium, Czechia, Denmark, France, Germany, Italy, Latvia, Lithuania, Malta, the Netherlands 
and Sweden. 
34 Commission Decision of 29.11.2017 setting up the group of experts on the screening of foreign direct 
investments into the European Union (C(2017)7866 final). 

13 

 
 
 
is  likely  to  affect  EU  security  or  public  order  (see  footnote  23  in  Section  3.5  for  more 
information). The list of projects and programmes of Union interest is annexed to the 
Regulation and, pursuant to Article 8(4), it is updated by the Commission by means of a 
delegated  regulation  when  necessary.  In  the  reporting  period  the  Commission  adopted 
two  delegated  regulations35  to  clarify  the  scope  of  projects  and  programmes  of  Union 
interest and update the list with the legal basis of newly adopted programmes, including 
initiatives  covered  by  the  2021-2027 EU  long-term  budget  (also  known  as  the 
multiannual financial framework). 

Article 9 of the Regulation sets out the requirements for information that Member States 
need  to  provide  about  the  FDI  transactions  they  screen  as  well  as,  upon  request,  other 
FDI planned or completed in their territory. After the first months of cooperating on FDI 
transactions,  it  has  become  clear  that,  in  most  cases,  presenting  detailed  and  accurate 
information  in  a  standardised  format  helps  the  other  national  authorities  and  the 
Commission complete their assessment in the 15 calendar days following the receipt of a 
notification.  Conversely,  if  the  information  provided  is  insufficient  or  ambiguous,  the 
other  26  Member  State  authorities  and  the  Commission  may  have  to  request  further 
information from the notifying country and reserve the right to provide comments or an 
opinion  respectively.  This  may  have  the  effect  of  extending  EU  cooperation  until  the 
information requested by other Member State authorities or the Commission is provided 
and  the  additional  20-day  period  for  the  final  analysis  comes  to  an  end.  To  facilitate 
gathering relevant, specific and targeted information to enable a faster assessment by the 
Commission  and  Member  States,  the  Commission  prepared,  in  close  cooperation  with 
Member State FDI Screening experts, a template that Member States are encouraged 
to use when notifying an FDI undergoing screening to the cooperation mechanism36. 
This  form  requests  more  information  than  is  formally  required  under  Article 9  of  the 
Regulation.  Although  using  the  form  is  not  mandatory,  it  has  become  a  regular  part  of 
notifications, enabling a faster assessment of whether the transaction represents a risk to 
security or public order. It has helped to align practices across Member States. 

- 

Investment  screening  is  a  confidential  process  in  all  Member  States  and 
national authorities do not usually comment publicly on specific transactions 
they screen. Similarly, the EU  cooperation on individual  FDI transactions is 
subject  to  strict confidentiality  rules  as  they concern the national  security of 
one  or  more  Member  States  or  the  EU  as  a  whole.  To  create  the  technical 
conditions  for  the  exchange  of  sensitive  and  classified  information, 
Article 11(2) of the Regulation requires the Commission to provide a secure 

35 Commission Delegated Regulation (EU) 2020/1298 of 13 July 2020 amending the Annex to Regulation 
(EU) 2019/452 of the European Parliament and of the Council establishing a framework for the screening 
of foreign direct investments into the Union (C/2020/4721) and Commission Delegated Regulation (EU) 
2021/2126  of  29 September  2021  amending  the  Annex  to  Regulation  (EU)  2019/452  of  the  European 
Parliament and of the Council establishing a framework for the screening of foreign direct investments into 
the Union (C/2021/6924). 
36  The  template  notification  form  is  published  on  the  Commission’s  website  on  investment  screening, 
https://policy.trade.ec.europa.eu/enforcement-and-protection/investment-screening_en  

14 

 
 
 
 
and encrypted system to support direct cooperation and exchange information 
between  the  contact  points.  To  fulfil  this  obligation,  the  Commission 
implemented  or  initiated  several  measures  to  handle  different  categories  of 
information  from  sensitive  non-classified  information  to  EU  restricted  or 
secret information, accompanied by appropriate technical solutions37. 

Article 5(3)  of  the  Regulation  requires  the  Commission  to  report  annually  on 
implementation of the FDI Screening Regulation. These reports provide transparency on 
the  operation  of  FDI  screening  in  the  EU  and  inform  the  public  about  FDI  screening 
developments  in  Member  States.  They  contribute  to  the  EU’s  accountability  in  an  area 
where,  given  the  security  interests  at  stake,  transparency  of  individual  transactions  is 
neither  possible  nor  appropriate.  The  reports  build  on  information  provided  by  the 
Member  States  in  their  confidential  annual  reports  to  the  Commission  as  well  as 
information  gathered  from  commercial  sources  and  the  Commission’s  own  databases. 
The  Regulation  does  not  provide  guidance  on  the  scope  and  granularity  of  the  EU  or 
national reports. As a result, the Commission had to find the right balance between the 
different  practices  of  Member  States  (many  of  whom  do  not  report  at  all  about  their 
screening  activities)  and  the  obligation  to  inform  the  public  about  EU  activities  in  this 
policy area38. In line with the requirements of the Regulation, the Commission has issued 
three annual reports in the reporting period of this evaluation39. 

As required under Article 3(7) of the Regulation, since June 2019, the Commission has 
published the list of screening mechanisms notified  by Member States40. The list  is 
updated immediately when a Member State notifies the Commission about the adoption 
of a new mechanism or an amendment to an existing mechanism. 

As  the  exchange  of  FDI  information  in  the  cooperation  mechanism  regularly  involves 
processing  personal  data  (for  example,  names  and  addresses  of  natural  persons 
involved  in  a  transaction),  the  Member  States  and  the  Commission  concluded  a  joint 
(particularly 
controllership  arrangement, 
Screening 
the GDPR41 (Article 26), 

line  with  data  protection 

the EDPR42 (Article 28), 

rules 
FDI 

the 

in 

37 The development of the IT solution for SECRET UE/EU SECRET information is currently in pilot phase 
and  has been significantly slowed by external circumstances, such as  travel restrictions  and supply chain 
disruptions during the COVID-19 pandemic. 
38 The ECA report took the view that the Commission’s annual reports do not contain enough information 
to  assess  the  effectiveness  and  efficiency of  the  cooperation  mechanism  and  that  it  should  provide  more 
information  in  general  terms  on  the  sectors  affected  and  types  of  risks  identified.  (Point  57  of  the  ECA 
report). 
39  Reference  number  of  the  Annual  Reports  of  the  Commission  on  the  screening  of  foreign  direct 
investments into the Union and the accompanying Staff Working Documents: COM(2021) 714 final and 
SWD(2021)  334  final;  COM(2022)  433  final  and  SWD(2022)  219  final;  COM(2023)  590  final  and 
SWD(2023) 329 final. 
40  The 
https://policy.trade.ec.europa.eu/enforcement-and-protection/investment-screening_en  
41  Regulation  (EU)  2016/679  of  the  European  Parliament  and  of  the  Council  of  27 April  2016  on  the 
protection of natural persons with regard to the processing of personal data and on the free movement of 
such data, and repealing Directive 95/46/EC (General Data Protection Regulation). 

the  Commission’s  website 

investment 

screening: 

available 

list 

on 

on 

is 

15 

 
 
 
 
 
the  underlying Commission  Decision43.  The 

Regulation (Article 14)  and 
joint 
controllership  agreement  is  between  Member  States  and  the  Commission  on  the 
processing  of  these  personal  data.  It  sets  out  the  respective  roles,  responsibilities  and 
practical  arrangements44.  The  joint  controllership  agreement  entered  into  force  on 
28 April 2022, and it was the first  arrangement of this kind  adopted by  Member States 
and the Commission. 

Article 13  of  the  Regulation  encourages  Member  States  and  the  Commission  to 
cooperate with the competent authorities of like-minded third countries on issues on 
screening  foreign  direct  investments  on  the  grounds  of  security  and  public  order.  This 
cooperation  includes  sharing  experiences,  best  practices  and  information  on  screening 
mechanisms  and  investment  trends,  but  it  does  not  allow  cooperation  on  specific  FDI 
transactions.  The  EU  has  pursued  such  cooperation  bilaterally,  including  within 
dedicated working groups of the Trade and Technology Council with the US45 and in the 
Trade  and  Technology  Council  with  India46.  Cooperation  has  also  extended  to  other 
partners, for example, Japan, and in plurilateral formats, such as the G7 and the OECD. 

In  brief,  the  cooperation  mechanism’s  supporting  arrangements,  such  as  the  Expert 
Group and the rules and tools for the confidential exchange of information have worked 
well. The recommended notification form became widely used by national authorities to 
notify transactions to the network, even though its use is voluntary. The annual reports of 
the Commission and the up-to-date list of national screening mechanisms have increased 
the  transparency  of  screening  in  the  EU.  Through  the  adoption  of  delegated  acts,  the 
Commission  ensured  that  FDI  in  EU  companies  critical  for  the  functioning  of  newly 
adopted  programmes  of  Union  interest  can  be  duly  scrutinised.  The  Commission’s 
engagement  with  like-minded  countries  have  strengthened  the  EU’s  preparedness  to 
address FDI through the exchange of information and good practices with international 
partners. 

42 Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the 
protection  of  natural  persons  with  regard  to  the  processing  of  personal  data  by  the  Union  institutions, 
bodies,  offices  and  agencies  and  on  the  free  movement  of  such  data,  and  repealing  Regulation  (EC) 
No 45/2001 and Decision No 1247/2002/EC. 
43  Commission  Decision  (EU)  2020/1502  of  15 October  2020  laying  down  internal  rules  concerning  the 
provision of information to data subjects and the restriction of certain of their rights in the context of the 
processing of personal data  by the Commission in the  cooperation mechanism established by Regulation 
(EU) 2019/452 of the European Parliament and of the Council. 
44 
https://ec.europa.eu/dpo-register/detail/DPR-EC-03306. 
45  More  information  about  the  activities  of  the  EU-US  TTC  Investment  Screening  Working  Group  is 
available on the Commission’s website: https://futurium.ec.europa.eu/en/EU-US-TTC/wg8 
46 https://ec.europa.eu/commission/presscorner/detail/en/ip_23_2728  

Its  main  elements  are  available 

the  Data  Protection  Officer: 

the EU  Register  of 

in 

16 

 
 
 
 
3.7.  Adoption  and  implementation  of  screening  mechanisms  among  the  EU’s 

major trading partners 

According to an analytical note by the OECD Secretariat47, the number of countries that 
operate  mechanisms  to  manage  the  security  implications  of  foreign  investment  is 
growing steadily, and this is a trend that is unlikely to slow or stop in the medium term. 
The  note  found  that,  at  present,  over  80%  of  the  61  economies  that  participate  in  the 
Freedom  of  Investment  Roundtables  have  some  instruments  in  place  to  manage  the 
security  implications  stemming  from  foreign  investments.  In  addition,  in  over  half  of 
these economies, the mechanisms cover large parts of the economies or at least more than 
one  sectors.  The  note  also  points  out  that  most  countries  that  operate  investment 
screening  mechanisms  and  report  case  statistics  have  used  these  mechanisms  more 
frequently since 2017. 

Among the top 10 trading partners of the EU48, nine jurisdictions (the US, China, the UK, 
Russia,  Norway,  Türkiye,  Japan,  South  Korea  and  India)  maintain  a  screening 
mechanism49, and Switzerland is in the process of establishing one50. 

In brief, the EU has moved in the same direction as the rest of the world to protect itself 
against risky FDI. 

4.  EVALUATION FINDINGS 

This section summarises the findings of the external study presented by the OECD at the 
request  of  the  Commission,  the  consultations  organised  by  the  Commission  for  the 
purposes of this evaluation51 and the findings of the ECA Report that are relevant for the 
evaluation of the effectiveness, efficiency, coherence, EU added value and relevance of 
the Regulation. The Commission’s own conclusions are set out in the next section. 

4.1.  To what extent was the intervention successful and why? 

4.1.1 Effectiveness of the Regulation 

The  OECD  report  and  the  consultations  organised  by  the  Commission  found  that  the 
cooperation mechanism  has broad support, not  only  from  Member States  but  also  from 
private sector stakeholders. National screening authorities considered that they take better 
informed screening decisions thanks to the exchange of transaction-specific information 
under  the  cooperation  mechanism.  The  cooperation  mechanism  has  also  made  several 

47  Investment  policy  developments  in  61  economies  between  16 October  2021  and  15 March  2023. 
https://www.oecd.org/daf/inv/investment-policy/Investment-policy-monitoring-April-2023.pdf  
48 Top trading partners 2022 by total trade (import and export) based on Eurostat Comext data. 
49 This information is based on the research note by the OECD Secretariat (May 2020): Acquisition- and 
ownership-related policies to safeguard essential security interests – Current and emerging trends, observed 
designs,  and  policy  practice  in  62  economies,  https://www.oecd.org/investment/OECD-Acquisition-
ownership-policies-security-May2020.pdf  
50 https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-95018.html 
51 The contributions received in these consultations are summarised in Annex V.  

17 

 
 
Member  State  authorities  aware  of  many  transactions  taking  place  in  their  own 
jurisdictions.  This  is  because  another  Member  State  notifies  to  the  cooperation 
mechanism the part of a transaction that it has dealt with or been involved in52. 

A  significant  majority  of  respondents  to  the  targeted  consultation53  agreed  with  the 
statements below. 

-  The EU’s framework for FDI screening has been effective in assessing the likely 

impact of specific FDIs on security and public order in the EU. 

-  The EU’s framework for FDI screening has generally been effective in assessing 
the likely impact of specific FDIs on security and public order in the EU and in 
identifying  and  sharing  information  about FDIs in  the  EU  both  between  the 
Member States themselves, and between the Member States and the Commission. 

-  The FDI Screening Regulation has  enabled Member States  and the Commission 
to correctly identify FDI transactions likely to have an adverse impact on projects 
or  programmes  of  Union  interest  in  cases  where  security  or  public  order  is 
affected. 

However,  views  were  more  nuanced,  albeit  still  positive,  on  whether  the  current  EU 
framework  –  which  leaves  Member  States  free  to  decide  on  most  of  the  parameters  of 
their national screening mechanisms – has been effective in identifying risks to security 
and/or public order for projects and programmes of Union interest. There were similarly 
diverging views on whether the current EU framework has been effective in identifying 
cross-border risks to security and/or public order. 

National screening  authorities’ responses  to  an additional consultation  organised by  the 
Commission  highlighted  the  European  aspect  of  security,  the  value  of  information 
exchange and the importance of obtaining the views of other Member States on specific 
transactions and the usefulness of informal exchanges on risks and how best to deal with 
them. Some Member States without a screening mechanism considered it a good way of 
informing policy decisions and prompting them to looking into security risks related to 
FDI. 

However,  a  number  of  shortcomings  were  identified,  which  ultimately  undermine  the 
cooperation mechanism’s ability to protect the EU’s public order and security from risky 
FDIs. 

a)  Issues related to the design of the Regulation 

The  OECD  report,  the  consultations  organised  by  the  Commission  and  the  ECA  report 
identified several fundamental flaws related to the design of the Regulation, likely to 

52 OECD report, point 135. 
53  In  the  targeted  consultation  the  Commission  received  47  responses,  including  18  from  Member  State 
authorities  involved  in  EU  cooperation  on  FDI  screening  and,  where  applicable,  the  implementation  of 
national screening mechanisms. 

18 

 
 
undermine  the  protection  of  the  EU’s  security  and  public  order.  These  flaws  result  in 
potentially  risky  transactions  going  unnoticed  by  the  Commission  and  Member  States, 
despite the risk that they could present. 

-  The  OECD  report  found  that  the  absence  of  a  screening  mechanism  in  some 
Member States results in these Member States having few or no effective means of 
managing  risk  related  to  FDI  in  the  EU,  in  these  Member  States  not  building 
institutional  capacity,  and  therefore  not  being  able  to  benefit  fully  from 
information  exchanges  with  other Member States and the Commission under the 
cooperation mechanism. More importantly, the absence of a screening mechanism 
impedes effectiveness. Problematic foreign investors wanting to invest in sensitive 
assets  may  choose  non-screening  Member  States  as  a  gateway  into  the  internal 
market, relying on the freedoms granted by the internal market rules to companies 
established  in  any  EU  Member  State54.  The  targeted  consultation  has  confirmed 
that  this  is  a  major  issue,  with  many  respondents  considering  it  a  major 
impediment  to  the  cooperation  mechanism’s  effectiveness.  The  ECA  report  also 
concluded  that  the  lack  of  screening  mechanisms  in  all  Member  States  is 
detrimental to the effectiveness of the EU framework55. 

-  Under the Regulation, Member States that screen FDIs are free to define the 
scope of their national screening mechanisms56. According to the OECD report, 
Member States with a too narrow definition of the scope have limited ways of 
identifying  and  addressing  risks  of  transactions  not  screened,  with  potential 
spill-over effects on the security and public order interests of other Member States. 
For  sectors,  transactions,  or  investors  from  certain  non-EU  jurisdictions  not 
subject  to  screening,  the  consequences  of  this  are  similar  to  those  of  the  total 
absence  of  a  screening  mechanism.  The  ECA  report  also  took  the  view  that 
Member States’ freedom to determine the scope of their screening mechanisms in 
areas such as what investments to screen and which sectors to include as critical 
for security or public order result in significant differences in scope and approach 
between screening systems thus limiting the effectiveness of the EU framework57. 
On the other hand, the responses to the targeted consultation did not agree entirely 
with this assessment as most respondents considered a minor problem the fact that 
Member States are free to decide which sectors, assets (for example infrastructure, 
technologies, inputs) and economic activities they screen. 

-  The  OECD  report  found  no  clear  reason  why  foreign  investments  made 
through an entity established in the EU, where the direct investor established 
in the EU is controlled by a non-EU person (‘intra-EU transactions’) should 
not be covered by the cooperation mechanism58. These investments could carry 

54 For more information, see page 65 of the OECD report. 
55 Point 27 of the ECA report. 
56 For more information, see page 66 of the OECD report. 
57 Point 27 and 34 of the ECA report. 
58 For further details, see p. 81 of the OECD report. 

19 

 
 
the  same  risks  to  public  order  and  security  as  FDIs  carried  out  through  a  legal 
entity  not  established  in  the  EU.  The  targeted  consultation  has  confirmed  an 
interest in clarifying and expanding the scope of the Regulation in this direction, 
with most respondents in favour of covering transactions where the direct investor 
is established in the EU but is ultimately owned by a natural person or an  entity 
from a third country that can effectively participate in the management or control 
of the target company. Information Member States’ screening authorities gave the 
Commission  on  a  confidential  basis  has  revealed  that  there  are  precedents  for 
transactions falling outside the scope of the cooperation mechanism for this reason 
that  the  competent  Member  State  nonetheless  has  prohibited  or  authorised  with 
conditions  since  October  2020.  This  confirms  that  the  current  system  does  have 
‘blind  spots’  resulting  from  not  covering  intra-EU  transactions.  This  limitation 
was also observed by the ECA report59. 

-  According to the OECD report, the Regulation contains very little possibility to 
hold  the  Member  State  ultimately  deciding  on  the  transaction  in  question 
accountable to the Commission or the other Member States, even if concerns 
about  security  or  public  order  have  been  formally  expressed60.  The  Member 
State that decides on the transaction is only obliged to give due consideration to, 
or take utmost account of (as the case may be), comments and opinions. However, 
it is  not required to  inform  the other Member States  or the Commission (even if 
they have issued a comment/an opinion) of its course of action. Nor is it required 
to explain if, how and to what extent it has taken comments/opinions into account 
or if, how and to what extent it has not done so. This undermines the effectiveness 
of the Regulation and may deter other Member States from providing substantial 
input  for  the  assessment  of  specific  FDI  transactions.  The  targeted  consultation 
confirmed  the  seriousness  of  this  issue,  with  many  respondents  considering  the 
fact  that  the  Member  State  screening  the  transaction  does  not  have  to  report  to 
other  Member  States  or  the  Commission  on  the  outcome  of  its  assessment  of 
security  or  public  order  risks  a  major  impediment  to  the  effectiveness  of  the 
Regulation. The ECA report reached the same conclusion61. 

A second set of issues are procedural or technical62. 

-  The  OECD  report  found  that  Member  States  with  a  screening  mechanism  have 
very  different  rules  for  deciding  when  to  start  screening,  and  for  deciding 
how long they have to screen before taking a final decision63. These differences 
cause  problems,  especially  in  multi-country  transactions,  when,  for  example, 
clearance of the same transaction is requested in a number of Member States (in 

59 Point 29(b) of the ECA report. 
60 For further details, see p. 75 of the OECD report. 
61 Point 27 of the ECA report. 
62  Although  these  issues  also  affect  the  cooperation  mechanism’s  efficiency  and,  to  a  certain  extent,  the 
coherence between the Regulation and national screening mechanisms, as they have a significant impact on 
the Regulation’s effectiveness, they are presented in detail in this section on effectiveness. 
63 For more information, see p. 76 of the OECD report. 

20 

 
 
which subsidiaries are located), with the result that the same transaction is notified 
by  several  Member  States  because  several  entities  of  the  target  group  of 
companies  are  concerned64.  The  OECD  report  states  that  the  screening  of  such 
transactions is inefficient, time-consuming and unpredictable for the investor, the 
the 
target  group  of  companies, 
Commission.  These  transactions,  a  significant  proportion  of  all  notifications 
(27%), result in repeated, asynchronous and uncoordinated use of the cooperation 
mechanism,  even  if  investors  apply  for  authorisation  at  the  same  time  in  all 
Member States concerned. 

the  screening  authorities 

involved  and 

-  Member  States  with  a  screening  mechanism  are  free  to  determine  their 
screening  procedures65.  Some  national  authorities  screen  (and  notify  to  the 
cooperation  mechanism)  all  the  requests  for  authorisation  they  get,  while  others 
make  a  selection  and  formally  screen  (and  notify)  certain  sensitive  transactions. 
This creates an imbalance in Member States’ use of the Regulation; inefficiencies 
because not all transactions notified would in principle warrant being assessed by 
the  cooperation  mechanism  or  the  mechanism’s  being  made  aware  of  them;  and 
ineffectiveness  as  some  potentially  sensitive  transactions  go  unnoticed  (they  are 
not  notified  because  they  are  never  formally  screened  under  national  screening 
mechanisms). 

The  targeted  consultation  has  confirmed  this  shortcoming,  with  only  a  few 
respondents  in  favour  of  maintaining  the  current  rules  for  notifying  FDI 
undergoing  formal  screening  to  the  cooperation  mechanism,  leaving  it  to  the 
Member State’s discretion to decide what is formally screened and what is to be 
notified to the EU. On possible solutions, respondents have said they would prefer 
national  screening  authorities  to  notify  only  FDIs  that  meet  certain  criteria66. 
Considerably fewer respondents were in favour of the other option, whereby host 
Member States only notify FDIs that they had initially identified (‘pre-screened’) 
as potentially risky for security or public order. 

-  According to the OECD report, challenges lie in the cooperation mechanism’s 
deadlines67.  The  deadlines  for  Member  States  to  comment  and  for  the 
Commission to issue an opinion on notified transactions are the same. As a result, 
the Commission  may not  have enough time to incorporate  other Member States’ 
comments  into  its  assessment,  if  those  comments  are  provided  at  an  advanced 
stage of the Commission’s assessment. Some national deadlines are also too short 
to incorporate Member States’ comments or Commission opinions. 

64 For more information, see p. 82 of the OECD report. 
65 For more information, see p. 79 of the OECD report. 
66 For example specific sensitive sectors, critical technologies, likely impact of the FDI on more than one 
Member State – for example due to significant cross-border sales or the existence of a ‘sister company’ of 
the target in one or more other Member States. 
67 For more information, see p. 76 of the OECD report. 

21 

 
 
The  graph  below  shows  the  interplay  between  selected  Member  States’  deadlines  for 
decisions  and  deadlines  specified  in  the  Regulation.  Day  ‘0’  in  the  visualisation 
corresponds to when Member State’s screening authorities receive a formal and complete 
filing. 

Figure C: EU and selected Member States’ deadlines: schematic presentation of the base 
scenario   

Source: OECD Report, Figure 4 (p. 35). Finland has not set a timeline for decisions under its domestic screening mechanism under 
the Act on the Screening of Foreign Corporate Acquisitions (Act 172/2012 as amended) for companies in the defence and security 
sectors (shown on the graph). 

The  OECD  report  found  that  some  Member  States,  such  as  France,  may  need  to 
announce  their  final  decision  before  receiving  comments  from  Member  States  or 
opinions  from  the  Commission,  even  if  no  additional  information  is  requested.  This  is 
mainly due to short national deadlines  for decisions, set in some Member States before 
the Regulation was drafted or came into force. 

Another difficulty  for the Commission  is  that, in the scenario described in  Article 6(7), 
Member States and the Commission are given the same amount of time – 35 days after 
receiving a notification – to issue comments or opinions. If Member States use the full 35 
days,  the  Commission  has  no  time  to  incorporate  these  comments  into  its  own 
assessment, making it difficult for the Commission to issue an opinion if it considers, on 
the basis of these comments, that the security or public order of more than one Member 

22 

 
 
State  risks  being  affected.  If  additional  information  is  requested  about  a  transaction 
undergoing screening, the domestically set timelines in some Member States’ deadlines 
may  have  expired  before  the  process  under  the  cooperation  mechanism  has  ended, 
preventing the screening  Member State from  having  all  the relevant  information  before 
taking its decision. The graph below shows this. 

Figure D: EU and selected Member States’ deadlines where additional procedural steps are 
taken under the cooperation mechanism 

Source: OECD report, Figure 5 (p. 36). Finland has not set a timeline for decisions under its domestic screening mechanism under 
the Act on the Screening of Foreign Corporate Acquisitions (Act 172/2012 as amended) for companies in the defence and security 
sectors (shown on the graph). 

Member  States  adopt  different  strategies  to  avoid  situations  in  which  they  cannot  take 
into account comments or opinions on a transaction for their final screening decision. 

-  Some  have  set  deadlines  for  national  screening  that  are  long  enough  to 
accommodate  the  cooperation  mechanism’s  deadlines,  even  if  the  deadlines  are 
extended (e.g. Finland, Germany). 

-  Deadlines  can  be  extended  for  transactions  that  fall  under  the  scope  of  the 
Regulation  or  are  extended  automatically  if  a  Member  State  or  the  Commission 
have indicated they intend to provide comments or opinions. 

-  The clock ticking for the screening decision is stopped or suspended for as long as 

comments or opinions can be received. 

23 

 
 
-  The national screening process and its deadlines only apply once the cooperation 

process has fully ended68. 

The  targeted  consultation  confirmed  that  the  lack  of  harmonisation  of  Member  States’ 
deadlines for screening  FDI transactions, and the fact that the timing of notifications to 
the cooperation mechanism is determined only by the start of formal screening (therefore 
determined by the Member State), are major problems. On how to make the cooperation 
mechanism  more  efficient  in  identifying  and  assessing  threats  to  the  EU’s  security  or 
public  order,  many  respondents  were  in  favour  of  harmonising  national  deadlines  for 
screening  FDI  transactions  subject  to  the  cooperation  mechanism and  harmonising 
deadlines  for  requesting  additional  information from  the  parties  concerned  and  for 
submitting  such  information.  Most  respondents  also  called  for  the  establishment  of 
minimum common criteria to assess which transactions screened by the Member States 
pose  a  risk  to  public  order  or  security.  The  ECA  report  reached  the  same  conclusion, 
pointing  out  that  the  ‘pre-screening’  procedure  used  in  some  Member  States  and  the 
different treatment of multi-country transactions had a negative impact on the efficiency 
and effectiveness of FDI screening at national and EU level69. 

In  response  to  a  Commission  questionnaire,  private  sector  stakeholders  with  proven 
direct  experience  of  FDI  screening  procedures  identified  the  following  issues,  partially 
related  to  national  screening  mechanisms,  that  undermine  the  effectiveness  of  the  EU 
framework for FDI screening. 

-  Differences  between  key  concepts,  such  as  the  definition  of  FDI  (or  the 
investments  covered  by  national  mechanisms)  and  the  substantive  test  to 
determine if an FDI is likely to affect security or public order, including the risk 
factors related to the foreign investor. 

-  Differences  between  Member  States’  thresholds  of  influence  over  a  target 

company that a foreign investor must meet to trigger a review. 

-  The  lack  of  clarity  about  activities  that  fall  under  the  scope  of  national 
mechanisms because the list of sectors covered is vague and non-exhaustive. 

-  Procedural differences between national mechanisms, such as filing deadlines that 
are  too  short,  imposed  by  certain  Member  States,  from  the  date  a  transaction  is 
signed  (such  as  the  date  a  Share  Purchase  Agreement  is  signed);  the  significant 
divergence in deadlines  among Member States and differences between national 
screening mechanisms and the cooperation mechanism (some Member States start 
their  national  screening  procedures  only  after  the  cooperation  mechanism  has 
ended,  while  others  conduct  theirs  at  the  same  time  as  the  cooperation 
mechanism, and, in some cases, Member States do not notify transactions to the 
cooperation mechanism at all if an in-depth investigation is not launched). 

68 For more information, see p. 37 of the OECD report. 
69 Point 34 of the ECA report. 

24 

 
 
 
 
-  The lack of a legal basis for direct formal interaction between the investor/target 
company  and  other  Member  States  and  the  Commission  during  the  screening 
procedure. 

-  The lack of notifying parties’ access to comments made by other Member States 

and Commission opinions. 

b)  Issues  stemming  from  the  implementation  and/or  interpretation  of  the 

regulation by the Member States 

The  OECD  report,  the  consultations  organised  by  the  Commission  and  the  ECA  report 
found that the following issues also undermine the ability of the Member State deciding 
on  a  transaction  to  address  the  public  order  or  security  concerns  identified  by  other 
Member States. 

-  The  OECD  report  pointed  out  that  only  a  few  Member  States  have  equipped 
themselves with a legal basis and procedures to take into account or mitigate 
the  security  or  public  order  risks  identified  by  other  Member  States  or  the 
Commission70.  At  national  level,  there  is  often  no  measure  in  place  for  the 
institutional review of Member States’ comments or Commission opinions. Some 
national deadlines are too short to take the Commission’s or other Member States’ 
concerns into account;  and many Member States do not  have the legal  means to 
impose  mitigating  measures  with  a  cross-border  effect  (e.g.  continuity  of  supply 
from  the  target  company  in  the  Member  State  hosting  the  investment  to  a  client 
(for example, the armed forces) in another Member State). 

-  Very few national screening authorities  have the power to take into account 
the  material  public  order  or  security  concerns  of  other  Member  States  in 
their  screening  decisions71.  With  some  limited  exceptions,  under  national  law, 
Member  States  can  only  prohibit  a  transaction  or  impose  mitigating  measures  if 
their own public order or security is affected. Member States often make a security 
assessment  before  notifying  (or  not)  transactions  to  the  cooperation  mechanism 
taking into account only their own security or public order interests, with the result 
that  the  mechanism  may  not  even  become  aware  of  FDIs  that  may  affect  the 
security  or  public  order  of  Member  States  other  than  the  one  hosting  the 
transaction or projects or programmes of Union interest. 

-  There  are  only  limited  possibilities  for  identifying  and  addressing  FDIs 
which,  for  whatever  reason,  are  not  screened  nationally  (e.g.  no  screening 
mechanism,  narrow  scope  of  the  existing  screening  mechanism,  transaction  not 
filed by the parties concerned, etc.)72. In cases of non-notified transactions, many 
national  screening  authorities  are  not  legally  empowered,  under  national  law,  to 

70 For more information, see p. 76 of the OECD report. 
71 For more information, see p. 71 of the OECD report. Page 49 of the OECD report gives an overview of 
explicitly  legislated  powers  to  act  in  the  interests  of  other  Member  States  or  projects  or  programmes  of 
Union interest. 
72 For more information, see p. 68 and p. 70 of the OECD report. 

25 

 
 
obtain from the parties to the transaction information requested by other Member 
States or the Commission. 

The Regulation does not make the provision of information conditional on the fact 
that a transaction is  undergoing screening.  In practice, this means  that very little 
use  can  be  made,  and  is  made,  of  Article 7  of  the  Regulation,  which  allows 
cooperation on any FDI not screened by a Member State. As a result, transactions 
that could affect the EU’s public order or security could go unnoticed and, even if 
identified  thanks  to  the  cooperation  mechanism,  might  not  be  investigated  and 
addressed because the host Member State does not have a legal basis for doing so. 

In  their  responses  to  a  Commission  questionnaire,  most  national  screening 
authorities took the view that cooperation on non-screened FDI is only effective if 
the  Member  State  where  the  transaction  takes  place  maintains  a  screening 
mechanism that can address the concerns raised. Without an applicable screening 
mechanism,  the  Member  State  where  the  transaction  is  planned  or  completed  is 
unlikely  to  have  the  necessary  means  to  take  measures  in  response  to  a 
Commission opinion or other Member States’ comments. 

One respondent believed that if the ‘host’ Member State does not have the power 
to at least investigate a transaction, other Member States may be less inclined to 
comment on the transaction. Some respondents pointed out that the obligation for 
all  Member  States  to  maintain  a  screening  mechanism  would  address  this 
shortcoming. 

The  ECA  report  found  out  that,  although  the  Commission  may  assess  FDI  not 
undergoing  screening  at  its  own  initiative,  these  provisions  have  limited  value, 
given  the  lack  of  information  available  on  the  FDI  transactions  taking  place, 
except for information that is in the public domain73. 

The OECD report and the Commission consultations have not revealed shortcomings in 
the  arrangements  and  mechanisms  complementing  the  cooperation  mechanism,  such  as 
the  expert  group  on  the  screening  of  FDI  into  the  EU,  the  rules  on  the  confidential 
handling of sensitive information and the arrangements for international cooperation with 
like-minded partners, such as the US, Japan and the G7 countries74.  

4.1.2 Efficiency of the Regulation 

Efficiency covers the resources used by an intervention (in this case, the FDI Screening 
Regulation) to obtain the desired outcome. The evaluation has identified two main types 
of costs  of FDI screening:  the administrative costs  borne by public administrations  and 
businesses  in  order  to  comply  with  the  Regulation,  and  the  possible  decrease  of  FDI 
inflows due to the adoption and implementation of the EU framework for FDI screening. 

73 Point 27 of the ECA report. 
74 Canada, France, Germany, Italy, Japan, UK, US.  

26 

 
 
On administrative costs, according to stakeholders interviewed for the OECD report, the 
EU framework has not significantly changed the processes or deadlines for, or outcomes 
of,  investment  screening  in  Member  States.  Responses  to  a  Commission  questionnaire 
confirm  this.  Like  Member  States,  most  private  sector  respondents  were  unable  to 
provide detailed cost estimates for the administrative burden  of EU cooperation on 
FDI  screening.  Their  replies  indicated  that  the  cooperation  mechanism’s  average  costs 
were rather limited compared to the overall costs of most FDI reviews. However, several 
respondents  reiterated  that  where  a  transaction  is  notifiable  in  more  than  one  Member 
State,  the  lack  of  procedural  alignment  among  national  mechanisms  and  the  different 
national requirements and practices have substantial cost implications and administrative 
burden  (including  legal  and  consulting  fees,  compliance  efforts  and  administrative 
overheads).  

Asked if the EU framework for FDI screening deterred investors from investing in the 
EU,  all  Member  State  respondents  considered  that  the  Regulation  and  national 
mechanisms  did  not  have  a  dampening  effect  on  FDI.  Most  private  sector  respondents 
shared the view that the EU framework for FDI screening, while not without flaws, had, 
on the whole, not deterred investors from investing in the EU. 

Another  private  sector  respondent  who  contributed  on  behalf  of  a  foreign  investor  said 
that  the  workflow  to  get  clearance  from  FDI  screening  authorities  had  become  heavier 
than the workflow to get merger control clearances. 

As  part  of  the  evaluation,  the  Commission  assessed  whether  it  was  methodologically 
feasible to give a quantitative estimation of the likely current, past or future impact of the 
FDI Screening Regulation and its possible amendments on the economy and society and 
on FDI inflows. The conclusion arrived at was that this was not possible for the reasons 
explained in Section 2.4 of Annex II. 

4.1.3 Coherence of the Regulation 

Internal coherence 

The  evaluation  found  that  the  provisions  of  the  Regulation  are  generally  internally 
coherent  and  work  well  together  to  achieve  its  objectives.  The  Regulation’s  various 
obligations fit well together, with minimal rules and a lot of flexibility on the design and 
implementation of national screening mechanisms by Member States. National screening 
authorities’ responses to a Commission questionnaire confirmed this as they considered 
that the purpose of the Regulation was on the whole coherent with the provisions for its 
implementation  (for  example:  the  confidentiality  of  information  exchanged,  the 
Commission  expert  group on the screening  of FDI into the EU,  and the  list  of projects 
and programmes of Union interest annexed to the Regulation). 

Coherence with Member States’ legislative frameworks 

To achieve the Regulation’s objective, the screening by Member States of FDI likely to 
affect  security or public  order is  of paramount importance.  The  OECD  report therefore 

27 

 
examined  the  screening  mechanisms  maintained  by  the  Member  States  and  concluded 
that  certain  definitions  and  provisions  of  the  Regulation  were  being  interpreted  and 
applied  in  different  ways  across  Member  States  (for  example,  who  is  considered  a 
‘foreign investor’ and what constitutes ‘formal screening’)75. 

Furthermore, the Regulation only has minimal rules (primarily procedural requirements) 
on designing screening mechanisms76. This means that differences in the sectoral scope 
of  national  mechanisms,  or  the  application  of  rules  to  greenfield  investments,  or  their 
exemption from those rules, could be seen as an inconsistency. 

Finally,  the  lack  of  certain  Member  States’  explicit  competences  to  act  effectively  on 
other Member States’ comments or Commission opinions could be seen as inconsistent 
with the obligation to take these comments and opinions into ‘due consideration’ or take 
‘utmost  account’  of  them.  These  obligations  concern  behaviour,  not  outcomes,  but 
certain Member States’ inability to act in line with the Regulation can also be considered 
to be related to coherence. 

The  consequences  of  different  scopes  and  definitions,  or  the  consequences  of  certain 
Member  States’  inability  to  take  action  in  the  interests  of  other  Member  States  have 
repercussions on the effectiveness of the Regulation. These shortcomings were evaluated 
in detail in the section on efficiency. The ECA report considered the lack of definitions 
or  the  uniform  interpretation  of  key  concepts  (such  as  ‘likely’  or  ‘security  or  public 
order’)  a  shortcoming  of  the  Regulation77.  However,  the  Commission  consultations  did 
not receive comments suggesting this was very problematic in practice. 

In response to a Commission questionnaire, national screening authorities considered that 
the Regulation had promoted the adoption of, and a certain degree of similarity among, 
national  screening  mechanisms.  At  the  same  time,  respondents  pointed  out  that 
differences remained among national screening mechanisms, for example in the sensitive 
economic  sectors  subject  to  screening  and  deadlines.  Generally,  national  screening 
authorities were in  favour of promoting  greater harmonisation  of national  rules  without 
affecting the responsibilities of Member States in screening.  

Coherence with relevant EU interventions 

The  Regulation  clarifies  that  its  application  is  without  prejudice  to  the  application  of 
Article 21(4)  of  Regulation  (EC)  No 139/2004  (the  Merger  Regulation),  and  both  the 
Regulation  and  Article 21(4)  of  Regulation  (EC)  No 139/2004  should  be  applied 
consistently78. It  clarifies that the Regulation does  not affect  EU rules on the prudential 
assessment  of  acquisitions  of  qualifying  holdings  in  the  financial  sector,  which  is  a 
distinct  procedure  with  a  specific  objective79.  The  Regulation  also  states  that  it  is 

75 Paragraphs 161-165 of the OECD report. 
76 These rules are set out in Article 3(2)-(6). 
77 Points 29 and 33 of the ECA report. 
78 Recital (36). 
79 Recital (37). 

28 

 
 
consistent with and without prejudice to other notification and screening procedures set 
out in sectoral EU law80. 

In the reporting period, the Commission has not become aware of specific cases in which 
a transaction was subject to multiple authorisation procedures, and these were carried out 
in  a  conflicting  manner.  However,  the  respondents  to  the  targeted  consultation  were 
almost  evenly  divided  on  the  overall  consistency  of  the  processes  required  by  the  FDI 
Screening Regulation with other scrutiny and authorisation procedures.  

In  response  to  a  Commission  questionnaire,  many  private  sector  respondents  called  for 
greater consistency between nationality criteria (used to determine an investor’s country 
of  origin  and  ultimate  ownership)  and  other  EU  instruments,  in  particular  the  EU 
sanctions regime, anti-money laundering and EU merger control rules, and key concepts, 
such as ‘control’ and the consideration given to security and public order (in particular in 
the context of EU merger control rules).  

The  evaluation  found  that  the  Regulation  was  cited  in  several  relevant  EU  policy 
instruments81,  but  no  major  inconsistencies  or  overlaps  were  identified  between  the 
Regulation  and  these  instruments,  whose  purpose  is  distinct  from  that  of  the  FDI 
Screening  Regulation.  Rather, the evaluation  showed that there  was a  certain degree of 
complementarity between the Regulation and the EU instruments applicable to sectors or 
actions relevant for security or public order. 

Finally,  the  evaluation  found  that  the  Regulation  was  consistent  with  EU  restrictive 
measures  (sanctions),  which,  on  the  basis  of  Article 215  of  the  TFEU,  take  precedence 
over  other  EU  regulations  and  may  prohibit  or  stand  in  the  way  of  authorising  FDI  by 
certain  third  countries  or  nationals  of  third  countries.  On  FDI  not  prohibited  by  EU 
restrictive  measures,  the  Commission  has  called  for  systematic  scrutiny  of  FDI  by  or 
related to Russian or Belorussian persons, with particular attention to the threats posed by 
investments by persons or entities associated with, controlled by or subject to influence 
by the governments of these two countries82. 

80 Recital (38). 
81 For example:  

-  Regulation (EU) 2022/2560 on foreign subsidies distorting the internal market; 
-  Regulation  (EU) 2021/696  establishing  the  Union  Space  Programme  and  the  European Union 

- 

- 

Agency for the Space Programme; 
Proposal  for  a  regulation  establishing  a  framework  of  measures  for  strengthening  Europe’s 
semiconductor ecosystem (Chips Act) (COM/2022/46 final); and 
Joint Communication of the European Commission and the High Representative of the Union for 
Foreign  Affairs  and  Security  Policy  on  ‘European  Economic  Security  Strategy’  (JOIN/2023/20 
final). 

82  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 (C/2022/2316). 

29 

 
 
4.2.  How did the EU intervention make a difference and to whom? 

The evaluation found that the Regulation had generated more added value than Member 
States  could  individually  have  achieved  when  it  comes  to  the  screening  of  potentially 
risky  investments  on  the  grounds  of  EU  security  or  public  order.  Respondents  to  the 
targeted consultation generally agreed that the FDI Screening  Regulation  had  increased 
the effective protection of EU security and public order from the risks posed by certain 
FDIs more than Member States could individually have done. In particular, respondents 
said that the Regulation: 

-  provided security-relevant information to Member States that they would not 

otherwise have access to (without the cooperation mechanism); 

-  had  an  impact  on  the  decision  taken  by  the  Member  State  screening  a 

transaction83; 

-  had  increased  convergence  among  Member  States  on  what  may  constitute  a 

risk to security or public order; 

-  had increased convergence among Member States on how risks to security or 

public order should be assessed; and 

-  had  promoted 
mechanisms84. 

the  adoption  or  modernisation  of  national  screening 

Responses were more nuanced about the degree to which the Regulation had generated 
added value by increasing convergence between national rules on what may constitute a 
risk to security or public order, how such risks are assessed, and the procedural aspects of 
national screening mechanisms. 

In  response  to  a  Commission  questionnaire,  national  screening  authorities  said  that  the 
Regulation had increased their awareness of cross-border risks to security or public order 
and  drawn  their  attention  to  the  security  relevance  of  EU  projects  and  programmes,  as 
well as the potential risks to the continuity of these projects and programmes from certain 
FDI.  Overall,  Member  State  respondents  considered  that  the  Regulation  and  the 
cooperation  mechanism  had  allowed  the  Commission  and  Member  States  to  became 
more  familiar  with  screening  mechanisms  in  the  EU,  and  increased  awareness  of  FDI 
risks,  and  the  cooperation  mechanism  had  made  it  more  difficult  for  parties  to 
transactions  to  hide  risky  investments  from  Member  States.  Furthermore,  even  when 
assessing FDI made in only one Member State, more attention is paid to possible impacts 
at EU level. 

83  The  lack  of  information  on  the  outcome  of  national  screening  procedures  notified  to  the  cooperation 
mechanism meant that it was not possible to  do a comprehensive factual evaluation of how  Commission 
opinions and Member States’ comments have influenced the outcome of national screening investigations, 
for example by providing information or drawing attention to considerations not identified by the screening 
Member State. This was also pointed out in the ECA report (point 29.c), which presented it as a limitation 
of the effectiveness and efficiency of EU-wide screening. 
84 This was confirmed by the OECD report. For more information, see paragraphs 44-46 of it. 

30 

 
 
On the same matter,  private sector respondents  to  a  Commission  questionnaire  saw the 
Regulation’s added value in the following areas. 

- 

- 

- 

- 

- 

- 

It  has  prompted  Member  States  to  establish,  where  necessary  modernise,  and 
effectively  implement,  their  national  screening  mechanisms.  However,  two 
respondents considered that in a way, the Regulation had decreased legal certainty 
by  promoting  the  use  of  screening  on  grounds  of  security  and  public  order  in  a 
way  that  gives  Member  States  too  much  discretion  to  determine  the  scope  of 
sectors  or  economic  activities  covered  by  their  screening  mechanism,  the 
notification  triggers,  the  procedural  framework  and  screening  deadlines,  as  well 
as the substantive concerns assessed. 

It has increased the efficiency of risk assessment by the Member States, and given 
Member  States  security-relevant  information  on  FDI  transactions  subject  to 
screening. 

It  has  improved  awareness  of  cross-border  security  risks,  as  well  as  risks  on 
security and public order grounds to projects and programmes of Union interest. 

It has  fostered a degree  of consistency and convergence in the  approach  to  FDI 
screening across the EU – without the coordinated framework, it is reasonable to 
assume that newly  adopted screening  rules  would vary more widely  in  terms of 
criteria, procedures and thresholds. 

It  has  drawn  political  attention  in  Member  States  to  the  importance  of  FDI 
screening, which may have resulted in additional resources being allocated to the 
implementation of screening mechanisms, which in turn might have improved the 
quality of risk analysis. 

It  has  increased  the  private  sector’s  awareness  to  and  understanding  of  national 
screening mechanisms. 

Lastly,  the  Commission’s  annual  reports  on  FDI  screening  in  the  EU,  which  provide 
information  about  FDI  trends,  national  screening  activities,  legislative  and  policy 
developments  in  Member  States  and  the  implementation  of  the  EU  cooperation 
mechanism, increase the transparency of screening in the EU. At the same time, the ECA 
report  considered  that  the  Commission’s  reports  contained  insufficient  information  and 
data  and  recommended  that  they  focus  more  on  critical  risks  and  approaches  to 
mitigating  them,  and  that,  in  cooperation  with  Member  States,  the  Commission  also 
improve the scope and quality of the underlying data85. 

4.3. 

Is the intervention still relevant? 

The evaluation found that the Regulation’s objective of protecting the EU’s security and 
public  order  from  risky  FDI  remained  very  relevant,  particularly  given  the  evolving 
geopolitical situation (presented in Section 3.1), the trends of FDI in the EU (presented in 

85 Points 57 and 66 of the ECA report. 

31 

 
 
 
Section  3.2),  and  the  international  policy  context  (presented  in  Section  3.7).  The 
increasing  number  of  Member  States  maintaining  and  updating  their  screening 
mechanisms  (presented  in  Section  3.3),  and  the  more  than  400  cases  reviewed  by  the 
cooperation mechanism each year, confirm the continued relevance of FDI screening as a 
policy tool, and of EU cooperation, for identifying and addressing the cross-border risks 
of  FDI  to  security  or  public  order.  Respondents  to  the  targeted  consultation  confirmed 
this assessment. 

The  shortcomings  found  by  the  OECD  report,  the  consultations  organised  by  the 
Commission  and  the  ECA  report  point  to  three  key  shortcomings  limiting  the  current 
rules’ relevance. 

-  Firstly, the gap between the aggregated number of cases received and screened by 
Member States and the number of cases reviewed by the cooperation mechanism 
raises the question of whether the scope of investors covered by the Regulation 
and  the  criteria  for  notifications  to  the  cooperation  mechanism  remain 
relevant.  The  comparative  analysis  of  national  screening  mechanisms  and  the 
annual  reports  published  by  some  Member  States  found  that  several  Member 
States went beyond the scope of investors covered by the Regulation by screening 
certain intra-EU investments86, which can pose the same security and public order 
risks  as  FDI  the  Regulation  covers.  This  was  confirmed  by  national  screening 
authorities,  whose  confidential  replies  to  a  Commission  questionnaire  showed 
that  there  were  precedents  for  transactions  outside  the  scope  of  the  cooperation 
mechanism  that  were  prohibited  or  authorised  with  conditions  since  October 
2020.  This  confirms  that  the  current  system  has  ‘blind  spots’  and  that  the 
Regulation  could  be  improved  by  covering  investments  by  investors  established 
in  the  EU  and  controlled  by  third  country  investors.  This  may  be  particularly 
relevant given patterns of past investment by investors from countries of potential 
concern in the EU predating the current focus on screening. 

-  Secondly,  given  the  difference  between  the  proportion  of  transactions  that 
Member  States  find  risky  under  their  national  systems  and  the  proportion  of 
notified  transactions  in  which  the  Commission  or  another  Member  State 
intervened,  it  appears  that  the  trigger  for  mandatory  notification  to  the 
cooperation mechanism often results in very low-risk cases being brought to the 
attention  of  the  network  of  screening  authorities,  while  relevant  cases  go 
unnoticed  due  to  the  limitations  concerning  intra-EU  FDI.  The  OECD  report 
pointed out that the current design resulted in both oversharing (the notification of 
transactions  that  are  manifestly  irrelevant  for  other  Member  States  who  are 
themselves unlikely to contribute useful information) and undersharing, whereby 
a transaction likely to affect the security or public order of other Member States is 
not  brought  to  their  attention,  with  varying  practices  in  Member  States  being 

86 For more information, see paragraphs 166-167 of the OECD report. 

32 

 
 
another contributing factor87. The ECA report also highlighted the overburdening 
of the system with ineligible (out of scope) and low-risk cases88. 

-  Thirdly,  because  Member  States  may  decide  not  to  maintain  and  implement  a 
screening  mechanism,  the  current  system  leaves  leeway  for  circumventing 
national  FDI  mechanisms  if  a  foreign  investor  establishes  a  subsidiary  in  a 
Member  State  without  a  screening  mechanism,  then  organises  its  future 
investments  through  that  subsidiary,  or  if  the  target  company’s  assets  are 
transferred, before the actual FDI is made, to an entity in another Member State 
without a screening mechanism or with less stringent screening procedures. 

In response to a Commission questionnaire, national screening authorities were in favour 
of  maintaining  the  cooperation  mechanism  while  addressing  the  shortcomings  in  its 
efficiency  and  effectiveness.  Several  private  sector  respondents  acknowledged  that  the 
Regulation  had  played  a  major  role  in  promoting  a  degree  of  harmonisation  and 
coherence that might not have existed across the EU otherwise. At the same time, they 
took the view that the current system could be improved, with greater harmonisation to 
provide  clarity,  and  that  screening  in  the  EU  could  be  made  more  consistent.  They 
suggested  some  rules  and  practices,  where  harmonisation  or  alignment  would  be 
beneficial. These recommendations are set out in Annex V. 

5.  WHAT ARE THE CONCLUSIONS AND LESSONS LEARNED? 

The  overall  objective  of  this  staff  working  document  is  to  evaluate  the  FDI  Screening 
Regulation  using  the  five  standard  evaluation  criteria  of  the  better  regulation  toolbox: 
effectiveness, efficiency, coherence, EU added value and relevance. This section presents 
the main findings of the Commission and the lessons learned from the evaluation. 

5.1 Conclusions 

On effectiveness, the evaluation shows that the Regulation has had a positive impact on 
protecting EU security or public order from risky FDI. It also shows that the Regulation 
itself has not slowed down or deterred the inflow of FDI into the EU. That said, several 
shortcomings  were  identified  that  result  in  blind  spots  in  the  system  (such  as  Member 
States  without  a  screening  mechanism  or  the  lack  of  screening  of  foreign-controlled 
intra-EU  investments),  ultimately  undermining  the  ability  of  the  Commission  and 
Member  States  to  identify  a  wide  scope  of  potentially  risky  transactions.  This  may 
undermine  the  protection  of  security  or  public  order  in  the  EU,  including  in  but  not 
limited to  the Member State where the investment  takes place.  These shortcomings  are 
described in detail in the next section on lessons learned. 

On efficiency, the evaluation concluded that the administrative burden of implementing 
the Regulation is reasonable, both for Member State public authorities and for parties to 

87 For more information, see p. 79 of the OECD report. 
88 Point 38 of the ECA report. 

33 

 
 
transactions undergoing screening. However, the evaluation found that certain procedural 
aspects  of  the  cooperation  mechanism  limit  its  efficiency.  These  are,  for  example,  the 
lack  of  harmonisation  of  Member  States’  timelines  for  screening  FDI  transactions,  the 
lack  of  predictability  of  the  stage  of  national  screening  at  which  EU  cooperation  is 
initiated  because  their  start  is  only  determined  by  the  start  of  formal  screening  by  the 
Member  State  concerned,  and  the  lack  of  an  efficient  cooperation  procedure  for 
transactions  screened  by  multiple  Member  States.  As  the  number  of  Member  States 
screening  FDI 
increase 
significantly,  which  may  undermine  the  functioning  of  the  market  for  investments  and 
‘corporate control’ of EU legal entities. This calls for an appropriate regulatory solution 
in the upcoming revision of the Regulation. 

the  Commission  expects 

these  problems 

increases, 

to 

The evaluation shows that the Regulation is internally coherent to a satisfactory degree. 
No significant  inconsistencies were identified in  relation  to  the  cooperation mechanism 
and between the cooperation mechanism and other aspects of the Regulation. At the same 
time,  the  evaluation  revealed  that  the  minimum  requirements  for  national  screening 
mechanisms  are  insufficient  to  achieve  the  necessary  level  of  coherence  (consistency) 
between the FDI Screening Regulation and national screening mechanisms (and between 
national  mechanisms  themselves)  for  the  efficient  and  effective  functioning  of  the 
cooperation  mechanism.  On  external  coherence,  no  procedural  inconsistencies  were 
found  between  the  Regulation  and  other  EU  legislation  and  policies,  while  certain 
stakeholders  pointed  out  the  lack  of  harmonisation  of  certain  concepts  and  the 
consideration  given  to  security  or  public  order,  which  could  result  in  inconsistencies 
when the same FDI transaction is subject to more than one authorisation procedure. 

The  evaluation  shows  that  the  Regulation  has  provided  added  value  by  setting  up  a 
cooperation  mechanism,  which  has  increased  the  effective  protection  of  security  and 
public  order  from  the  risks  posed  by  certain  FDIs  beyond  what  would  have  been 
achieved by Member States each operating individually. 

On  relevance,  the  evaluation  found  that  the  objective  of  the  Regulation  (protecting 
security  and  public  order  from  the  risks  posed  by  certain  FDIs)  remains  relevant.  That 
said, the relevance of the current system is limited by the shortcomings identified in the 
evaluation concerning the limitations to the origin of investors and the trigger set by the 
Regulation for notifying transactions to the cooperation mechanism. 

5.2 Lessons learned 

The main  lessons learned and some possible solutions  are set  out  below. These are not 
exhaustive and are without prejudice to future decisions to be taken by the Commission 
in its proposal for a revision of the Regulation. 

34 

 
Lesson 1: The lack of ‘ex ante’ screening mechanisms  in some Member States and 
the  divergence  between  existing  mechanisms  undermine  the  effectiveness  of  the 
Regulation. 
The  absence  of  screening  mechanisms  in  some Member  States  that  make  it  possible  to 
scrutinise transactions before they are completed (‘ex ante’) diminishes the effectiveness 
of the EU framework for investment screening considerably: Member States that have no 
mechanism have few or no effective means to manage risks related to foreign investment 
in  the  EU,  do  not  build  institutional  capacity,  and  cannot  benefit  fully  from  exchanges 
under  the  cooperation  mechanism89.  Furthermore,  the  evaluation  concluded  that 
limitations  to  the  coverage  of  investment  screening  mechanisms  in  Member  States 
diminish the effectiveness of the EU framework for investment screening considerably: 
Member  States  that  exclude  important  areas  from  the  application  of  their  screening 
mechanisms – including by narrowly defining their sectoral scope or exempting investors 
associated  with  certain  non-EU  jurisdictions  –  have  limited  effective  means  to  manage 
risks  related  to  foreign  investment  in  the  EU.  This  may  have  spillover  effects  on  EU 
security or public order interests in other Member States and on projects or programmes 
of Union interest. 

In  the  absence  of  a  common  scope  of  transactions  subject  to  screening  in  all  Member 
States or other ways to harmonise the conditions that should trigger screening at national 
level,  the  number  and  scope  of  notifications  that  the  cooperation  mechanism  receives 
from  the  Member  States  are  likely  to  continue  to  vary  greatly.  Furthermore,  foreign 
investors may continue taking advantage of jurisdictions  in  the EU  that do not  have an 
FDI screening mechanism or whose mechanism does not apply to the sector concerned. 

Under  the  current  system,  such  FDI  might  be  identified,  and  assessed  if  an  ex officio 
cooperation  is  initiated  under  the  mechanism  provided  by  Article  7  of  the  Regulation. 
However, the evaluation has revealed a very limited use of this cooperation compared to 
the number of transactions  assessed pursuant  to  a national  screening  procedure. Hence, 
the whole cooperation mechanism is only as strong as its weakest link. 

- 

line  with 

Possible measures 
In 
its  relevant 
communications since March 2020 and the recommendation of the ECA report90, 
a  revised  Regulation  could  require  all  Member  States  to  adopt  an  ‘ex ante’ 
screening mechanism. 

the  Commission 

the  positions 

taken  by 

in 

89 Some national mechanisms only carry out ex post screening of FDI, which deprives these Member States 
of an important tool if they (or the Commission or another Member State) identify a risk in relation to an 
FDI undergoing screening in another Member State and there is a subsidiary of the same company  in their 
jurisdiction. 
90 Point 60 of the ECA report.  

35 

 
 
 
 
-  These mechanisms should meet certain substantive criteria91, otherwise there is a 
risk that the current inefficiencies will prevail (e.g. minimum scope of sectors or 
economic  activities  where 
transaction  cannot  be  completed  without 
authorisation; types of investments and investors covered). 

the 

Lesson 2: The current definition of FDI is too limiting. 
The evaluation found that the current scope of the Regulation (covering transactions that 
fall  under  its  definition  of  ‘foreign  direct  investment’)  excludes  certain  important 
transactions  and  transaction  types.  The  most  consequential  issue  is  the  definition  of 
‘foreign investor’ in the Regulation, which means that the cooperation mechanism cannot 
be used for investments by non-EU investors if these investors invest via an entity set up 
in the EU, even though the public order or security implications of such transactions can 
be the same as in scenarios where the foreign investor directly invests from abroad. The 
only  exception  to  this  is  the  case  of  circumvention  of  the  screening  mechanism,  for 
example  by  using  an  EU  shell  company.  Member  States  confirmed  to  the  Commission 
that they had prohibited or conditioned certain intra-EU transactions since October 2020 
that were not notified to the cooperation mechanism before the national decision, as the 
transaction fell outside the scope of FDI as defined by the Regulation. In relation to these 
transactions,  the  other  26  Member  States  and  the  Commission  were  not  able  to  make 
their own analysis and share possible concerns, as they were not aware of the transaction 
undergoing screening. 

Possible measure 

-  A  revised  Regulation  could  explore  extending  the  cooperation  mechanism  to 
cover  intra-EU  transactions  where  the  EU  direct  investor  is  controlled  by  a 
foreign  investor.  The  screening  of  such  intra-EU  transactions  should  be  carried 
out  in  full  conformity  with  the  principle  of  proportionality  and  other  principles 
enshrined  in  the  Treaties  and  the  objective  of  preserving  an  open  and  inclusive 
internal market in the EU. 

Lesson 3: Notification of all transactions undergoing screening is a suboptimal filter 
to identify risky transactions across the EU. 
The  current  set-up,  where  Member  States  are  required  to  notify  to  the  cooperation 
mechanism all FDIs that they screen, creates several shortcomings. These issues result in 
a  mechanism  that  assesses  a  significant  number  of  transactions  (including  many  non-
critical  FDIs)  and  devotes  resources  to  checking  the  eligibility  of  transactions  that  are 
found to be ineligible or obviously non-critical, while still risking overlooking potentially 
critical transactions. 

-  First, the evaluation found that an overwhelming number of transactions notified 
to the cooperation mechanism have no impact on public order or security of the 

91 It should be noted that  point 61 of the ECA report recommends that the Commission  assesses whether 
national screening mechanisms comply with the standards set out in Article 3 of the Regulation. 

36 

 
 
 
 
notifying  Member  State  or  other  Member  States,  or  through  projects  and 
programmes of Union interest. 

-  Second,  there  are  no  harmonised  conditions  to  determine  what  may  or  must 
constitute a formal screening of a transaction at national level, which is the trigger 
for  Member  States  to  notify  transactions  to  the  cooperation  mechanism.  As  a 
result,  certain  transactions  might  be  dismissed  when  they  are  considered 
non-sensitive  by  the  screening  Member  State  from  a  purely  national  security 
perspective  while  they  could  be  relevant  to  other  Member  States  or  projects  or 
programmes  of  Union  interest.  It  is  not  appropriate  for  the  screening  Member 
State  to  decide on its own criteria for  determining which  transactions should be 
withheld from the cooperation mechanism. 

These  shortcomings  severely  impair  the  effectiveness  of  the  Regulation  while 
undermining  the  efficient  use  of  resources  in  national  administrations  and  creating 
unnecessary administrative burden for businesses. 

Possible measures 

-  Laying down some common criteria for the transactions that Member States must 
notify to the cooperation mechanism, for example a common minimum scope of 
sectors  or  transactions  that  need  to  be  screened  and  notified  to  the  cooperation 
mechanism.  This  would  allow  the  cooperation  mechanism  to  focus  on  the  most 
critical transactions. 

-  The  list  of  minimum  criteria  could  be  further  developed  over  time  to  adapt  to 

changing risks or new technologies. 

- 

In  addition  to  this,  a  mechanism  could  be  put  in  place  to  avoid  missing 
transactions considered critical by one or more Member States but falling outside 
of the common minimum scope. 

Lesson  4:  The  differences  between  national  screening  mechanisms  can  seriously 
undermine the effectiveness and efficiency of the cooperation mechanism. 
The Regulation provides very little framing as regards the scope (‘what actually needs to 
be screened’), the objective and criteria in light of which the screening takes place. In the 
absence of harmonised EU rules, the evaluation found significant conceptual differences 
between national screening legislations with regard to the expression of concepts such as 
‘security’, ‘public order’, ‘national security’ and ‘essential security interests’, as well as 
the  probability  thresholds  to  indicate  the  likelihood  of  an  adverse  effect  on  impact  on 
security and public order (‘likely, ‘disrupt’, ‘threaten’, ‘may affect’)92.  The ECA Report 
suggested  improvements  in  this  regard  to  ensure  that  investors  are  not  discriminated 
against and that the free movement of capital is not unduly restricted93. Given the current 
vague  safeguards,  some  Member  States  may  justify  prohibiting  a  transaction  in  a 

92 Page 57 of the OECD report. 
93 Point 60 of the ECA report.  

37 

 
 
 
 
situation underlying the Xella case94, where the European Court of Justice was very clear 
on the breach of the freedom of establishment committed by such refusal. The continued 
lack of alignment of the scope, objective and criteria of national screening mechanisms 
combined with an increasing number of such mechanisms risk infringing the Treaty free 
movement rules and create obstacles to the Treaty freedoms.  

In  addition  to  the  lack  of  alignment  of  substantive  rules  procedural  divergences  also 
create further problems for the cooperation mechanism. Member States with a screening 
mechanism  are  free  to  determine  their  timeframes  for  screening  and  the  moment  when 
they  notify  the  cooperation  mechanism  of  a  specific  transaction.  This  issue  is  notably 
problematic in  the case  of multi-country notifications,  i.e.  when several  Member States 
notify their respective national screening procedure of the same broader transaction. As a 
result,  transactions  that  are  screened  in  several  Member  States  because  the  target 
company  has  subsidiaries  in  these  Member  States  are  not  necessarily  notified 
simultaneously  to  the  cooperation  mechanism.  In  the  evaluation  period,  these  multi-
country  transactions  accounted  for  about  25%  of  the  transactions  reviewed  by  the 
cooperation mechanism. 

However,  the  timelines  of  EU  cooperation  are  such  that  the  Commission  and  the  other 
Member States need to assess each leg of the transaction upon receipt of the notification. 
Consequently,  they  may  assess  the  same  transaction  at  several  points  in  time  with  an 
uneven  level  of  information,  and  after  the  respective  deadline,  they  may  not  have  the 
possibility to reopen the assessment of a transaction notified earlier. 

This  has  consequences  for  resources  and  leads  to  duplication  of  work,  but  most 
importantly, it compromises the quality of the risk assessment. The  worst-case scenario 
would  be  for  the  Commission  or  Member  States  to  close  their  assessment  of  the  first 
leg(s) of a transaction without  identifying a  concern, and identifying a risk only  after a 
later notification by a Member State in relation to its own leg of the transaction. As the 
completion  of  a  transaction  is  subject  to  the  receipt  of  screening  authorisation  from  all 
Member States where the parties filed a request, aligning the timelines would not delay 
the completion of transactions. 

Possible measures 

-  Harmonisation  could  be  considered  for  the  scope  of  screening  mechanisms  and 
the threshold for what is to be screened on the basis of which criteria, and what 
sort  of  finding  can  trigger  Member  States’  decisions  that  impose  conditions  or 
prohibit a transaction. 

-  Member  States  could  be  required  to  notify  the  cooperation  mechanism  within  a 

specified time following receipt of the filing by the investor. 

-  Further  procedural  harmonisation  could  be  considered  for  ‘multi-country 
notifications’  to  ensure  a  parallel  and  possibly  coordinated  handling  of 

94 Judgment of 13 July 2023, Xella Magyarország, C-106/22, EU:C:2023:568. 

38 

 
 
 
transactions  (including  their  assessment  and  the  final  decision)  in  all  Member 
States concerned. This action was also recommended by the ECA report95. 

Lesson 5: The information provided to the cooperation mechanism about individual 
transactions is not sufficient. 
Currently,  the  scope  of  the  information  that  must  be  provided  in  the  notification  to  the 
other  Member  States  and  the  Commission  under  the  Regulation  is  rather  limited.  The 
notification form, which was prepared by the Commission in close cooperation with the 
Member  States,  goes  beyond  the  formal  initial  information  requirements  under  the 
Regulation and it has proven useful and widely used by Member States. However, it does 
not  address  the  fact  that  certain  transactions  may  require  more  than  one  request  for 
information  from  the  screening  Member  State,  and  in  some  cases,  the  necessary 
information is only known to Member States other than the one screening the transaction. 

Possible measures 

-  The  revised  Regulation  could  formalise  and  standardise  the  information 

requirements provided in the notification template currently in use. 

-  The  revised  Regulation  could  explicitly  allow  the  Commission  and  Member 
States  to  ask  questions  to  other  Member  States  than  the  one  hosting  the 
transaction, if the assessment of a case requires this. 

-  The  revised  Regulation  could  provide  more  flexibility  for  requesting  additional 
information from the screening Member State (or through them from the investor) 
with safeguards against abuse and unjustified delays. 

Lesson 6: The timelines of the cooperation mechanism are too short for potentially 
critical  transactions,  and  they  are  suboptimal  for  the  cooperation  between  the 
Commission and Member States. 
In general, the timelines of the cooperation mechanism appear too short, in particular for 
potentially  critical  transactions.  Furthermore,  the  fact  that  the  Member  States  and  the 
Commission  are  bound  by  identical  timelines  to  make  comments  or  issue  an  opinion 
prevents the Commission from factoring in the assessment of Member States concerned 
by a transaction when assessing the impact on security or public order in more than one 
Member State. The Commission may only become aware of a Member State’s security 
concern on the day it is supposed to issue an opinion. Given the time required for internal 
procedures,  the  current  timeframes  do  not  leave  sufficient  room  for  concluding  the 
substantive analysis. 

Possible measure 

- 

In potentially sensitive cases, the Commission should have more time to conclude 
its  assessment  under  the  cooperation  mechanism  than  the  Member  States.  This 
would allow the Commission  to  take due account  of  Member States’  comments 

95 Point 61 of the ECA report. 

39 

 
 
 
 
 
 
when preparing an opinion, without unduly delaying the screening procedures at 
national level. 

Lesson  7:  Member  States  do  not  have  sufficient  power  to  address  the  interests  or 
concerns of other Member States. 
The evaluation found that a number of Member States with an FDI screening mechanism 
believe they do not have the power to take into consideration the protection of security or 
public order of other Member States or the EU. They argue they do not have the power to 
ask questions to foreign customers, suppliers or competitors of targets on their territory. 
They  also  argue  they  do  not  have  the  possibility  to  impose  mitigating  measures  with  a 
cross-border effect. This seriously undermines the effectiveness of the Regulation, whose 
aim  is  precisely  to  address  the  concerns  expressed  by  other  Member  States.  Only  if 
Member  States  can  effectively  address  the  concerns  of  others,  the  whole  cooperation 
mechanism is worth the effort and the resources for all stakeholders involved. 

Possible measure 

-  The obligation for the Member State hosting the FDI to at least take into account 
concerns  of  other  Member  States  is  already  enshrined  in  the  Regulation.  The 
revised Regulation could improve this. 

Lesson 8: The network of screening authorities does not have sufficient information 
about  the  outcome  of  national  screening  procedures  notified  to  the  cooperation 
mechanism. 
The current Regulation does not require screening Member States to provide information 
about the outcome of their screening decisions, for example a copy of their final decision, 
even when the Commission issued an opinion or other Member States made comments 
based  on  their  security  interests  or  concerns.  As  a  result,  the  network  of  screening 
authorities has only limited information, if any, about FDIs that were considered risky by 
one  or  more  Member  States  or  the  Commission  and  even  less  information  is  available 
about  the  reasons  for  Member  State  intervention  in  specific  transactions.  Furthermore, 
this limitation prevents the Commission from monitoring whether screening decisions are 
strictly  motivated  by  public  order  or  security  concerns  and  meet  the  risk  threshold 
required by the Regulation. 

Possible measures 

-  The revised Regulation could require a Member State that has received comments 
or  opinions  to  provide  an  explanation  of  its  course  of  action  in  specific 
transactions  to  increase  accountability  within  the  cooperation  mechanism  (this 
would be in line with the recommendation of the ECA report)96. 

-  Member States could be required to provide information, on a confidential basis, 
about  the  outcome  of  screening  of  transactions  notified  to  the  cooperation 

96 Point 66 of the ECA report. 

40 

 
 
 
 
 
 
mechanism,  on  the  basis  of  which  the  Commission  could  publish  general  or 
aggregate  information  in  its  annual  reporting  (this  would  be  in  line  with  the 
recommendation of the ECA report97 and could improve the scope and quality of 
underlying  data  for  the  Commission’s  annual  reports,  also  recommended  by  the 
ECA report)98. 

In  brief,  the  evaluation  found  that  several  missing  or  weak  links  remain  in  the  EU’s 
‘chain’  of  protection  against  risky  FDI  transactions.  While  the  cooperation  between  all 
national authorities and the Commission has been intense and has helped in identifying, 
assessing and addressing risky FDI transactions that would otherwise have been missed99, 
it  is  appropriate  for  the  Commission  to  propose  a  revision  of  the  Regulation  to  ensure 
that the chain does not have missing links and all links have the same sufficient level of 
strength. 

97 Point 60 of the ECA report. 
98 Point 66 of the ECA report. 
99 In the reporting period, the Commission and the relevant Member State authorities reviewed more than 
1 100 transactions. 

41 

 
 
 
ANNEX I: PROCEDURAL INFORMATION 

1.  Lead DG, Decide planning / Commission work programme references 

This evaluation forms part of the initiative to evaluate and possibly revise the FDI Screening 
Regulation,  which  was  published  by  the  European  Commission’s  Directorate-General  for 
Trade (DG TRADE) on the Commission’s ‘Have your say’ website100 on 12 February 2023. 
The  agenda  planning  (Decide)  reference  assigned  to  the  evaluation  is  PLAN/2023/92.  The 
evaluation  was  required  under  Article 15  of  the  Regulation  and  was  announced  in  the 
Commission work programme for 2023. 

The report prepared  by the OECD and co-funded by the EU assessed the effectiveness  and 
efficiency of the cooperation mechanism almost 2 years after the full entry into force of the 
Regulation.  The OECD started its  work under a  delegation agreement in  October 2021 and 
published its report in November 2022. 

2.  Organisation and timing 

In  line  with  the  better  regulation  guidelines,  an  existing  interservice  steering  group  of  the 
Commission  oversaw  the  evaluation.  This  steering  group  includes  almost  20  Commission 
Directorates-General that play a part in the Commission’s analysis of FDI transactions on a 
case-by-case basis where their specific expertise is required. 

The steering group is led by DG TRADE. In the course of the evaluation, it was consulted on 
the  questionnaire  for  the  targeted  consultation  and  the  evaluation  questions  and  indicators 
summarised in the evaluation matrix (Annex III).  

3.  Limited exceptions to the better regulation guidelines 

In conducting the evaluation, an exception was granted to certain procedural requirements of 
public consultations described in the better regulation guidelines due to the specialised focus 
of  the  instrument.  These  exceptions  concerned  the  duration  (4  weeks  instead  of  12  weeks) 
and  the  language  of  publication  of  the  online  questionnaire  (English  only).  Otherwise,  the 
targeted consultation published by the Commission complied with better regulation rules for 
public consultations. 

4.  Consultation of the Regulatory Scrutiny Board 

Not applicable. Tool #3 of the better regulation toolbox concerning the role of the Regulatory 
Scrutiny Board provides that the Board scrutinises only selected evaluations. This report has 
not been selected for scrutiny. 

100  https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13739-Screening-of-foreign-direct-
investments-FDI-evaluation-and-revision-of-the-EU-framework_en 

42 

 
 
 
5.  Evidence, sources and quality 

DG  TRADE  used  an  external  contractor  to  support  the  evaluation  of  the  FDI  Screening 
Regulation. The OECD Secretariat (Investment Division of the Directorate for Financial and 
Enterprise  Affairs)  carried  out  a  study  on  the  effectiveness  and  efficiency  of  the  FDI 
Screening Regulation and offered conclusions and broad recommendations on how to address 
the  shortcomings  identified  in  the  study101.  The  study  was  co-financed  by  the  Commission 
and  was  carried  out  between  October  2021  and  June  2022.  It  reflects  information  as  of 
30 June 2022. 

The  analytical  work  carried  out  by  the  OECD  Secretariat  was  based  on  desk  research  and 
interviews  with  Member  State  authorities,  the  Commission  and  other  stakeholders  (mainly 
legal advisers) involved in FDI screening. The OECD interviewed experts from all Member 
States.  However,  because  of  resource  constraints,  the  study  focuses  on  15  of  them  only102. 
They  were  selected  with  a  view  to  achieving  a  balance  between  smaller  and  larger 
economies,  and  a  presentation  of  all  situations  under  the  current  Regulation:  long-standing 
FDI  screening  mechanism,  recent  FDI  screening  mechanism  and  absence  of  FDI  screening 
mechanism. 

The study assesses the ability of the cooperation mechanism to screen and address FDIs that 
likely  affect  the  security  or  public  order  of  Member  States  or  projects  or  programmes  of 
Union interest (effectiveness). It also assesses the ability of the system to fulfil its objectives 
while keeping the administrative burden for investors and other stakeholders proportionate to 
the policy goals and relevant security or public order concerns (efficiency). The study reports 
that the cooperation mechanism enjoys broad support, not only from Member States but also 
from  stakeholders.  National  screening  authorities  notably  consider  that  they  take  better 
informed  screening  decisions  thanks  to  the  exchange  of  transaction-specific  information 
under  the  cooperation  mechanism.  Stakeholders  consider  that  the  EU  framework  has  not 
significantly changed processes, timelines, or outcomes of investment screening in Member 
States. Nevertheless, as mentioned above, the study has identified several shortcomings that 
diminish the effectiveness and efficiency of the screening of FDIs in the EU. Some of these 
shortcomings  stem  from  the  design  of  the  Regulation,  others  from  the  interpretation  and 
implementation  of  the  Regulation  by  Member  States.  The  study’s  findings  and  final 
recommendations have helped the Commission to identify the key problems and set out the 
priorities for the revision of the FDI Screening Regulation. 

The evaluation also considers evidence provided by Member States in their annual reports to 
the Commission pursuant to Article 5(1) of the Regulation. 

101  The  study  was  published  in  November  2022:  https://www.oecd.org/investment/investment-policy/oecd-eu-
fdi-screening-assessment.pdf. 
102 Austria, Belgium, Croatia, Czechia, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Slovakia, 
Slovenia, Spain and Sweden. 

43 

 
 
The Commission published a targeted consultation and a call for evidence  that ran between 
14 June and 21 July 2023. The Commission received 47 replies to the consultation103 and 10 
contributions to the call for evidence104. Member States and stakeholders (law firms, business 
associations  and  businesses)  with  proven  experience  in  implementing  the  EU  rules  on  FDI 
screening  were  invited  by  DG  TRADE  to  provide  further  written  input  based  on  a 
questionnaire.  These  replies  were  collected  between  3  August  and  1 September  2023.  A 
summary of replies is available in Annex V. 

the 

targeted  consultation 

103  The  summary  report  of 
the  Commission’s  website: 
https://policy.trade.ec.europa.eu/consultations/screening-foreign-direct-investments-fdi-evaluation-and-possible-
revision-current-eu-framework_en#consultation-outcome.  
104  Contributions 
the 
https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13739-Screening-of-foreign-direct-
investments-FDI-evaluation-and-revision-of-the-EU-framework/feedback_en?p_id=32186570. 

the  Commission’s  website: 

is  available  on 

available  on 

evidence 

call 

are 

for 

to 

44 

 
 
 
 
ANNEX II. METHODOLOGY AND ANALYTICAL MODELS USED 

1.  Methods and sources 

1.1 External report and consultation activities 

The  evaluation  relied  on  a  supporting  study  provided  by  an  external  contractor  (OECD 
Secretariat)105.  The  supporting  study  was  based  on  information  collected  from  multiple 
sources, such as: 

-  desk research, based on information from publicly accessible government sources, in 
reports,  and 
particular 
legislation,  parliamentary  documentation  and  public 
conversations  with  experts  and  practitioners  during  and  before  the  research  period; 
and 

-  27  semi-structured  interviews  with  65  different  interlocutors  from  Member  State 
governments  and  authorities,  the  Commission,  as  well  as  legal  counsels  involved  in 
international transactions that were screened in Member States. 

In  addition,  DG  TRADE  has  carried  out  the  following  activities  for  the  purpose  of  this 
evaluation report: 

- 

- 

an open consultation – namely the targeted public consultation with a mix of open and 
closed questions and a call for evidence launched by the Commission – held between 
14 June and 21 July 2023; 

targeted  surveys  with  open  questions  to  Member  State  screening  authorities  and 
stakeholders  (law  firms,  businesses  and  business  associations)  with  proven  practical 
experience in screening  FDI transactions – open between 3 August and 1 September 
2023; 

-  desk research relying on confidential data concerning the FDI transactions notified to 

the cooperation mechanism; and 

-  desk research relying on open-source information about FDI transactions, legislation 

and policy developments at EU and national level. 

The results of the stakeholder consultations are summarised in Annex V. 

The evaluation is thus based on a combination of extensive desk research and a broad range 
of stakeholder feedback from consultations carried out by the external contractor and by the 
Commission. These provided a solid basis for the findings of the evaluation. 

1.2 Analysis of FDI trends between 2019 and the first half of 2023 

This section presents a detailed description of trends in FDI flows in the EU between January 
2019  and  June  2023,  prepared  by  the  Commission’s  Joint  Research  Centre  (JRC).  A 

105 Further information about this study is available in Annex I, point 5. 

45 

 
 
summary of this section is available in Chapter 3.2 of the main report. The figures shown are 
based  on  detailed  transaction-level  data  for  acquisitions  of  equity  stakes  above  10%  of  the 
capital of the EU-based target company and greenfield investments106. 

Since 2019, 9 084 foreign acquisitions have taken place in the EU, with a total value of more 
than EUR 832 billion. In the same time period, a higher number of greenfield projects (a total 
of just over 12 000 projects) were recorded, however with a lower associated total value of 
EUR 342.5 billion107. 

The  number  of  acquisitions  declined  in  the  beginning  of  2020,  corresponding  with  the 
beginning of the COVID-19 pandemic and related public health restrictions, with a year-on-
year reduction of 29.4% in 2020 compared to 2019 (Figure 1, left). In line with global FDI 
trends108,  foreign  acquisitions  experienced  post-COVID-19  growth  and  recovered  gradually 
through 2021 (with a 36.4% year-on-year increase in 2021 compared to 2020). However the 
increasing  trend  was  interrupted  in  early  2022,  linked  to  higher  interest  rates  and  the  trade 
tensions following Russia’s war of aggression against Ukraine. Despite this, at the end of the 
reporting period, foreign acquisitions in the EU remained above 2020 levels. 

The  decline  in  investment  coinciding  with  the  beginning  of  the  COVID-19  pandemic  was 
even  more  dramatic  for  foreign  greenfield  projects  (Figure  1,  right),  with  a  43%  drop  in 
projects  and a 40%  drop  in  values between 2019 and 2020.  Foreign  greenfield  investments 
also started a post-COVID-19 recovery in 2021, which lasted until the end of 2022. However, 
and  in  contrast  with  foreign  acquisitions,  foreign  greenfield  investments  did  not  reach 
pre-pandemic  levels.  Finally,  the  number  of  foreign  greenfield  projects  remained  stable  in 
2022 (with a small 4% increase compared to 2021). However, a declining trend started at the 
end of 2022, which continued in the beginning of 2023. 

Figure 1: Number of transactions and value of foreign investments in the EU – acquisitions 
(left) and greenfield projects (right), trend 

106 See the end of the analysis for details on the datasets used and the methodology, and for definitions. 
107 Values are available for 32% of acquisitions, and roughly 95% of greenfield projects. 
108 Pitchbook, 2022 Annual Global M&A Report, January 2023. 

46 

 
 
 
 
 
Source: JRC elaboration based on Bureau van Dijk data, extracted on 13 July 2023 from Orbis M&A and Orbis Crossborder. The spike in 
the value of foreign greenfield projects in the first half of 2022 was largely due to two Intel investments in semiconductor manufacturing 
plants 
EUR 12 billion: 
in 
https://www.intel.com/content/www/us/en/newsroom/news/eu-news-2022-release.html. 

in  Magdeburg 

EUR 17 billion; 

(Germany), 

(Ireland), 

Leixlip 

worth 

worth 

and 

The US and Canada, carrying out 3 202 acquisitions worth a total of EUR 419.5 billion, were 
the main countries of origin of foreign acquisitions in the EU between 2019 and the first half 
of 2023, accounting for 35.2% of transactions and 50.4% of the total value (Figure 2, left). 
The  UK  and  European  Free  Trade  Association  (EFTA)  countries  followed,  accounting  for 
25.7%  and  11.7%  of  total  acquisitions,  respectively.  Firms  originating  in  China  and  Hong 
Kong carried out 298 acquisitions of EU firms, with an observed value of  EUR 12.2 billion 
(1.5% of the total value, which corresponds to 3.3% of the total number of acquisitions). For 
foreign greenfield projects, a similar pattern in terms of main foreign jurisdictions of origin 
can  be  observed  (Figure  2,  right).  The  most  important  origin  jurisdiction  was  the  US  and 
Canada, which accounted for a share of 42.7% of greenfield projects in the period analysed 
(and  almost  50%  of  the  total  value).  The  UK  and  EFTA  countries  followed  in  second  and 
third  place,  accounting  for  20%  and  almost  10%  of  total  foreign  greenfield  projects, 
respectively. Finally, China and Hong Kong were the fifth most important origin jurisdiction, 
accounting for just over 6% of total foreign greenfield projects. 

Figure  2:  Number  of  acquisitions  of  equity  stakes,  and  values  (left);  number  of  greenfield 
projects, and values (right) – by foreign jurisdiction (January 2019-June 2023) 

Source:  JRC  elaboration  based  on  Bureau  van  Dijk  data,  extracted  on  13  July  2023  from  Orbis  M&A  and  Orbis  Crossborder.  OFCs: 
offshore  financial  centres109.  EFTA  includes  Iceland,  Norway  and  Switzerland.  Developed  Asia  includes  Japan,  Singapore,  Taiwan  and 
South Korea.  GCC-ME (Gulf Cooperation Council and Middle East) includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab 
Emirates, Iran, Iraq, Israel, Jordan, Lebanon, Palestine, Syria, Türkiye and Yemen. RoW: rest of the world. 

Foreign investment originating in all foreign jurisdictions experienced somewhat comparable 
trends  between  2019  and  the  first  half  of  2023,  which  largely  followed  the  general  trends 
depicted in Figure 1. In terms of foreign acquisitions, all jurisdictions experienced a year-on-
year  decline  in  2020  compared  to  the  previous  year  (Figure  3,  left),  with  acquisitions 
originating in China and Hong Kong (-52.6%) and Russia (-60%) experiencing a particularly 
steep  decline.  Foreign  greenfield  projects  originating  in  EFTA  countries  experienced  the 

109  Offshore  financial  centres  (OFCs)  include  Andorra,  Antigua  and  Barbuda,  Barbados,  Bermuda,  Bahamas, 
Gibraltar, Saint Kitts and Nevis, Cayman Islands, Liechtenstein, Monaco, Marshall Islands, Panama, Seychelles, 
Saint Vincent and the Grenadines, and British Virgin Islands. 

47 

 
 
 
largest  drop  (-60%)  in  2020  compared  to  2019  (Figure  3,  right).  In  2021,  acquisitions 
originating  in  the  US  and  Canada  and  Russia  recovered  at  the  fastest  pace,  increasing  in 
number by 51.3% and 158%, respectively, by the beginning of 2022 compared to 2020. For 
greenfield  projects,  transactions  originating  in  the  US  and  Canada  also  recovered  in  2021 
compared to 2020 (+18%). 

Figure  3:  Number  of  acquisitions  (left)  and  greenfield  projects  (right)  –  trend  by  foreign 
jurisdiction (top 5) 

Source:  JRC  elaboration  based  on  Bureau  van  Dijk  data,  extracted  on  13  July  2023  from  Orbis  M&A  and  Orbis  Crossborder.  OFCs: 
offshore financial centres. EFTA includes Iceland, Norway and Switzerland. Developed Asia includes Japan, Singapore, Taiwan and South 
Korea. 

Investors  often  use  subsidiaries  registered  in  other  countries  to  make  investments.  Between 
2019 and the first half of 2023, foreign entities used their EU subsidiaries for 31% of foreign 
acquisitions,  and  28.2%  of  greenfield  investments  identified  in  the  reporting  period,  on 
average (Figure 4). Looking at the geographical breakdown by investor origin, the use of EU 
subsidiaries ranges from 21.9% of acquisitions by investors originating in the US and Canada 
(15% for greenfields) to 49.8% of acquisitions by investors originating in offshore financial 
centres (50% for greenfields). 

Figure 4: Share of transactions performed by EU-based and non-EU-based direct investors 
in total transactions, by origin of the investor’s controlling parent (January 2019-June 2023) 

48 

 
 
 
 
Source:  JRC  elaboration  based  on  Bureau  van  Dijk  data,  extracted  on  13  July  2023  from  Orbis  M&A  and  Orbis  Crossborder.  OFCs: 
offshore financial centres. EFTA includes Iceland, Norway and Switzerland. Developed Asia includes Japan, Singapore, Taiwan and South 
Korea.  GCC-ME  (Gulf  Cooperation  Council  and  Middle  East)  includes  Bahrain,  Kuwait,  Oman,  Qatar,  Saudi  Arabia,  United  Arab 
Emirates, Iran, Iraq, Israel, Jordan, Lebanon, Palestine, Syria, Türkiye and Yemen. RoW: rest of the world. Shares calculated by dividing 
the amount of transactions performed by EU-based and non-EU-based direct investors, respectively, by the total amount of transactions for 
each foreign jurisdiction. 

Information  and  communication  (ICT)  and  manufacturing  account  for  about  half  of  total 
acquisitions (Figure 5), making up 25.9% and 25.2% of total acquisitions between 2019 and 
the first half of 2023, respectively. As regards foreign greenfield projects, retail accounted for 
the  largest  share  of  total  foreign  projects  (28.9%),  followed  by  ICT  (16.8%)  and 
manufacturing (12.5%). 

Figure  5:  Share  of  acquisitions  and  greenfield  projects  in  total  acquisitions  and  greenfield 
projects – by sector (January 2019-June 2023) 

Source:  JRC  elaboration  based  on  Bureau  van  Dijk  data,  extracted  on  13  July  2023  from  Orbis  M&A  and  Orbis  Crossborder. 
Prof&Scientific stands for professional, scientific and technical activities (NACE Rev. 2, Section M); it contains research and development 
facilities,  among  other  things.  ICT  corresponds  to  NACE  Rev.  2,  Section  J.  Retail  stands  for  wholesale  and  retail  trade  (NACE  Rev.  2, 
Section G). Finance stands for financial and insurance activities (NACE Rev. 2, Section K). Transport stands for transportation and storage 
(NACE Rev. 2, Section H). Manufacturing corresponds to NACE Rev. 2, Section C. Real estate corresponds to NACE Rev. 2, Section L. 

Looking at trends in the number of acquisitions, ICT surpassed manufacturing in early 2020 
and remained at the top in 2021 and the first half of 2022, while in the second half of 2022 
and the first half of 2023 a similar number of transactions were observed in the two sectors 
(Figure  6,  left).  Retail  remained  the  sector  that  received  the  highest  number  of  foreign 
greenfield  projects  in  the  whole  time  period  (Figure  6,  right),  while  ICT  remained  the 
second  most  important  sector  for  greenfield  projects.   The  number  of  acquisitions  in 
high-tech sectors (such as ICT and professional, scientific and technical activities) remained 
relatively high from 2019 to the first half of 2023, while the number of greenfield projects in 
the  same  sectors  dropped  significantly  below  2019  levels  in  the  following  years  (with  a 
partial exception in the first half of 2022). 

49 

 
 
Figure  6:  Number  of  acquisitions  (left)  and  greenfield  projects  (right)  –  trends  by  main 
sectors 

Source:  JRC  elaboration  based  on  Bureau  van  Dijk  data,  extracted  on  13  July  2023  from  Orbis  M&A  and  Orbis  Crossborder. 
Prof&Scientific stands for professional, scientific and technical activities (NACE Rev. 2, Section M); it contains research and development 
facilities,  among  other  things.  ICT  corresponds  to  NACE  Rev.  2,  Section  J.  Retail  stands  for  wholesale  and  retail  trade  (NACE  Rev.  2, 
Section G). Finance stands for financial and insurance activities (NACE Rev. 2, Section K). Manufacturing corresponds to NACE Rev. 2, 
Section C. 

Between 2019 and the first half of 2023, the share of total foreign acquisitions in the EU that 
targeted  Member  States  without  a  fully  applicable  investment  screening  mechanism  (‘non-
screening  Member  States’)110  was  22.7%,  with  a  decrease  in  the  number  of  foreign 
acquisitions targeting non-screening Member States from 341 in the first half of 2019 to 154 
in the same period of 2023 (a 54.8% decrease) (Figure 7a, left). Similarly, 20% of greenfield 
projects  targeted  non-screening  Member  States  in  the  same  time  period,  down  from  493 
projects in the first half of 2019 to 126 in the first half of 2023 (a 74% decrease) (Figure 7a, 
right). Most of the reduction in numbers was due to a general negative trend in transactions, 
affecting  screening  and  non-screening  Member  States  similarly.  The  share  of  investments 
taking  place  in  non-screening  Member  States  declined  from  29%  (25%)  in  the  first  half  of 
2019 to 19% (16%) in the first half of 2023 for acquisitions (greenfields). This decline can be 
further  explained  by  the  progressive  introduction  of  investment  screening  mechanisms  in 
several  Member  States  in  the  period  considered,  which  means  that  the  cluster  of  non-
screening Member States became smaller. 

110 For the purpose of this analysis, Member States without a screening mechanism between 2019 and the first 
half of 2023 are: Belgium, Bulgaria, Cyprus, Estonia, Greece, Croatia, Ireland, Luxembourg and Sweden. For 
Member States that introduced their mechanisms in this period (Malta in 2020, Czechia and Denmark in 2021, 
Slovakia  in  2022  and  Slovenia  in  2023),  the  figures  include  transactions  targeting  these  countries  in  the 
screening  Member  State  category  from  these  implementation  years  on.  The  analysis  does  not  take  into 
consideration  the  difference  between  the  scope  (sectors  and  investors  covered)  and  ownership  thresholds  of 
screening mechanisms, i.e. the fact that a transaction may not be subject to screening, despite the Member State 
maintaining a screening mechanism. Therefore, the actual share of non-screened FDI is even higher. 

50 

 
 
 
Figure 7a: Screening  and non-screening  Member  States’ shares  in  number  of  transactions, 
trends – acquisitions (left) and greenfield (right) 

Source:  JRC  elaboration  based  on  Bureau  van  Dijk  data,  extracted  on  13  July  2023  from  Orbis  M&A  and  Orbis  Crossborder.  Shares 
calculated by dividing the amount of transactions in non-screening (and screening) Member States by the total amount of transactions in 
each half-year. 

Figure  7b:  Value  of  foreign  acquisitions  (left)  and  greenfield  projects  (right)  in  screening 
and non-screening Member States – trend 

Source: JRC elaboration based on Bureau van Dijk data, extracted on 13 July 2023 from Orbis M&A and Orbis Crossborder. 

The  US  and  Canada  accounted  for  31.4%  of  deals  (649  investments)  in  non-screening 
Member States between 2019 and the first half of 2023 (Figure 8, left), almost the same level 
observed  for  the  UK  (30.2%).  Almost  half  (46.7%)  of  greenfield  projects  in  non-screening 
Member  States  were  completed  by  investors  from  the  US  and  Canada,  while  the  UK  and 
EFTA countries had much smaller shares (21.8% and 9.9%, respectively). Most acquisitions 
by Russian investors went to non-screening Member States. 

51 

 
 
 
Figure 8: Number of acquisitions (left) and greenfield projects (right) in screening and non-
screening Member States – by foreign jurisdiction (January 2019-June 2023) 

Source:  JRC  elaboration  based  on  Bureau  van  Dijk  data,  extracted  on  13  July  2023  from  Orbis  M&A  and  Orbis  Crossborder.  OFCs: 
offshore financial centres. EFTA includes Iceland, Norway and Switzerland. Developed Asia includes Japan, Singapore, Taiwan and South 
Korea.  GCC-ME  (Gulf  Cooperation  Council  and  Middle  East)  includes  Bahrain,  Kuwait,  Oman,  Qatar,  Saudi  Arabia,  United  Arab 
Emirates, Iran, Iraq, Israel, Jordan, Lebanon, Palestine, Syria, Türkiye and Yemen. RoW: rest of the world. 

Figure  9  reports  public  shareholding  in  FDI  transactions  (both  deals  and  greenfield 
projects)  between  2019  and  2022.  Public  shareholding  (this  encompasses  state-owned 
companies)  occurs  when  a  state-controlled  entity  holds  (control  or  minority)  stakes  in  a 
foreign  investor. We focus the analysis of public shareholding  on foreign investors coming 
from the main jurisdictions of origin of investments in the EU (i.e. Switzerland, China, Japan, 
South Korea, Russia, the UK, and the US). 

The  percentage  of  foreign  acquisitions  of  equity  stakes  in  the  EU  where  the  presence  of 
public shareholding from any of the main foreign jurisdictions was identified decreased from 
16% in 2019-2020 to 13.7% in 2022. For greenfield investments, the trend was quite stable, 
with a small increase in public shareholding, ranging from 10.5% in 2019 to 11.4% in 2022. 

During  these  years,  public  shareholding  was  present  through  minority  stakes;  therefore, 
focusing only on control stakes would give a limited picture of public shareholding of foreign 
investments  in  the  EU.  Between  2019  and  2022,  the  overall  average  shares  held  by  public 
entities were around 7% (8% for acquisitions and 6% for greenfields). 

52 

 
 
 
 
Figure 9: Foreign acquisitions and greenfield investments with public participation, share by 
amount of participation and country – by year 

Source: JRC elaboration based on Bureau van Dijk data, extracted on 13 July 2023 from Orbis M&A and Orbis Crossborder. Russia is not 
included in the chart for 2022 as available information was only based on one data point. Note that data on public influence depends on the 
reconstruction of ownership links between subsidiaries. This can be very difficult for certain jurisdictions (for example China) due to the use 
of offshore subsidiaries to enter the EU, or to their complex nested structures not fully captured by Bureau van Dijk raw data. 

Between  2019  and  2022,  the  pattern  of  public  shareholding  varied  somewhat  across  the 
selected foreign jurisdictions. 

Overall,  in  the  time  frame  analysed,  the  largest  proportion  of  transactions  with  public 
shareholding (42%) originated in the US, with this proportion increasing from 39.8% in 2019 
to  45.3%  in  2022.  These  transactions  mainly  occurred  through  federal  and  local  funds 
controlled by public bodies, which usually hold small stakes (on average below 1% between 
2019 and 2022) in foreign companies investing in the EU. 

The  second  largest  proportion  between  2019  and  2022  originated  in  South  Korea  (22.3%, 
again increasing from 18.8% in 2019 to 24.4% in 2022), with average stakes of around 1.4% 
in this time period. 

Similarly, all other foreign jurisdictions present very small average public shares in the period 
analysed,  with  averages  ranging  from  2.1%  for  the  UK  to  8.3%  for  Switzerland. The  main 

53 

 
 
 
 
 
 
exception  is  China  with  about  45%.  However,  the  proportion  of  transactions  originating  in 
China decreased from 13.4% in 2019 to 5% in 2022. 

Methodology of and sources for the analysis of FDI trends 

Raw  data  on  acquisitions  of  equity  stakes  and  greenfield  projects  comes  from  Bureau  van 
Dijk  datasets  (Orbis  M&A  and  Orbis  Crossborder,  respectively).  Data  was  retrieved  on 
13 July 2023, and has been further elaborated by the JRC. 

The term ‘foreign investor’ is used whenever an investor is ultimately controlled by a non-EU 
entity  (either a company or an individual). When the ultimate owner cannot  be established, 
the location of the investor applies. This definition differs from the one of the FDI Screening 
Regulation111.  Throughout  this  text,  the  term  ‘acquisition’  means  the  acquisition  of  equity 
stakes in EU companies, be it mergers and acquisitions or stakes below 50% but above 10% 
of  the  capital.  The  term  ‘transactions’  means  the  sum  of  acquisitions  and  greenfield 
investments.  The  data  provider  regularly  updates  the  raw  data  (including  on  old  deals  and 
projects), so data extraction for the same time window, done at different points in time, can 
lead to different figures due to update lags. 

Values are only available for a fraction of the acquisitions because companies are not obliged 
to  report  the  deals’  financial  details.  For  greenfield  investment  projects,  the  expected 
investment is almost always available112.  

them  with 

Deals  include  mergers,  majority  acquisitions,  joint  ventures,  and  minority  acquisitions  of 
shares  above  the  10%  threshold.  All  types  of  greenfield  projects  are  accounted  for  in  this 
document,  including  construction  of  new  sites,  relocation  of  a  foreign  presence,  and 
expansion  of  existing  sites.  All  tables  and  figures  are  based  on  announced  and  completed 
their  announced  date.  Rumours  and  postponed 
transactions  but  report 
deals/projects  are  excluded.  A  multi-deal,  i.e.  a  deal  with  multiple  targets  and/or  multiple 
investors, is considered a sum of multiple deals. For example, if a foreign investor acquires 
two  companies,  this  is  recorded  as  two  deals.  Conversely,  if  a  foreign  investor  acquires  a 
company  with  multiple  subsidiaries  (in  different  countries),  the  deal  remains  unique  and  is 
attributed to the parent company’s country. Deals with multiple targets and multiple investors 
(a  negligible  amount)  are  disregarded,  as  it  is  very  difficult  to  devise  a  general  rule  to 
attribute the transaction. This classification rule is also applied to greenfield investments that 
are  multi-purpose  projects  as  part  of  which  several  sites  are  built  and/or  projects  with 
multiple investors. 

In the analysis of public shareholding, for each investor, the ownership information available 
at  the  time  of  the  deal/project  is  used.  Where  not  available  for  2022,  the  ownership 
information used is that of 2021, the latest information available. 

111 See Article 2(2) of Regulation (EU) 2019/452. 
112 Values are available for 32% of acquisitions, and roughly 95% of greenfield projects. 

54 

 
 
2.  Limitations 

The evaluation took place under favourable conditions. There was a high degree of interest 
from Member State screening authorities and stakeholders, in particular certain law firms and 
businesses  with  direct  experience  of  FDI  screening,  or  associations  with  a  membership  of 
such companies. 

However,  certain  limitations  affected  the  findings.  These  are  described  in  the  following 
sections. 

2.1 Limitations due to the confidentiality of FDI screening procedures and the design of 

the FDI Screening Regulation 

FDI screening is a confidential process in all Member States. Some Member States disclose 
certain  information  about  the  functioning  of  their  screening  mechanisms113,  but  this 
information  is  typically  aggregated,  and  due  to  a  lack  of  agreed  methodology  and 
comprehensive data, it is not suitable to serve as a basis for an EU-level analysis. 

The  Commission  has  access  to  certain  data  due  to  its  participation  in  the  cooperation 
mechanism.  However,  due  to  the  lack  of  an  ‘accountability  mechanism’  (the  obligation  of 
Member States to report on the outcome of screening procedures notified to the cooperation 
mechanism)  and  the  lack  of  data  provided  in  Member  States’  annual  reports  to  the 
Commission114, the Commission cannot gather comprehensive information about the outcome 
of  transactions  subject  to  the  cooperation  mechanism,  i.e.  whether  the  transaction  was 
authorised with or without conditions, prohibited, or withdrawn before the conclusion of the 
national  screening  procedure,  and  on  what  grounds  the  national  decision  was  taken  (for 
example,  whether  the  Commission’s  opinion  or  comments  received  from  other  Member 
States influenced this decision). Due to this limitation, information was not available on the 
impact of FDI screening cooperation on transactions subject to screening, and on the extent to 
which national decisions are aligned with the outcome of the cooperation. 

2.2 Lack of metrics to measure security and public order 

Since security and public order are not objective conditions, there is no agreed methodology 
to measure their level in a society in a way that could serve as an indicator for this evaluation. 
Furthermore,  as  the  ultimate  objective  of  FDI  screening  is  to  avoid  the  manifestation  of 
possible future risks,  it was not  possible to  develop  clear scenarios to  serve as hypothetical 
points of comparison to assess the functioning of the FDI Screening Regulation. 

113  According  to  information  provided  by  the  Member  States  in  their  annual  reports  to  the  Commission,  the 
following  Member  States  publish  (or  will  publish)  a  report  about  the  implementation  of  their  screening 
mechanism:  Austria,  Czechia,  Finland,  Italy,  Malta,  the  Netherlands,  Romania  and  Slovakia.  In  addition, 
France,  Germany  and  Spain  publish  an  overview  with  key  figures.  Further  information  about  these  reports  is 
available  in  the  staff  working  document  accompanying  the  third  annual  report  of  the  Commission  on  the 
screening of foreign direct investments into the Union (SWD(2023) 329 final). 
114 This limitation was also pointed out in the ECA report (point 57). 

55 

 
 
2.3 Lack  of  directly  applicable  methodological  models  or  widely  used  practices  for 

evaluating FDI screening mechanisms 

Several countries evaluate or plan to evaluate the performance of their screening mechanisms 
to  assess  if  a  legislative  revision  is  necessary  or  justified.  However,  to  the  Commission’s 
knowledge,  there  is  no  internationally  established  practice  regarding  evaluation  questions, 
criteria  and  indicators  related  to  the  functioning  of  FDI  screening  mechanisms  that  the 
methodology of this evaluation report could draw on. 

According to information provided by the Member States for the purpose of this report, some 
of them are legally obliged to evaluate their screening mechanisms while others are planning 
to conduct an evaluation without being legally required to do so. However, by the time of this 
evaluation, only Germany had carried out and published the results of an internal evaluation 
by  the  FDI  screening  division  of  the  Federal  Ministry  for  Economic  Affairs  and  Climate 
Action (BMWK) in cooperation with the Federal Statistical Office115. The evaluation drew on 
transaction-level  data  recorded  in  the  BMWK’s  own  database  for  the  purpose  of 
implementing the German screening mechanism, and on a survey of the business community 
and  the  federal  ministries  concerned  on  the  legal  changes  and  the  workload  for  the 
administration and businesses associated with the enforcement of the regulations, carried out 
in  March  2023.  The  evaluation  was  thus  interlinked  with  the  review  of  the  administrative 
burden. The survey of the business community was conducted based on randomised samples. 
As  the  parties  to  the  transactions  (investor  and  target  company)  are  usually  represented  by 
law firms, the BMWK considered them an appropriate group of experienced stakeholders for 
assessing  the  impact  of  the  legal  changes  on  the  economy.  The  survey  of  the  law  firms 
covered  a significant  part  of the relevant  cases, and the law firms  surveyed were those that 
had a high degree of specialisation and particular expertise in the field of FDI screening due 
to the high number of cases handled during the evaluation period. 

2.4 Limitations  to  quantifying  the  impact  of  FDI  screening  and/or  the  FDI  Screening 
Regulation  and  its  possible  future  amendments  on  the  economy,  society  and  the 
inflows of foreign investment 

From a methodological point of view it is rather difficult (if not impossible at all) to give a 
quantitative  estimation  of  the  likely  current,  past  or  future  impact  of  the  FDI  Screening 
Regulation and its possible amendments on the economy, society and the inflows of foreign 
investments. Anticipating future effects is particularly challenging for several reasons. First, 
FDI  inflows  cannot  be  forecasted  as  they  depend  on  aspects  such  as  global  economic 
conditions,  geopolitical events, and technological  advancements, which are very difficult to 
foresee.  Second,  the  EU  rules  leave  the  final  decision  on  any  FDI  with  the  Member  State 
where the transaction is planned or completed. Therefore, the Regulation’s impact on specific 
transactions  can  only  be  indirect.  Third,  the  adoption  or  modernisation  of  screening 

115https://www.bmwk.de/Redaktion/DE/Publikationen/Aussenwirtschaft/evaluierung-gesetze-aenderung-
aussenwirtschaftsgesetze-verordnung.pdf?__blob=publicationFile&v=2  

56 

 
 
mechanisms promoted (but not legally required) by the FDI Screening Regulation took place 
at a different pace in the Member States concerned. This makes it extremely difficult to single 
out  and  assess  the  likely  effects  of  the  EU  framework  for  FDI  screening  on  FDI  flows. 
Additionally, even if a flow of FDI could possibly be forecasted, it would be difficult to make 
a quantitative estimation of the future impact of the revision of the current EU rules due to: 
(1)  the  magnitude  of  changes  in  FDI  flows  (past  experience  suggests  that  changes  in  FDI 
flows are likely too small to have a visible effect in certain types of evaluation models); (2) 
the short length of time series of FDI transactions after the entry into force of the Regulation; 
and  (3)  the  difficulty  to  construct  a  sound  ‘no-change’  scenario  for  comparison  purposes 
considering  that  the  full  implementation  of  the  Regulation  almost  coincided  with  the 
macroeconomic  effects  of  the  COVID-19  pandemic  (making  it  impossible  for  quantitative 
models to distinguish between effects of the pandemic and effects of the Regulation). 

Methodological approaches to a quantitative Impact Assessment 

Three different types of models are available to carry out  a quantitative  impact assessment. 
Section  1  and  2  explain  why  it  was  not  possible  for  the  Commission  to  anticipate  the 
economic impact of the current FDI Screening Regulation before its adoption, and why the 
same constraints apply when quantifying the impact of possible amendments to improve the 
current rules. Section 3 elaborates on the limitations to providing an ex post evaluation of the 
current Regulation based on econometric estimation. 

1.  Macroeconomic models 

Macroeconomic models are generally used to forecast changes in macroeconomic variables, 
such  as  gross  domestic  product  or  employment,  or  to  simulate  changes  in  structural 
parameters (e.g.  FDI inflows) that describe the  economy116, resulting  from  a policy change. 
Macroeconomic  models  are  based  on  equations  describing  the  links  between  aggregated 
production,  consumption  and  trade  in  an  economy.  Due  to  these  aggregated  characteristics, 
only relatively large shocks, i.e. changes in one of the variables/parameters, can have sizeable 
effects in the forecasts. In order to be able to use these types of models, the change in FDI as 
a result of a policy measure should be large enough to produce results in a macroeconomic 
forecast  or  simulation.  Therefore,  targeted  measures  such  as  the  FDI  Screening  Regulation 
(which  by  design  concerns  only  a  very  small  share  of  the  total  number  and  value  of 
investment transactions in the EU) would not produce a visible effect in a macromodel.  

2.  Cost-benefit analysis 

A  second  method  for  estimating  the  impact  of  future  changes  is  an  ex ante  cost-benefit 
analysis (CBA)117. The objective of this family of models is to quantify the likely impact of a 
new  policy  based  on  assumptions  of  what  is  likely  to  occur  when  the  new  policy  is  put  in 

116 Computable general equilibrium models are often used to evaluate trade policies, for example. 
117  We  refer  to  ex ante  CBA,  which  implies  the  assessment  of  the  likely  effect  of  policy  changes  on  a  target 
variable (here FDI inflows), and the associated quantification of future costs and benefits. 

57 

 
 
place.  This  usually  entails  creating  scenarios  and  estimating  the  costs  and  benefits  of  these 
different hypothetical policy options. 

The  difficulty  of  gathering  accurate  and  reliable  data  quantifying  the  costs  and  benefits 
related to the Regulation118 constitute an obstacle to applying a policy evaluation model based 
on CBA. 

A proper evaluation model should not only be able to carefully consider and quantify these 
costs  and  benefits,  but  also  to  quantify  the  likely  effects  of  proposed  changes  to  the 
Regulation  on  FDI  inflows.  However,  the  literature  provides  limited  guidance  on  the 
appropriate modelling approach.  The literature evaluating  the effects  of screening  measures 
(which may include investment  restrictions beyond pure national  security considerations) is 
still scarce and provides contradictory results.  

Mistura and Roulet (2019)119 find a negative effect of restrictions on international investments 
in a dataset covering 60 advanced and emerging countries over the period from 1997 to 2016. 
Results  of  this  paper  suggest  that  reforms  liberalising  FDI  restrictions  by  about  10%  as 
measured by the OECD FDI Regulatory Restrictiveness Index could increase bilateral FDI in 
stocks by 2.1% on average. However, this Index does not score measures taken for reasons of 
public  order  and  essential  security  interests,  such  as  screening  mechanisms  enabled  by  the 
FDI Screening Regulation120. In contrast, Gregori and Nardo (2021)  121 do not find a negative 
effect of screening procedures per se on average when looking at EU countries in the period 
from 2011 to 2018. They find a reduction in FDI inflows only for mergers and acquisitions 
when  the  investor  is  from  a  ‘tax  haven’  jurisdiction122.  This  paper  also  suggests  that  a 
reduction of FDI inflows, if at all, is rather linked to  a country’s regulatory settings and the 
presence of specific measures such as limitations on setting up branches or profit repatriation, 

118  In  this  methodological  framework,  costs  would  include  the  fixed  costs  borne  by  Member  States  and  the 
Commission  to  manage  any  potential  changes  due  to  the  likely  increase  in  the  number  of  transactions 
subject  to  screening,  or  the  costs  borne  by  companies  to  learn  and  comply  with  the  new  set  of  rules. 
Benefits of FDI screening include lowering the risk to security or public order related to FDI transactions. 
Additional  potential  benefits  of  improved  EU  cooperation  could  include  convergence  of  screening 
procedures  in  Member  States,  peer  learning  on  policy  design  and  implementation,  and  improvement  in 
information sharing leading to increased efficiency and lower costs of screening at national level, greater 
knowledge  about  FDI  trends,  and  better  detection  of  non-notified  transactions.  Some  of  these  benefits 
arising  from  a  potential  reform  of  the  FDI  Screening  Regulation  were  already  highlighted  by  the  OECD 
report. 

on 

Papers 

119  Mistura,  Fernando,  and  Caroline  Roulet.  ‘The  determinants  of  Foreign  Direct  Investment:  Do  statutory 
restrictions matter?’ OECD (2019). 
120 Kalinova, B., A. Palerm and S. Thomsen (2010), ‘OECD’s FDI Restrictiveness Index: 2010 Update’, OECD 
Working 
Publishing, 
International 
Paris, https://doi.org/10.1787/5km91p02zj7g-en. 
121 Gregori, Wildmer Daniel, and Michela Nardo. ‘The effect of restrictive measures on cross‐border investment 
in the European Union.’ The World Economy 44.7 (2021): 1914-1943. 
122 Andorra, Anguilla, Barbados, Bermuda, Bahamas, Belize, Cook Islands, Cyprus, Grenada, Guernsey, Hong 
Kong,  Saint  Kitts  and  Nevis,  Cayman  Islands,  Liechtenstein,  Liberia,  Monaco,  Marshall  Islands,  Montserrat, 
Mauritius,  Maldives,  Nauru,  Niue,  Panama,  Seychelles,  Turks  and  Caicos  Islands,  Saint  Vincent  and  the 
Grenadines, British Virgin Islands, U.S. Virgin Islands, Vanuatu and Samoa. 

No 2010/03, 

Investment, 

OECD 

58 

 
 
and not to the presence of a screening mechanism per se. Albori et al. (2021)123 specifically 
consider  restrictions  on  foreign  investments  motivated  by  national  security  considerations, 
and they find no significant impact on FDIs flows.  

All  papers  cited  above  observe  transactions  through  time  to  be  able  to  detect  the  effect  of 
changes  in  national  policies  on  investments.  This  is  not  possible  for  the  FDI  Screening 
Regulation, as it is a recent instrument and its quantitative effects on FDI flows, if present, 
have  still  to  materialise.  Besides,  as  the  final  say  on  transactions  and  possible  redressing 
measures  has  remained  with  the  Member  States,  the  FDI  Screening  Regulation  cannot  be 
considered a regulatory barrier comparable to a screening  mechanism. Therefore,  according 
to the literature, it is reasonable to consider its influence on FDI inflows marginal (if any). 

Additional data-related problems jeopardise the possibility of conducting a CBA. Besides the 
uncertainty in determining the target variable (i.e. the change in FDI inflows due to the entry 
into  force  of  the  FDI  Screening  Regulation),  both  costs  and  benefits  have  ‘qualitative’ 
features.  Quantifying  the  advantages  associated  with  indicators  such  as  peer  learning, 
increased coordination, or decreased incentive to invest, is near to impossible. 

Below  is  a  list  of  additional  technical  problems  when  designing  an  IA  based  on  CBA  to 
simulate the impact of possible changes to the FDI Screening Regulation. 

- 

It  is  difficult  to  construct  a  counterfactual  scenario:  when  evaluating  policy 
changes, one needs to  find a benchmark for comparison, i.e. an alternative scenario. 
Typically,  this  counterfactual  is  the  ‘no-change’  situation.  However,  even  in  a 
‘no-change’ situation, it would be reasonable to  assume that many Member States  – 
against the background of geopolitical tensions and crisis situations – would continue 
taking measures to set up or strengthen national screening mechanisms, and that they 
would  pay  increased  attention  to  their  full  implementation  and  enforcement. 
Therefore, it is impossible to disentangle the portion of changes in FDI inflows due to 
possible  changes  to  the  Regulation  from  the  portion  that  would  have  been  observed 
anyway due to the tightening of national screening rules and their implementation. 
-  Certain risky transactions124 identified and addressed by the revised Regulation 
would  not  materialise  in  the  EU  knowing  that  the  revised  Regulation  is  indirectly 
tightening  controls  by  increasing  the  awareness  of  Member  States  and  the 
Commission  of  relevant  risks.  Quantifying  this  deterrence  ex ante  is  practically 
impossible as it would imply guessing how many transactions would not be observed 
only  because  investors  are  discouraged  by  the  revised  Regulation  (and  not  by  other 
regulatory, geopolitical or economic factors). 

-  Changes  depend  –  at  least  partly  –  on  Member  States.  Any  direct  effect  on  FDI 
inflow  ultimately  depends  on  Member  States’  readiness  for  and  timeliness  in 

123 Albori, M., Corneli, F., Nispi Landi, V., & Schiavone, A. (2021). ‘The impact of restrictions on FDI.’ Bank 
of Italy Occasional Paper, (656). 
124 Those affecting security or public order. 

59 

 
 
adopting, modernising and making full use of their national screening mechanisms to 
identify  and  address  risky  transactions,  including  those  that  are  likely  to  affect  the 
security of other Member States or the collective security of the EU through strategic 
assets125. 

3.  Ex post evaluation based on econometric estimation 

A third option for a quantitative impact assessment is using the family of ex post evaluation 
models.  These  make  it  possible  to  quantify  the  likely  impact  of  a  new  policy  (or  a  policy 
reform) based on past  experience  of (and data on) similar policies.  It looks for evidence of 
causal  effects  between  the  policy  and  the  outcomes  (social,  economic  and  environmental 
changes). 

This  causal  impact  is  usually  estimated  using  counterfactual  impact  evaluation  methods126. 
Counterfactual  impact  evaluation  replies  to  the  fundamental  question  of  ‘what  would  have 
happened if the Regulation had not been implemented’. The answer is based on a comparison 
between two different groups: a ‘treated group’, which is formed by those, who were affected 
by  the  measure  and  a  ‘control  group’,  who  have  not  experimented  with  the  Regulation  but 
have the same characteristics as those in the treated group. However, for the FDI Screening 
Regulation, it is not possible to identify distinct treated and control groups. 

While the Regulation is binding in its entirety and directly applicable in all Member States, 
which  implies  that  the  treated  group  is  the  entire  EU,  this  is  not  necessarily  the  case  in 
practice  (Riela,  2023)127.  As  the  Regulation  does  not  require  Member  States  to  set  up  a 
screening mechanism, and it is supplementary to any existing national mechanism, the impact 
of  the  EU  screening  framework  depends  crucially  on  the  presence  and  effectiveness  of 
national policies (OECD, 2022). Therefore, any estimation of the effect of the FDI Screening 
Regulation  is  likely  to  depend  on  the  existence  and  efficiency  of  national  mechanisms,  but 
disentangling  the  two  is  not  possible  from  an  econometric  point  of  view.  Additionally, 
differences in national screening mechanisms lead to heterogeneous treatment of companies 
(foreign investors investing in the EU but also EU companies receiving foreign investments) 
in  different  Member  States  in  a  way  that  is  difficult  to  model  and  measure.  Furthermore, 
identifying  the  control  group  would  also  be  difficult  because  Member  States  without  a 
screening  mechanism have very different  economic characteristics when compared to  those 
with a screening procedure in place. Besides, the FDI Screening Regulation is a very recent 
tool and its medium- and long-term effects have still to materialise. Further complicating the 
identification  of  any  effects  of  the  Regulation  on  FDI  inflows,  the  COVID-19  pandemic 
drastically  changed  the  economic  and  social  landscape  in  2020-2021,  which  coincides  with 

125 This term refers to projects and programmes of Union interest. 
126 See, for example, Heckman, James J., and Edward J. Vytlacil.  ‘Econometric evaluation of social programs, 
part  I:  Causal  models,  structural  models  and  econometric  policy  evaluation.’ Handbook  of  econometrics 6 
(2007): 4779-4874. 
127  Riela,  Stefano. 
foreign  direct 
implementation.’ European View 22.1 (2023): 57-67. 

investment  screening  mechanism 

two  years  after 

‘The  EU’s 

60 

 
 
 
the start of EU cooperation on FDI screening. Therefore, any effect of the Regulation on FDI 
inflow  cannot  be  really  disentangled  from  the  effects  of  the  pandemic  (e.g.  some  countries 
adopted temporary travel restrictions due to lockdowns; this brought greenfield investments 
down  to  zero).  Finally,  the  lack  of  comprehensive  reporting  by  Member  States  about  their 
screening  decisions  concerning  transactions  notified  to  the  cooperation  mechanism128 
represents a serious obstacle to understanding the volume and legal effect (i.e. prohibition or 
authorisation  with  conditions) of actual restrictions to  FDI on grounds of security  or public 
order. For these reasons, it is not possible to quantify the economic impact of the Regulation 
for the purpose of this evaluation. 

128 See further details in Section 2.1 of this Annex. 

61 

 
 
ANNEX III. EVALUATION MATRIX 

The table below summarises the evaluation matrix, which is structured around the five ‘better regulation’ evaluation criteria (effectiveness, efficiency, 
relevance, coherence, EU added value) and corresponding evaluation questions. 

Stakeholders’  responses  to  the  targeted  consultation  (which  included  questions  on  each  criterion),  and  in  response  to  the  call  for  evidence,  were 
considered data sources for all questions, so they are not mentioned in each line of the matrix. 

62 

 
 
 
 
Evaluation question 

Judgement criteria 

Indicators and descriptors 

Data sources 

1.  EFFECTIVENESS 

Q1.1 How 
successful has the 
Regulation been in 
achieving its 
objective129?  

Q1.1.1 To what extent 
has the Regulation 
helped to identify FDI-
related risks to security 
or public order in more 
than one Member State? 

The Regulation has 
achieved its objective of 
improving the 
identification of FDI-
related risks to security or 
public order in the EU. 

Q1.1.2 To what extent 
has the Regulation 
helped to address FDI-
related risks to security 
or public order in more 
than one Member State? 

The Regulation has 
achieved its objective of 
better addressing FDI-
related risks to security or 
public order in the EU. 

129 To improve security and public order in the context of investment screening. 

63 

•  Number of transactions 

notified to the cooperation 
mechanism. 

•  Number of opinions issued 
by the Commission and 
comments from Member 
States. 

•  Number of transactions not 

in the scope of the 
Regulation that could be 
risky for security or public 
order (estimate). 

•  Number of transactions 

reported by Member States 
that would not have known 
about certain transactions 
without the cooperation 
mechanism (including 
transactions subject to it 
under Article 7 of the 
Regulation). 

•  Number of transactions 

notified to the cooperation 
mechanism over time. 
•  Number of opinions issued 
by the Commission and 
comments from Member 

•  Desk research. 
•  Public reports of national 
authorities if available and 
relevant. 
•  OECD report. 
•  Questionnaire for screening 

authorities of Member States. 

•  Desk research. 
•  Questionnaire for screening 

authorities of Member States. 

•  OECD report. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evaluation question 

Judgement criteria 

Indicators and descriptors 

Data sources 

States. 

•  Member States’ views on 

the mechanism’s 
usefulness. 

•  Examples of risky 

• 

transactions not in the scope 
of the Regulation. 
(In)ability in national 
legislation to impose cross-
border obligations, and/or 
take into account other 
Member States’ concerns if 
there is no risk to a Member 
State’s own public order or 
security, and/or to seek 
information from economic 
operators in other Member 
States. 

Q1.1.3 To what extent 
has the Regulation 
helped to identify FDI-
related risks to EU 
projects and programmes 
that are critical for 
security? 

The Regulation has 
correctly identified the 
relevant EU projects and 
programmes that are 
critical for security. 

•  List of projects and 

•  Desk research 

programmes annexed to the 
Regulation based on the 
definition in Article 8 of the 
Regulation. 

•  Number of transactions 

notified to the cooperation 
mechanism where the target 
company participated/-s in 
an EU project or 
programme. 

•  Number of transactions not 

in the scope of the 

64 

 
 
 
 
 
 
 
Evaluation question 

Judgement criteria 

Q1.1.4 To what extent 
has the Regulation 
helped to address FDI-
related risks to EU 
projects and programmes 
that are critical for 
security? 

The Regulation has 
helped to better address 
FDI-related risks to EU 
projects and programmes 
that are critical for 
security. 

Q1.1.5 To what extent 
has the effectiveness of 
the Regulation been 
undermined because not 
all Member States adopt 
or maintain screening 
mechanisms? 

The effectiveness of the 
Regulation has been 
negatively affected by the 
fact that not all Member 
States maintain a 
comprehensive screening 
mechanism.  

Indicators and descriptors 
Regulation that could be 
considered risky. 

•  Number of transactions 

notified to the cooperation 
mechanism related to FDI 
in companies benefiting 
from EU projects and 
programmes. 

•  Opinions issued by the 

Commission and comments 
from Member States on FDI 
in companies benefiting 
from EU projects and 
programmes. 

•  Number of Member States 
who adopted a screening 
mechanism or have 
reformed their system since 
2019. 

•  Number of cases not 

screened by the Member 
States but notified to the 
cooperation mechanism that 
were likely to affect 
security or public order.  

Q1.1.6 To what extent 
does the absence of 
harmonisation of 
national screening 
mechanisms (procedural 

The differences in 
national screening 
mechanisms and between 
them and the EU 
Regulation undermine the 

Differences between: 

• 

• 

the scope and type of 
investments covered, 
the sectors and economic 
activities covered, 

65 

Data sources 

•  Desk research 
•  Obtaining the views of lead 
DGs managing projects and 
programmes of Union 
interest. 

•  OECD report 
•  Annual reports by Member 
States submitted to the 
Commission. 
•  Desk research. 
•  ECA report. 
•  Statistical/aggregated data on 
inward FDI (proportion of 
FDI going to non-screening 
Member States divided by 
the total FDI flows into the 
EU). 

•  OECD report 
•  Desk research (comparative 

analysis of national 
screening rules). 
•  Questionnaire for 

 
 
Evaluation question 

and substantive 
differences) undermine 
the effectiveness of the 
Regulation? 

Judgement criteria 

effectiveness of the 
Regulation. 

Q1.1.7 To what extent 
does the design of the 
cooperation mechanism 
(Article 6, 7, 8) 
undermine the 
achievement of the 
Regulation’s objective? 

The cooperation 
mechanism has certain 
limitations and 
shortcomings that 
undermine the efficiency 
of the system. 

• 

Indicators and descriptors 
• 

the nationality criteria for 
foreign investors, 
the ability to take into 
account comments from 
other Member States or the 
Commission’s opinion in 
the final decision, 

•  deadlines. 

Impact of: 
• 

the obligation to notify all 
transactions undergoing 
formal screening to the 
cooperation mechanism, 
the lack of clarity on what 
constitutes formal screening 
of an FDI (which triggers 
mandatory notification to 
the cooperation 
mechanism), 

information requirements 
throughout the cooperation 
procedure, 
the legal effect of 
comments and opinions, 
lack of information about 
the outcome of national 
procedures. 
Impact of the Regulation on 
FDI inflows. 

• 

• 

• 

• 

•  deadlines, 
• 

•  Perception of Member 

66 

Data sources 
stakeholders (law firms, 
businesses and business 
associations) with proven 
practical experience of FDI 
screening. 

•  Questionnaire for national 
screening authorities.  

•  OECD report. 
•  Questionnaire for national 
screening authorities.  

•  Desk research (literature 

review of methodologies for 
measuring the impact of 

Q1.2 What have the 
quantitative and 
qualitative effects 

Q1.2.1 Has the EU 
framework for FDI 
screening become a 

The Regulation has not 
affected the EU’s 
openness to FDI. 

 
 
Data sources 
security screening 
mechanisms on FDI 
inflows). 

•  Questionnaire for national 
screening authorities.  

•  Questionnaire for 

stakeholders (law firms, 
businesses and business 
associations) with proven 
practical experience of FDI 
screening. 
•  OECD report. 
•  Desk research. 
•  Questionnaire for national 
screening authorities. 

Evaluation question 

Judgement criteria 

Indicators and descriptors 

of the Regulation 
been?  

deterrent to FDI in the 
EU? 

States. 

•  Perception of businesses. 

Q1.2.2 What is the effect 
of the minimum 
requirements (Article 3) 
on the functioning of the 
cooperation mechanism? 

The minimum 
requirements applicable 
to national screening 
mechanisms are not 
sufficient to ensure that 
the cooperation 
mechanism is effective. 

•  Compatibility of national 

screening mechanisms and 
screening practices with the 
requirements of the 
cooperation mechanism set 
out in Articles 6, 7 and 8, 
including timing; the cross-
border reach of mitigating 
measures; the procedural 
and legal grounds for 
considering input from the 
Commission or other 
Member States; the absence 
of legal means in Member 
States without a screening 
mechanism to act in cases 
initiated by the Commission 
or other Member States 
pursuant to Article 7; the 
fact that even Member 

67 

 
Evaluation question 

Judgement criteria 

Indicators and descriptors 
States with a screening 
mechanism are unable to 
provide information in 
Article 7 cases. 

Data sources 

Q2.1 To what 
extent has the 
implementation of 
the Regulation been 
cost-efficient for 
different 
stakeholders? 

Q1.2.3 Is the EU 
screening framework fit 
for increasing the use of 
investment screening by 
the EU’s major trading 
partners? 

Q2.1.1 How 
proportionate is the 
administrative burden on 
Member States’ 
administrations and on 
the Commission 
compared to the possible 
adverse consequences for 
security or public order? 
Q2.1.2 How 
proportionate is the 
administrative burden on 
businesses (in particular 
parties to transactions 
undergoing screening) 
compared to the possible 
adverse consequences for 
security or public order? 

The EU’s screening rules 
are comparable to those 
of its main trading 
partners. 

•  Factual information about 
the screening mechanisms 
of key trading partners of 
the EU. 

•  Desk research. 
•  OECD analytical documents 
on investment policies 
related to national security. 

2.  EFFICIENCY 

The administrative 
burden is reasonable. 

The administrative 
burden is reasonable. 

•  Costs of notifying cases to 
the cooperation mechanism 
(where applicable). 
•  Costs of assessing cases 

notified by other Member 
States. 

•  Costs of providing 

information required by the 
EU cooperation mechanism 
(in addition to the 
information provided for 
national screening 
procedures). 
•  Costs of accessing 

information about the 
requirements and 

•  Questionnaire for national 
screening authorities.  

•  Desk research. 

•  Questionnaire for 

stakeholders (law firms, 
businesses and business 
associations) with proven 
practical experience with 
FDI screening. 

68 

 
 
Evaluation question 

Judgement criteria 

Indicators and descriptors 

Data sources 

functioning of EU 
cooperation on FDI 
screening. 

•  Costs of the absence of 
alignment with national 
procedures, in particular the 
divergent timeframe for the 
assessment of multi-country 
notifications. 
Impact of these factors on 
the quality of the collective 
assessment of transactions 
by all authorities 
participating in the 
cooperation mechanism. 

• 

•  Questionnaire for national 
screening authorities. 

•  Desk research. 
•  OECD report 
•  Questionnaire to 

stakeholders (law firms, 
businesses and business 
associations) with proven 
practical experience of FDI 
screening 

The efficiency of the 
Regulation’s 
implementation could be 
improved by changing 
certain features. 

Q2.2 Have any 
inefficiencies been 
identified? What is 
the simplification 
and cost reduction 
potential? 

Q2.2.1 To what extent 
does the following 
indicative list of features 
of the Regulation enable 
the cooperation 
mechanism to efficiently 
assess transactions: 
deadlines, the factors for 
screening, the secure and 
encrypted IT system 
provided by the 
Commission, and the 
mandatory notification of 
all FDI undergoing 
screening? 

Q3.1 To what 
extent do the scope 
and objective of the 
Regulation continue 
to be relevant, 
considering the 
evolving policy and 

Q3.1.1 Have the 
objectives of the 
Regulation been 
relevant, considering 
evolving policy 
developments and the 
regulatory context? Have 

3.  RELEVANCE 

The Regulation has 
complemented other 
policy developments and 
regulatory initiatives in 
achieving its broader 
objectives. 

• 

Relationship of the Regulation to 
policy developments, such as:  
the Communication on 
Economic Security, 
•  EU restrictive measures 
(sanctions), in particular 

•  Desk research: review and 

analysis of related EU policy 
and legislation. 

•  Desk research on case trends 
and relevant Commission 
guidance. 

69 

 
 
 
 
Evaluation question 

the regulatory 
context? 

recent developments, 
such as the COVID-19 
pandemic and Russia’s 
war against Ukraine, 
increased FDI-related 
security risks? 

Judgement criteria 
The COVID-19 pandemic 
and Russia’s war against 
Ukraine have made it all 
the more important to 
effectively screen FDI in 
the EU. 

Indicators and descriptors 
those concerning Russia 
and Belarus130. 

Data sources 

Relationship of the Regulation to 
regulatory developments, 
including: 
• 

the Foreign Subsidies 
Regulation, 
the EU Chips Act, 
the Critical Raw Materials 
Act. 

• 
• 

The Regulation is still 
relevant today, 
considering FDI trends 
and foreign investors’ 
strategies. 

Number/proportion of cases in 
which the risks highlighted in the 
relevant Commission guidance 
were assessed. 

•  Factual information and 

stakeholders’ perception of 
whether most of the 
investors and investments 
that can be relevant for 
security or public order are 
included in the scope of the 
Regulation. 

The Regulation has 
helped to identify and 
assess FDI transactions 
that represent a risk to 

•  How the EU cooperation 
mechanism has helped to 
identify risks to security or 
public order in the EU, in 

Q3.1.2 Has the scope of 
investments (limited to 
FDI as defined by 
Article 2 of the 
Regulation) been 
relevant, considering 
FDI trends in the EU, 
including ownership 
structures and foreign 
investors’ strategies? 
Q 3.2.1 To what extent 
do the identification and 
assessment of FDI 
transactions that 

•  Desk research. 
•  Questionnaire for national 
screening authorities. 

•  Questionnaire for 

stakeholders (law firms, 
businesses and business 
associations) with proven 
practical experience of FDI 
screening. 

•  Desk research. 
•  Questionnaire for national 
screening authorities. 

Q3.2 To what 
extent do the needs 
addressed by the 
Regulation continue 

130 All restrictive measures in force are available at www.sanctionsmap.eu. 

70 

 
 
 
 
 
 
Evaluation question 

to require action at 
EU level? 

represent a risk to 
security or public order 
continue to require 
action at EU level? 

Judgement criteria 
security or public order at 
EU level. 

Indicators and descriptors 

Data sources 

particular where it gave the 
competent national 
authority additional 
information. 

Q4.1 To what 
extent is the 
Regulation coherent 
with other EU and 
national 
interventions that 
have similar 
objectives? 

Q 3.2.2 To what extent is 
it necessary to take 
action at EU level to 
ensure a certain degree 
of consistency of 
national screening 
mechanisms in the EU, 
as well as their consistent 
implementation?  

The Regulation has 
helped to ensure a certain 
degree of consistency of 
national screening 
mechanisms in the EU, as 
well as their consistent 
implementation. 

•  How the Regulation has 
contributed to coherent 
rules and practices in the 
EU concerning the 
screening of FDI 
transactions. 

4.  COHERENCE 

Q4.1.1 To what extent is 
the Regulation coherent 
with national screening 
mechanisms?  

The Regulation is 
coherent with national 
screening mechanisms. 

Coherence of the 
•  scope, 
• 
• 
•  deadlines. 

transactions covered, 
reasons for screening, 

Q4.1.2 To what extent is 
the Regulation coherent 
with other authorisation 
procedures in EU law? 

The Regulation is 
coherent with: 

Coherence (lack of conflict) of 
objectives and procedures. 

•  merger control 

(Article 21(4) of 
Regulation (EC) 

71 

•  Questionnaire for national 
screening authorities. 

•  Questionnaire for 

stakeholders (law firms, 
businesses and business 
associations) with proven 
practical experience of FDI 
screening. 

•  OECD report (comparative 

analysis of national 
screening mechanisms). 

•  Questionnaire for 

stakeholders (law firms, 
businesses and business 
associations) with proven 
practical experience of FDI 
screening. 
•  Desk research. 
•  Questionnaire for 

stakeholders (law firms, 
businesses and business 
associations) with proven 
practical experience of FDI 

 
 
 
 
Indicators and descriptors 

Data sources 

screening. 

Evaluation question 

• 

• 

Judgement criteria 
139/2004), 
rules on the 
prudential 
assessment of 
acquisitions of 
qualifying 
holdings in 
financial sector 
entities (Directive 
2016/36/EU), 
the certification of 
transmission 
system operators 
of electricity and 
natural gas 
networks in the 
EU (Article 10 of 
Directive 
2009/72/EC and 
Article 10 of 
Directive 
2009/73/EC), 
•  EU restrictive 
measures 
(sanctions) based 
on Article 215 
TFEU. 

Q4.2 To what extent are the various parts of the 
Regulation coherent with one another? Are 
there any incoherent parts of the Regulation in 
terms of its goals and provisions? 

The different obligations 
and mechanisms of the 
Regulation work well 
together to achieve its 

•  Coherence between the 

•  Desk research on the 

cooperation mechanism for 
FDI undergoing screening 
(Article 6) and for FDI not 

Regulation. 

•  Questionnaire for national 
screening authorities. 

72 

 
Evaluation question 

Judgement criteria 

main objective. 

Data sources 

Indicators and descriptors 
undergoing screening 
(Article 7). 

•  The current definition of 

‘projects and programmes 
of Union interest’, the list in 
Annex I and the procedure 
for screening FDI affecting 
security or public order 
through projects or 
programmes is coherent 
with the Regulation’s 
objectives. 

•  Coherence between the 

Regulation’s objective and 
the legal basis for 
international cooperation 
(the impossibility of sharing 
case-specific information 
with like-minded partners 
under specific 
arrangements). 

•  Coherence between the 

purpose of the Regulation 
and the provisions for 
implementing it 
(confidentiality of 
information, Commission 
expert group on the 
screening of FDI into the 
EU). 

Q4.3 To what extent is the Regulation coherent  The Regulation is 

Legislation, communications, 

•  Desk research on relevant 

73 

 
Evaluation question 

with current EU policies and priorities? 

Judgement criteria 

coherent with other 
relevant EU policies and 
priorities. The notion of 
FDI-related security or 
public order risks is also 
reflected in those 
policies/actions. 

Indicators and descriptors 
guidelines referencing the FDI 
Screening Regulation. 

Data sources 

proposals, legislation and 
policy documents, such as 
Commission 
communications. 

5.  EU ADDED VALUE 

Q5.1 Could the 
objective of the 
Regulation have 
been achieved 
sufficiently by the 
Member States 
acting alone? 

Q5.1.1 Could Member 
States identify FDI 
affecting the security or 
public order of other 
Member States or EU 
projects and programmes 
by implementing only 
their national screening 
mechanisms?  

The Regulation generates 
added value compared to 
the results that could have 
been obtained by 
implementing national 
screening mechanisms in 
terms of identifying and 
addressing FDI-related 
risks to security or public 
order. 

Q5.2 Has the implementation of the Regulation 
increased legal clarity and certainty in FDI 
screening? 

Article 3(1) of the 
Regulation and the list of 
screening mechanisms 
published by the 
Commission have 

74 

•  Greater awareness of cross-
border risks to security or 
public order (for example, 
FDI that is risky for other 
Member States but not 
necessarily the screening 
Member State, or 
transactions that are critical 
for another Member State 
for reasons other than those 
for the screening Member 
State. 

•  Greater awareness of the 
security relevance of EU 
projects and programmes 
and the potential risks to 
their continuity from certain 
FDI. 

•  Level of awareness of 

national rules. 
•  Greater clarity and 

consistency of national 
screening rules adopted or 

•  Questionnaire to screening 

authorities of Member States. 

•  Desk research on 

transactions in which EU 
companies participating in 
EU projects or programmes 
were involved. 

•  Desk research. 
•  Questionnaire for 

stakeholders (law firms, 
businesses and business 
associations) with proven 

 
Evaluation question 

Q5.3 What is the Regulation’s added value? 

Is it still valid to think that the Regulation’s 
objective can best be achieved by EU action? 

Judgement criteria 
increased legal clarity 
and certainty for 
businesses. 

The Regulation has added 
value compared to the 
results that could have 
been obtained through 
national interventions to 
adopt and implement 
screening mechanisms. 

Identifying cross-border 
risks to security or public 
order requires an EU 
coordination mechanism. 

Indicators and descriptors 

revised after the Regulation 
entered into force. 

Data sources 

practical experience of FDI 
screening. 

•  Desk research. 
•  Questionnaire for national 
screening authorities. 

•  Questionnaire for companies 
involved in transactions 
undergoing screening. 

•  Number of Member States 

with a screening 
mechanism. 

•  Convergence of screening 
mechanisms (rules and 
implementation). 

•  Better and more efficient 
risk assessment by the 
Member States. 

•  Awareness of cross border 
risks to security or public 
order. 

•  Awareness of security or 

public order risks affecting 
projects or programmes of 
Union interest. 

75 

 
 
 
 
 
 
 
 
 
 
ANNEX IV. OVERVIEW OF BENEFITS AND COSTS  

The table below summarises the costs and benefits of implementing the Regulation. A discussion of the Regulation’s efficiency, and of the limitations of 
the collection of data on costs, were presented in Section 4.1.2 and Annex II to the evaluation report. The information in this annex draws on responses to 
the targeted consultation and additional surveys of Member States and private sector stakeholders with practical experience of FDI screening in the EU. 

76 

 
 
 
Overview of costs and benefits identified in the evaluation 

Citizens/Consumers  

Businesses 

Quantitative  

Comment 

Quantitative  

Comment 

Not applicable.  The  Regulation  does  not 
impose 
on 
obligations 
citizens or consumers. 

No  quantification 
possible. 

No reliable data or methodology 
were  identified  to  measure  the 
compliance  costs  for  businesses 
(in particular the party/-ies filing 
for screening authorisation). The 
Commission 
consultations 
concluded that the average costs 
cooperation 
the 
related 
to 
mechanism 
limited 
were 
compared to  the overall costs  of 
in 
FDI  reviews  (see  details 
Annex V Section 3). 

Quantitative 

No 
quantification 
possible. 

Cost: 
compliance 
costs related 
to the 
cooperation 
mechanism 

Recurrent 

Administrations 

Comment  

not 

The  consultations  carried  out  by  the 
Commission 
provide 
did 
comprehensive  information  about  the 
costs  for  national  administrations  of 
complying  with 
the  Regulation. 
Information  provided  by  the  Member 
financial 
States  suggests 
burden  of  the  Regulation  is  minimal 
(see Annex V Section 3). 

that 

the 

the 

period, 
reporting 
costs  borne  by 

the 
For 
compliance 
the 
Commission  can  be  summarised  as 
follows. 

•  Approximately  EUR 

in 

2.7 
million 
operational 
expenditure,  most  of  which 
was to purchase IT equipment 
for 
secure  communication 
States, 
Member 
with 
including  the  workstations  to 
be  used 
the  Member 
States). 

in 

•  Approximately  EUR  50 000 
administrative 
in 
expenditure 
reimburse 
(to 
Member  States’  travel  costs 
the 
the  meetings  of 
for 
Commission expert group  on 
the  screening  of  FDI  into  the 
EU ). 

•  Approximately  EUR 

1.5 
million in HR expenditure in 
the  coordinating  DG  (DG 

77 

 
 
 
Negligible 
indirect costs (if 
and 
any) 
to 
impossible 
quantify. 

The 
of 
results 
consultations  carried  out 
Commission 
by 
the 
the 
that 
concluded 
Regulation 
not 
had 
deterred FDI. 
or 
No 
reliable 
were 
methodology 
identified  to  measure  the 
indirect  costs,  if  any,  for 
citizens  and  consumers  of 
deterring FDI. 

data 

Cost: 
indirect costs 
of deterring 
certain FDI 
transactions 

Recurrent 

and 

precise 

No 
quantification 
possible 
anecdotal 
evidence 
suggests  that  the 
cost is very low. 

TRADE), 
the 
based 
standard  costs  for  FTEs  in 
2021. 

on 

The 
results  of  consultations 
carried  out  by  the  Commission 
concluded  that  the  Regulation 
had not deterred FDI (see Annex 
V Section 3). 

Not 
applicable. 

Not applicable. 

the 

existence 

While 
or 
implementation  of  a  screening 
mechanism may, in theory, deter 
a  very  limited  number  of  EU 
companies 
accepting 
from 
certain investments, there  are no 
reliable  data  or  methodology  to 
measure 
the 
economy as a whole (see Annex 
II Section 2.2). 

these  costs  for 

No 
quantification 
possible. 

Benefit: 
greater 
security and 
public order 

Recurrent 

the 

security 

The 
of 
results 
consultations  carried  out 
by 
Commission 
concluded that, overall, the 
Regulation  had  helped 
improve 
and 
public  order  in  the  EU  by 
increasing  awareness  of 
security  risks  related  to 
the 
FDI  and  promoting 
adoption 
screening 
mechanisms 
in  Member 
States. 

of 

data 

reliable 

No 
or 
methodology  identified  to 
measure  these  benefits  for 
society as a whole. 

Not applicable.  Not applicable. 

Not 
applicable. 

Not applicable. 

78 

 
 
 
ANNEX V. STAKEHOLDER CONSULTATION – SYNOPSIS REPORT 

This  section  presents  the  consultations  undertaken  by  the  Commission  to  evaluate  the 
FDI Screening Regulation. Consultations by the OECD Secretariat to get information for 
their review are described in paragraphs 19-22 of the OECD report. 

The  number  and  profile  of  respondents  to  the  open  consultations  confirm  that  FDI 
screening is a targeted instrument, and it only applies to investments made by a limited 
and  well  identified  group  of  stakeholders  who  are  well  informed  about  its  procedural 
aspects. 

1.  Targeted consultation 

The targeted consultation on the evaluation and revision of the FDI Screening Regulation 
ran  between  14 June  and  21 July 2023.  The  European  Commission  received  47 
contributions,  including  18  from  Member  State  authorities  involved  in  the  EU 
cooperation on FDI screening and, when applicable, the implementation of the national 
screening  mechanism.  The  summary  report  of  the  consultation  is  published  on  the 
Commission’s website along with the contributions received131.  

2.  Call for evidence launched by the European Commission 

The call for evidence was open from 14 June to 21 July 2023 and 10 contributions were 
submitted  in  total132.  By  category  of  respondent,  contributions  were  submitted  by 
business associations (5), companies/businesses (2), a public authority (1), an EU citizen 
(1)  and  other  (1).  The  respondents  were  from  the  following  countries:  Belgium  (4), 
Germany (2), Sweden (1), Slovakia (1), Luxembourg (1) and Spain (1). 

None  of  the  respondents  questioned  the  need  for  national  FDI  screening  or  for  a 
comprehensive  EU  framework  that  complements  national  mechanisms.  Responses’ 
recurring themes can be summarised as follows. 

General comments 

-  Maintaining the EU’s openness  to  FDI is  important  because  FDI  drives growth, 

innovation and competition. 

-  FDI  in  the  EU  should  be  assessed  on  grounds  other  than  those  of  security  or 
public order. For example, a reciprocity check should be done to assess openness 
to FDI in the third country from  which FDI originates.  Also, among the criteria 

131  https://policy.trade.ec.europa.eu/consultations/screening-foreign-direct-investments-fdi-evaluation-and-
possible-revision-current-eu-framework_en#consultation-outcome  
132  All 
the  Commission’s  Have  Your  Say  portal: 
https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13739-Screening-of-foreign-direct-
investments-FDI-evaluation-and-revision-of-the-EU-framework/feedback_en?p_id=32186570. 

responses 

are  on 

received 

the 

79 

 
 
 
 
for determining if a country represents a risk to security or public order, the EU 
should include the criterion of respect for fundamental rights. 

Comments on the design and implementation of national screening mechanisms 

-  All  Member  States  should  adopt  screening  mechanisms  on  grounds  of  security 

and public order. 

-  There  is  scope  for  further  alignment  of  national  screening  mechanisms,  in 
particular  definitions,  deadlines,  criteria  and  the  parameters  of  the  substantive 
assessment  and  triggering  events.  A  common  sectoral  scope  for  mandatory 
screening  (for  example  FDI  in  ‘critical  infrastructure’  and  ‘critical  technologies’ 
relevant  to  the  transportation  sector,  critical  raw  materials  and  net  zero  industries) 
should  be  considered.  The  administrative  efficiency  of  screening  should  be 
improved through standardised notification forms. 

-  The outcome of national FDI screening mechanisms should be predictable and the 
development  of  common  European  guidelines  should  be  considered.  When  a 
transaction is subject to screening in more than one Member State, the assessment 
should  be  based  on  similar  standards  and  each  assessment’s  outcome  should  be 
consistent. 

-  Businesses  said  that  FDI  screening  reviews  should  be  confidential,  given  the 
possible  reputational  risks  for  investors.  EU  action  could  prevent  inconsistent 
disclosures  and  intentional  information  leaks.  The  citizen  who  responded  to  the 
call for evidence called for greater transparency of screening decisions. 

Comments on EU cooperation on FDI screening 

-  The  FDI  Screening  Regulation  should  cover  investments  in  which  the  direct 
investor  is  an  EU  business  but  investors  from  non-EU  countries  are  indirectly 
involved. 

-  The  criteria  for  transactions  to  be  notified  by  national  authorities  to  the  EU 
cooperation  mechanism  should  be  clarified,  possibly  by  adding  a  definition  of 
‘pre-screening’, which does not entail an obligation to notify. 

-  Member  States  should  be  required  to  provide  feedback  to  the  relevant  Member 
States  and  the  Commission  on  whether  their  comment/opinion  was  followed  up 
on or not, and, if it was followed up on, how so, and if not, why. 

- 

If the Commission  believes that an  FDI is  likely to  affect  the security  or public 
order of more than one Member State, all Member States concerned should have 
access to the Commission’s opinion and be informed if and how the opinion was 
followed up on, and if not, why. 

-  The list of projects and programmes of Union interest should be extended to other 
initiatives  that  allocate  a  significant  amount  of  EU  funding  to  boosting 
investments in critical infrastructure or technologies. 

80 

 
-  There is scope for increasing the Commission’s involvement in FDI screening in 

cases where projects or programmes of Union interest are at stake. 

3.  Targeted surveys 

In  addition  to  the  open  targeted  consultation,  the  Commission  sought  the  views  of 
national screening authorities and private sector stakeholders (law firms, businesses and 
business  associations)  with  proven  practical  experience  of  FDI  screening  on  certain 
matters  related  to  the  five  evaluation  criteria  (effectiveness,  efficiency,  relevance, 
consistency, EU added value). The consultation ran from 3 August to 1 September 2023. 
It took the form of a questionnaire with open questions based on the themes identified in 
the evaluation matrix (Annex III). 

The  Commission  received  responses  from  15  Member  States  (Belgium,  Bulgaria, 
Czechia,  Estonia,  Finland,  France,  Germany,  Ireland,  Italy,  Luxembourg,  Malta,  the 
Netherlands, Portugal, Slovakia and Spain) and 13 private sector stakeholders, including 
lawyers  experienced  in  representing  notifying  parties  in  screening  procedures  (9), 
business associations with a broad membership of EU companies (3), and one business 
whose investments have undergone several screening authorisation procedures in the EU. 

On effectiveness, Member States with an operational screening mechanism confirmed the 
cooperation mechanism’s usefulness. Their replies highlighted the EU aspect of security, 
the value of exchanging information and obtaining the views of other Member States on 
specific transactions, and the usefulness of informal information exchanges on risks and 
how  to  deal  with  them.  Some  Member  States  without  a  screening  mechanism  believed 
that  the  cooperation  mechanism  had  limited  usefulness,  while  others  found  it  a  useful 
way of informing policy decisions and prompting them to look into FDI-related security 
risks. Asked about transactions outside the scope of the cooperation mechanism that the 
Member  States  had  prohibited  or  authorised  with  conditions  since  October  2020,  more 
than one Member State reported on relevant transactions. This confirms that the current 
system does have ‘blind spots’. 

Member States’ responses to the questionnaire echoed the shortcomings undermining the 
effectiveness  and  efficiency  of  the  system  identified  in  the  OECD  report  and  the 
targeted consultation, namely: 

- 

- 

- 

- 

the lack of screening mechanisms in all Member States; 

the diverging scope of economic activities screened by Member States; 

the diverging scope of investments covered by national screening mechanisms (for 
example, whether greenfield investments are covered or not); 

the diverging  and sometimes unclear  stance  of Member States  on what  constitutes 
‘formal  screening’  and  the  filtering  criteria  they  might  have  for  notifying  cases  to 
the cooperation mechanism; 

81 

 
 
- 

- 

- 

- 

- 

the  scope  of  the  Regulation  excluding  investments  by  foreign-controlled  EU 
investors; 

the  ‘over-notification’  of  non-critical  cases  to  the  cooperation  mechanism,  which 
may have the negative result of potential risks being overlooked due to a shortage of 
human resources; 

lack  of  coordination  of  multi-country 

the 
mechanism; 

transactions 

in 

the  cooperation 

the  lack  of  information  about  the  outcome  of  national  procedures  given  to  other 
Member  States  and  the  Commission  in  cases  in  which  Member  States  made 
comments and/or the Commission issued an opinion; 

some Member States’ lack of legal  power to  protect  the security of other Member 
States and projects or programmes of Union interest, including the ability to impose 
cross-border  obligations  in  addition  to  measures  to  mitigate  possible  risks  to  the 
security or public order of the screening Member State. 

In addition to these points, private sector stakeholders’ responses indicated the following 
issues,  partially  related  to  national  screening  mechanisms,  that  undermine  the 
effectiveness of the EU framework for FDI screening. 

-  Differences between key concepts, such as the definition of FDI (or investments 
covered by the national mechanism) and the substantive test to determine whether 
an FDI is likely to affect security or public order, including  a foreign investor’s 
risk factors. 

-  Differences  between  Member  States’  thresholds  of  influence  over  a  target 

company that a foreign investor must reach to trigger a review. 

-  The lack of clarity  about  the activities  within the scope of national  mechanisms 

due to the vague and non-exhaustive list of sectors covered. 

interplay  between 

-  Procedural  differences  between  national  mechanisms,  such  as  filing  deadlines 
imposed by certain Member States that are not far away enough from the signing 
dates,  the  significant  difference  in  deadlines  among  Member  States,  and  the 
different 
the 
cooperation  mechanism  (some  Member  States  start  their  national  screening 
procedures  only  after  the  EU  cooperation  mechanism  has  ended,  while  others 
conduct  them  in  parallel  with  the  cooperation  mechanism  and,  in  some  cases, 
Member  States  do  not  notify  transactions  to  the  cooperation  mechanism  at  all 
unless an in-depth investigation is launched). 

the  national  screening  mechanisms  and 

-  The  lack  of  a  legal  basis  permitting  direct  formal  interaction  between  the 
investor/target company and other Member States and the Commission during the 
screening procedure. 

-  Notifying  parties’  lack  of  access  to  comments  from  other  Member  States  and 

Commission opinions. 

82 

 
On the effectiveness of cooperation on non-screened FDI (Article 7 of the Regulation), 
most Member State respondents took the view that it was effective only if the Member 
State  in  which  a  transaction  takes  place  maintains  a  screening  mechanism  that  can 
address  the  concerns  raised.  In  the  absence  of  an  applicable  screening  mechanism,  the 
Member  State  in  which  an  investment  is  planned  or  completed  is  unlikely  to  have  the 
means  necessary  to  take  measures  to  follow  up  on  a  Commission  opinion  or  other 
Member States’ comments. One respondent believed that in a situation where the ‘host’ 
Member State does not have the power to at least investigate a transaction, other Member 
States  may  be  less  motivated  to  comment.  Some  respondents  pointed  out  that  the 
obligation on all Member States to have a screening mechanism would address this. 

On  whether  the  legal  basis  for  international  cooperation  contributes  to  achieving  the 
objectives of the Regulation, Member State respondents confirmed that the exchange of 
information  on  the  design  and  implementation  of  screening  mechanisms  and  the 
exchange of good practices with like-minded partners was beneficial. Most respondents 
took  the  view  that  the  impossibility  of  sharing  case-specific  information  under  specific 
arrangements  did  not  undermine  the  effectiveness  of  the  Regulation,  while  others 
suggested  that  international  cooperation  could  be  beneficial  for  assessing  transactions 
and  exchanging  case-specific  information  without  compromising  the  confidentiality  of 
commercially  sensitive  information,  and  that  the  screening  procedure  could  improve 
effectiveness  in  the  future.  Many  respondents  said  that  the  Member  State  screening  a 
transaction may always contact the non-EU partner about it bilaterally if necessary. 

Asked if the EU framework for FDI screening deterred investment, all Member State 
respondents  believed  that  the  Regulation  and  national  mechanisms  did  not  have  a 
dampening effect on FDI. Some pointed out that short deadlines and greater convergence 
of  national  mechanisms  made  the  rules  less  cumbersome.  Two  Member  State 
respondents  took  the  view  that  the  Regulation  and  national  mechanisms  (whose 
establishment  was  incentivised  by  the  EU  framework)  effectively  deterred  potentially 
risky  FDI.  Most  private  sector  respondents  shared  the  view  that  the  EU  framework  for 
FDI  screening,  while  not  without  its  flaws,  had  not  deterred  FDI.  Some  respondents 
believed that the EU framework had prompted investors to adopt a more cautious stance, 
especially  investors  from  countries  of  geopolitical  concern  and  in  sectors  subject  to 
screening  authorisation  (although  financial  investors  may  decide  to  reduce  their 
investment  threshold  to  stay  below  applicable  notification  thresholds).  Other  private 
sector  respondents  believed  that  the  EU  framework  had  become  a  deterrent  to  some 
extent,  due  to  the  lack  of  transparency  and  procedural  fairness  as  regards  case-specific 
information  exchanged  under  it  (for  example,  the  lack  of  rules  on  transaction  parties’ 
rights  to  access  information on their  transaction), the administrative burden  of multiple 
filings for FDI authorisation in the EU, and the unpredictable deadlines that can result in 
significant delays in processing transactions. One private sector respondent estimated that 
it took approximately 3-6 months to process a transaction due to the decentralised nature 
of  screening  in  the  EU,  depending  on  the  number  of  Member  States  to  be  cleared. 
However, any evidence appears anecdotal, drawing mainly on respondents’ experience. 

83 

 
Most  Member  States  could  not  give  an  estimate  of  the  cost  of  participating  in  the 
cooperation mechanism (notifying cases and assessing cases notified by other Member 
States). One Member State considered the financial burden minimal (between EUR 5 000 
and  EUR  10 000/year),  whereas  another  estimated  the  annual  cost  of  assessing  cases 
notified to the cooperation mechanism to be EUR 48 000/year. A few other respondents 
mentioned  the  cost  of  one  or  two  employees,  without  specifying  a  value.  Some 
respondents  considered  the  current  administrative  burden  to  be  disproportionate  due  to 
the obligation to notify all cases undergoing screening. Another respondent pointed out 
that processing all the information received through the cooperation mechanism was very 
resource-intensive, but beneficial not only for the case-specific information but also for 
creating  consistency  among  national  systems.  Some  respondents  recognised  the 
usefulness  of  templates  for  notifications  in  reducing  the  administrative  burden  on 
Member States. 

Like  Member  States,  most  private  sector  respondents  were  unable  to  provide  detailed 
cost  estimates  for  the  administrative  burden  of  EU  cooperation  on  FDI  screening. 
Their  responses  indicated  that  the  average  costs  of  the  cooperation  mechanism  were 
rather  limited  compared  to  the  overall  costs  of  most  FDI  reviews.  One  respondent  (a 
lawyer)  said  that  filling  in  the  form  for  EU  cooperation  (in  addition  to  the  national 
application) took approximately 4-8 hours, which, depending on hourly fees, could cost 
approximately EUR 2 000-5 000. Another lawyer said that the English translation of the 
filing and the EU notification form did not increase their administrative burden.  

(including 

legal  and  consulting 

Several  respondents  reiterated  that,  where  a  transaction  is  notifiable  in  more  than  one 
Member State, the lack of procedural alignment of national mechanisms and the different 
national  requirements  and  practices  resulted  in  substantial  costs  and  a  heavy 
administrative  burden 
fees,  compliance  and 
administrative overheads). One respondent  said that  the additional legal  fees due to  the 
coordination  required  between  the  screening  procedures  launched  in  different  Member 
States  could  amount  to  EUR  100 000-1  million,  even  without  the  potential  financial 
implications  in  case  of  interim  financing  and  delayed  closing.  One  private  sector 
respondent  suggested  developing  and  implementing  a  central  submission  system  for 
transactions  that  are  notifiable  in  three  or  more  Member  States  to  streamline  and 
synergise the process, while the interlocutor of the applicant would remain the screening 
authority of the Member State initially concerned.  

The same respondent proposed a jurisdictional referral system, so parties to a transaction 
or  the  competent  Member  States  could  request  EU  screening  when  assessing  an 
investment’s  impact.  In  this  scenario,  the  case  could  be  referred  for  review  to  the 
Commission,  which  would  be  responsible  for  taking  the  final  decision,  taking  the 
position of the Member States concerned into account. On the other hand, another private 
sector respondent was against increasing the Commission’s responsibilities in individual 
FDI transactions, saying that the security and public order implications of  an  FDI  were 
most relevant for the Member State in which the transaction was planned or completed, 

84 

 
and that national authorities were therefore the best guardians of the national security and 
public order of the Member State concerned. 

Overall,  Member  State  respondents  were  satisfied  with  the  current  deadlines  of  the 
cooperation  mechanism  and  the  indicative  list  of  factors  that  may  be  taken  into 
consideration  in  the  screening  of  an  FDI133.  One  Member  State  was  in  favour  of 
developing guidelines on interpreting factors. 

On relevance, Member State respondents took the view that the Regulation covered most 
transactions that could be relevant for security or public order. However, most Member 
State  and  several  private  sector  respondents  believed  that  extending  the  Regulation  to 
cases  where  the  direct  investor  is  an  EU  company  and  its  ownership  chain  includes 
foreign  persons  or  companies  –  structures  that  are  often  used  for  legitimate  business 
interests – would also be a good idea. One law firm pointed out that, under the current 
system, national FDI screening mechanisms can be circumvented if the target company’s 
assets are transferred, before the actual FDI is made, to an entity in another Member State 
without a screening mechanism or with less stringent screening procedures. At the same 
time,  a  number  of  private  sector  respondents  believed  that  it  was  not  necessary  to 
broaden the scope of investors and investments subject to the Regulation.  

One  Member  State  respondent  took  the  view  that,  for  risks  originating  elsewhere  (for 
example  R&D  agreements  or  certain  joint  ventures),  identifying  and  addressing  them 
would require specific, bespoke tools other than FDI screening. On the relevance of the 
cooperation mechanism, Member State respondents were in favour of maintaining it and 
addressing  the  shortcomings  identified  in  relation  to  efficiency  and  effectiveness,  and 
maintaining  a  high  level  of  confidentiality  for  the  protection  of  sensitive  information. 
Several private sector respondents acknowledged that the Regulation had played a major 
role in promoting a degree of harmonisation and coherence that might not otherwise have 
existed across the EU. At the same time, private sector respondents took the view that the 
relevance  of  the  current  system  could  be  improved  with  more  harmonisation  to 
provide  clarity  and  promote  more  consistency  in  FDI  screening  in  the  EU.  Their 
responses said that the degree of harmonisation or alignment of the following rules and 
practices should be increased. 

-  The notion of FDI. 

-  An  exhaustive  catalogue  of  sensitive  sectors  or  activities  subject  to  screening, 

focused on those with a plausible link to security or public order. 

-  An agreed set of European criteria for determining whether an FDI is likely to affect 
security or public order instead of the current indicative list of factors in Article 4. 

-  Greater  convergence  of  whether  national  authorities  have  the  right  to  initiate  the 
screening  of  a  transaction,  and  whether  (or  in  which  sectors)  filing  is  voluntary  or 
mandatory. 

133 Article 4 of the Regulation. 

85 

 
 
-  Alignment  of  the  ownership  thresholds  above  which  a  transaction  is  subject  to 

screening by the competent Member State. 

-  Greater convergence of the substantive assessment by the Commission and Member 

States (including the notion of ‘criticality’). 

-  Obliging national authorities to justify their screening decisions. 

-  Procedural alignment (including better harmonisation of information requested from 
the  parties  to  a  transaction  at  the  time  of  the  request  for  screening  authorisation, 
possibly  using  a  harmonised  filing  form  for  national  authorities,  better  aligning 
deadlines and  the stages of national  screening  at which EU cooperation is initiated, 
and  possibly  a  deadline  for  parties  to  a  transaction  to  respond  to  requests  for 
additional  information  from  the  Commission  and  other  Member  States  under  the 
cooperation mechanism). 

-  Mitigating measures. 

-  Greater transparency of national screening decisions with the publication of national 
decisions  (with  redaction  of  information  relevant  for  national  security  or  business-
sensitive information) or standardised annual reports detailing some of the reasoning 
followed in national decisional practice, as well as statistics on the decisions adopted, 
the sectors concerned and investors’ origin. 

-  Regulating the right of the notifying parties to access information on their transaction. 

Private sector respondents also called for publicly available EU and national guidelines 
to improve the transparency and legal certainty of screening mechanisms and screening 
decisions. One private sector respondent suggested that Member States issue guidelines, 
possibly  based  on  a  template  provided  by  the  Commission,  on  factors  triggering 
notification obligations, substantive FDI concerns and the circumstances in which a deal 
is  considered  likely  to  jeopardise  national  security,  possible  remedies  (mitigating 
measures),  and  the  practical  interplay  between  the  EU  Merger  Regulation  and  FDI 
screening. 

On coherence, Member State respondents believed that the Regulation had brought about 
a  certain  degree  of  similarity  among  national  screening  mechanisms. This  similarity 
was created by the minimum requirements for screening mechanisms set out in Article 3, 
the list of factors in Article 4, and the formal and informal exchange of good screening 
practices facilitated by the Commission. At the same time, respondents pointed out that 
differences remained among national screening mechanisms, for example with regard to 
the  scope  of  sensitive  economic  sectors  subject  to  screening  and  deadlines.  Generally, 
respondents  were  in  favour  of  promoting  more  harmonisation  of  national  rules  without 
affecting  the  responsibilities.  On  the  internal  coherence  of  the  Regulation,  Member 
States considered that its purpose was coherent with the provisions on its implementation 
(for example, the confidentiality of information exchanged, the Commission expert group 
on the screening of FDI into the EU, and the list of projects and programmes of Union 
interest  annexed  to  the  Regulation).  Many  private  sector  respondents  called  for  greater 
consistency of nationality criteria (used to determine an investor’s country of origin and 

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ultimate  ownership)  with  other  EU  instruments,  in  particular  the  EU  sanctions  regime, 
the  rules  on  anti-money  laundering  and  EU  merger  control,  and  key  concepts,  such  as 
‘control’ and the consideration given to security or public order (in particular EU merger 
control rules). On the interplay with the Foreign Subsidies Regulation, one private sector 
respondent  requested  that  disclosure  requirements  and  thresholds  for  subsidies  not 
exceed  the  notification  requirements  for  concentrations  under  the  Foreign  Subsidies 
Regulation,  to  avoid  creating  an  additional  administrative  burden.  Some  business 
associations  that  responded  to  the  questionnaire  took  the  view  that  the  FDI  Screening 
Regulation should be consistent with the recently adopted trade-related autonomous tools 
(such as the International Procurement Instrument and the Foreign Subsidies Regulation), 
and  that  investments  in  the  EU  should  be  assessed  based  on  reciprocity  and  their 
contribution to ensuring a level playing field for EU investors abroad. 

One  private  sector  respondent  suggested  integrating  security  and  public  order 
considerations into industry-specific approval regimes (for example, as part of a ‘fit and 
proper’  or  equivalent  assessment),  relieving  companies  and  national  administrations  of 
the burden of using resources for multiple separate reviews. 

On EU added value, Member State respondents said that the Regulation had increased 
their awareness of cross-border risks to security or public order and drawn their attention 
to the security relevance of EU projects and programmes, as well as the potential risks to 
the  continuity  of  those  projects  and  programmes  from  certain  FDI.  Respondents  added 
that, thanks to the Regulation, national screening procedures now take the EU aspect into 
account much more than they did before October 2020. The cooperation mechanism also 
gives Member States and the Commission a clearer picture of investments in the EU as a 
whole,  and  has  made  it  easier  to  identify  patterns  in  foreign  investors’  behaviour  and 
FDI-related risks in certain sectors across the EU. They also confirmed the Regulation’s 
added value with respect to: 

- 

- 

the  increasing  number  of  Member  States  maintaining  and  implementing  a 
screening mechanism; 

the  convergence  of  screening  rules  and  their  implementation  in  the  EU, 
improvements  in  the  efficiency  of  risk  assessment  by  Member  States  (in  this 
regard,  the  usefulness  of  the  Commission’s  substantiated  opinions  on  critical 
transactions,  and  of  the  cooperation  mechanism  as  an  additional  source  of 
information, were mentioned); and 

- 

the greater awareness of cross-border risks to security and public order, including 
those affecting projects and programmes of Union interest. 

Overall,  Member  State  respondents  believed  that  the  Regulation  and  the  cooperation 
mechanism  had  enabled  the  Commission  and  Member  States  to  become  more  familiar 
with screening mechanisms in the EU, and increased awareness of FDI-related risks, and 
that  the  mechanism  made  it  more  difficult  for  parties  to  transactions  to  hide  risky 
investments from Member States. Besides all that, even when assessing investments that 

87 

 
take  place  in  only  one Member  State,  more  attention  is  paid  to  possible  impacts  at  EU 
level. 

On the same matter, private sector respondents saw the Regulation’s added value in the 
following areas. 

- 

- 

- 

- 

- 

- 

It  has  prompted  Member  States  to  establish,  and  where  necessary  to  modernise 
and  effectively  implement,  their  national  screening  mechanisms.  However,  two 
private  sector  respondents  believed  that  the  Regulation  had  decreased  legal 
certainty  by  promoting  the  use  of  screening  on  grounds  of  security  or  public 
order,  giving  Member  States  too  much  discretion  to  determine  the  scope  of 
sectors  or  economic  activities  covered  by  their  screening  mechanism,  the 
notification triggers, the procedural  framework  and screening  deadlines,  and the 
substantive concerns assessed in their procedures. 

It  has  increased  the  efficiency  of  risk  assessment  by  Member  States  and  given 
them security-relevant information on FDI transactions subject to screening. 

It has improved awareness of cross-border security risks and risks to projects and 
programmes of Union interest. 

It has brought about a degree of consistency and convergence in the approach to 
FDI screening across the EU: without the coordinated framework, it is reasonable 
to assume that newly adopted screening rules would vary more widely in terms of 
criteria, procedures and thresholds. 

It has drawn political attention in Member States to the importance of screening, 
which  may  have  resulted  in  additional  resources  being  allocated  to  the 
implementation of screening mechanisms, which in turn might have improved the 
quality of risk analysis. 

It has increased stakeholders’ awareness and understanding of national screening 
mechanisms. 

88