• Belgium issues first statistics on its FDI regime: vast majority cleared in phase I, a handful in phase II, and one ex officio investigation.
  • EU Commission starts showing its teeth in the enforcement of the Foreign Subsidies Regulation, with the first ex officio investigations.
  • France publishes its 2023 FDI report, with filing numbers and outcomes that are largely consistent with previous years.
  • Germany’s plans to overhaul its FDI regime slow down amid political controversies.
  • Italy authorizes Safran’s acquisition of RTX’s actuator business, reversing its initial veto, in light of Safran’s commitments.
  • Rotterdam court issues first judgment under the new Dutch FDI regime, ruling against the Government.
  • Four years of Spanish FDI screening: an overview.
  • UK Government issues updated guidelines on National Security & Investment Act (NSIA).
  • President Biden issues order requiring Chinese owner to divest cryptocurrency mining facility near U.S. military base.

First Statistics on Belgian FDI Screening

The Belgian FDI authority, the Interfederal Screening Commission (“ISC”), has published the first statistics on Belgian FDI screening. The regime, which applies to investments by non-EU investors in entities active in a broad range of sectors and activities in Belgium including aerospace and defense, energy, digital infrastructures, technologies of strategic importance (e.g., artificial intelligence, semiconductors or cybersecurity), and access to state-sensitive or personal data, entered into force on July 1, 2023.

In the first ten months following the entry into force of the regime, the ISC received 46 notifications, primarily concerning investments in healthcare (accounting for 11 notifications or 18% of the overall total), data (accounting for 9 notifications or 15% of the overall total), and digital infrastructures, electronic communication, and energy (each accounting for 6 notifications or 10% of the overall total).1

The large majority of investments was cleared during the initial assessment phase (Phase I). A detailed screening phase (Phase II), which may be opened if there are concrete indications of a possible risk to public order, national security or strategic interests, was opened in three cases. The ISC also opened one ex officio investigation into an investment that was carried out before the entry into force of the screening regime.2

The EU Foreign Subsidies Regulation in practice: first cases and enforcement trends

Almost eight months since taking full effect, the EU’s enforcement agenda for the Foreign Subsidies Regulation (FSR) is coming into focus.

The European Commission has launched several in-depth and ex officio cases, and reviewed over 150 notifications.

See our alert on recent enforcement activity and risk factors that may lead to lengthy review for cases.

French Treasury publishes its 2024 Annual Report on FDI control

The French Treasury published its 2024 Annual Report on FDI control. The report shows a slight decrease in activity, with a total number of 309 applications filed compared to 325 in 2022, and 328 in 2021. These include applications for a foreign investment authorization, notifications of the crossing of the 10% voting rights threshold in a French listed company by non-EU/EEA investors as well as requests for opinion on whether a transaction falls in the scope of the French FDI control regime.

Not all transactions notified required an authorization. Out of the 255 applications for authorizations, 135 (approx. 53%) were considered within the scope of FDI screening and were approved by the French Minister for the Economy (slightly higher than in 2022 and 2021 with, respectively, 131 and 124 approvals issued). This may indicate that the scope of the FDI screening is becoming slightly clearer for investors, although there is still much progress to do in this respect in light of the high proportion of “out of scope” decisions (close to 50%). Out of these “in-scope” applications, 44% were subject to conditions against 53% in 2022 and 54% in 2024, a decreasing intervention rate but arguably still high in absolute terms. While the report does not provide statistical data on refusal decisions, based on our experience such decisions are rare. For the 2023 year, there is one public instance: in October 2023 the Minister explicitly rejected Flowserve’s attempted acquisition of two French subsidiaries of Velan Inc., namely Ségault and Velan SAS, both active in the nuclear reactors and submarines sector.

According to the report, 21.5% of authorized transactions targeted activities deemed “sensitive by nature”, i.e., relating in particular to the defence or security sectors (weapons, munitions, explosive powders, war material, dual-uses items and technologies, cryptology, critical technologies, etc.), and 63.7% targeting investments in infrastructures, goods and services that are considered essential to safeguard the integrity, security and continuity of energy and water supplies, transportation networks, public health protection, etc. Overall, 67.3% of ultimate investors were located outside of the EU/EEE, mainly in the United States, the United Kingdom or Canada.

The report also emphasizes the critical nature of electronic technologies – especially semiconductors – for the energy and digital transitions, and therefore their significance for the safeguard of national interests. Based on the report, since 2020, 42 applications relating to companies in the electronics sector have been examined. 24 of these applications specifically concerned semiconductor companies, mostly small and medium-sized companies and 71% of investments in electronics were made by non-EU investors.

In the related press release, the French Minister for the Economy Bruno Le Maire referenced the May 2024 Ernst & Young study, which found France to be the most attractive EU country for foreign direct investments, for the fifth consecutive year. He nevertheless emphasized that the protection of national interests remains at the heart of the control process, highlighting the recent expansion of operations subject to FDI control. Since January 2024, the crossing of the 10% threshold by a non-EU/EEA investor triggering FDI screening, which was initially temporary and linked to Covid-19 pandemic, is now permanent. The screening procedure now also extends to the acquisition of control over registered branch offices/ establishments in France of foreign entities conducting sensitive activities (whereas the French regime previously only covered entities with legal personality in France or branches of such entities). Moreover, the industry sectors covered by FDI screening in France now include activities relating to the extraction, processing and recycling of critical raw materials and prison security activities and the list of critical technologies for which R&D activities are subject to control now includes low-carbon energy production as well as photonic-related technologies.

Overhaul of Germany’s FDI regime: what lies ahead?

As reported here earlier, the German Federal Ministry of Economy and Climate Action (BMWK), the authority leading FDI reviews in Germany, is in the process of overhauling the legal framework for FDI screenings in Germany. Last year, the BMWK published its evaluation report of the current regime. The report included several suggestions for changes to the regime and was preceded by an outline of cornerstones for potential revisions leaked in the press. The proposed areas of change are quite significant and are aiming at a broader screening scope and tighter scrutiny of inbound M&A transactions in Germany. In particular, it had been suggested to include greenfield investments in certain sensitive areas and cooperation arrangements between German research institutions and foreign partners in the scope of reviewable “transactions”. The legislative process runs alongside the planned changes to the EU Screening Regulation, which are currently being discussed at EU level and could include innovations such as an outbound investment control.

Since then, not much news came from the BMWK in this regard. However, in parallel to a recent visit of German Chancellor Scholz in China, it had been reported that Germany may water down its plans to tighten the German FDI regime, in particular dropping the inclusion of greenfield investments and research cooperations in the screening scope.3 It has further been reported that officials in the German Government seem to have concerns that tighter foreign direct investment screening rules could be a discouragement to invest in Germany, and thereby conflict with the Government’s plans to re-energize the German economy.4 However, representatives of the BMWK, which is leading the overhaul of the FDI regime, did not confirm this. The German FDI regime had been tightened in recent years mainly to scrutinize and even prevent Chinese investors from acquiring critical German assets in key strategic and technology sectors. Also the current considerations to broaden the FDI regime’s scope are factually aimed at China. In particular the German Green Party, the second largest coalition party in the German Government and heading the BMWK and the Ministry of Foreign Affairs, is taking a hard stance against China. German Chancellor Scholz, on the other hand, seems to take a more differentiated approach, as could be seen in the Governments’ decision in relation to Chinese COSCO’s investment in Hamburger Hafen in 2022/2023, where the Chancellor clashed with its coalition partners already over not prohibiting the investment (please see here for more information).

Against this background, the potential cut-back of broadening the German FDI’s scope may foreshadow a further policy clash within the German Government. It remains to be seen who will eventually have the upper hand in terms of policy. In any case, a relaxed German foreign direct investment regime should not be expected as an outcome of this.

Italy revises its prior veto of Safran’s acquisition of RTX’s actuation and flight control business

As previously reported here, on November 16, 2023, the Italian government vetoed the acquisition of Microtecnica, an Italian company active in the design and development of flight control actuation systems, by Safran, a French high-tech group active in the aviation, defense and space industries.

Microtecnica is a subsidiary of RTX, the US defense and aerospace group. Microtecnica was part of a broader perimeter of high-technology actuation and flight control activities that RTX had agreed to sell to Safran, pursuant to an agreement dated July 21, 2023.

Both Safran and RTX appealed the Government decision before the administrative court sitting in Rome, which has exclusive jurisdiction on these matters. With an unprecedented resolution, on June 4, 2024, the Italian Government reversed its own veto and authorized the acquisition, in light of commitments undertaken by Safran in respect of Microtecnica and its business, which have taken the form of prescriptions addressed to Safran.

Dutch FDI Authority to Confirm Filing Obligation Before Ordering Notification of Past Investments

In a Judgment of April 25, 2024, the Rotterdam District Court ruled that the Dutch FDI authority (i.e., the Bureau for Investment Screening (“BTI”))5 cannot order the notification of an investment that has already been carried out before positively confirming that the investment falls within the scope of the Dutch FDI screening regime.6 The case concerned a target established in the Netherlands, active in micro-optical products such as lenses, lasers, optical coatings, and chip-based optical systems. Following the entry into force of the Dutch FDI regime on June 1, 2023, the Minister retroactively called in the transaction (which had been implemented in 2021) for review, based on suspicions of a risk to national security. The Minister had found that the transaction constituted a notifiable investment within the meaning of the Act on Security Screening of Investments, Mergers and Acquisitions (“Vifo Act”) based on publicly available information.

The applicant sought interim relief against the call-in decision before the Rotterdam District Court, arguing that the transaction did not entail a transfer of voting rights, and therefore did not constitute a notifiable investment within the meaning of the Vifo Act. Siding with applicant, the Rotterdam District Court found that the assessment as to whether an investment falls within the scope of the FDI screening regime cannot be deferred until the review phase. Instead, the Minister must investigate whether the transaction is covered by the Vifo Act before ordering notification, including where necessary through requests for information. The Court concluded that, in the case at hand, no voting rights were transferred so that the Minister lacked jurisdiction to call in the transaction. A judgment in the main proceedings will follow later. This is the first judgment on the general Dutch FDI regime since its entry into force.

Taking stock of the Spanish FDI authority’s decisional practice (2020–2023)

Since the entry into force of the Spanish FDI regime in 2020, the Ministry of Economy, Trade and Business (the “Spanish FDI authority”), publishes annual reports summarizing its FDI screening activity and providing aggregate figures on the transactions reviewed during that year. During the three years of currency of the regime, the number of notifiable transactions has tripled:

  • In 2020, 28 transactions were subject to authorization, all of which were cleared unconditionally except one, which was subjected to mitigation measures (remedies).
  • By 2021, the number of reportable transactions subject to authorization nearly doubled, up to a total of 55. While the vast majority were cleared without conditions, 6 of them were subject to mitigation measures and no transaction was prohibited.
  • This trend continued in 2022, with the Spanish FDI authority deciding on 73 transactions, of which 63 were cleared unconditionally and the number of conditional approvals increased to 9. One transaction was prohibited due to the impossibility of imposing effective mitigation measures.
  • Finally, in 2023, 129 operations were notified to the authorities and 88 were finally subject to their prior authorization. In this case, only 8 were subject to additional mitigation measures and none was prohibited.

Annual reports provide statistics showing the most popular grounds for review:

  • In 2020, almost half of the transactions were subject to review because the investor was directly or indirectly controlled by the government (including state bodies – such as sovereign wealth funds- or armed forces) of a non-EU/EFTA country. The rest required a filing due to the sector in which the target was active, with targets active in critical technologies and having access to sensitive information triggering most filings.
  • In 2021, notifications due to foreign government ownership of the investor decreased, and among the sectors of activity triggering most reviews continued to be targets active in critical technologies and those having access to sensitive data with an increase in reviews of those providing a fundamental input to the State.
  • This trend followed suit in 2022 with most transactions reviewed concerning targets active in critical technologies, providing fundamental inputs to the State or having access to sensitive data, and a few notifications being triggered due to the state-owned nature of the investor.
  • In 2023, the trend consolidated, with provision of fundamental inputs taking the lead as the sector triggering most reviews.

While they continue to be infrequent, the Spanish FDI is now consistently imposing mitigation measures. For this reason, the 2022 and 2023 reports include a non-exhaustive list with examples of the main mitigation measures imposed throughout the year. Four main categories of remedies were identified:

  • Measures aimed at guaranteeing the supply of fundamental goods or services for the provision of essential services.
  • Measures aimed at limiting investors’ access to sensitive data.
  • Measures aimed at maintaining certain capacities and avoiding the loss of sovereignty in concrete areas, especially in the technology sector.
  • Measures the obligation upon investors to provide periodic information or information related to particular events.

For further information and full access to the annual reports, please visit the Ministry’s Portal for Investment Control.

Updated guidance under UK’s National Security and Investment Act

On 21 May 2024, the UK Government published updated guidance on the application of the National Security and Investment Act (NSIA). This includes:

  • An expanded version of the policy statement in which the Government sets out the factors it will take into account in deciding whether a transaction might give rise to national security concerns.
  • A new paragraph, in guidance on the application of the NSIA to acquisitions outside the UK, indicating that in certain circumstances the NSIA would capture “outward direct investment” from the UK. This clarifies the existing position rather than introducing any new restrictions on outward investment, though additional restrictions are under consideration in the UK (as in the US and EU).
  • An expanded version of guidance for the higher education and research-intensive sectors.
  • Minor changes to the general guidance on the NSIA and to the guidance on completing the filing forms.

The new guidance does not affect the scope of the 17 sectors in relation to which transactions are subject to mandatory notification. A consultation on changes to these sectors is expected in the coming months. For more information on these changes, as well as an update on several recent NSIA decisions, please see our recent alert memorandum.

President Biden issues order requiring Chinese owner to divest cryptocurrency mining facility near U.S. military base

On May 13, 2024, President Biden issued an order requiring MineOne Partners Limited, a company majority owned by Chinese nationals to divest previously acquired real estate in Wyoming located near Francis E. Warren Air Force Base.

The order is the first time President Biden has prohibited a transaction under CFIUS authorities (and only the eighth time in the history of CFIUS that such an order has been issued by the President). The order also is the first time a President has prohibited a transaction under the expanded real estate authorities granted to CFIUS by the Foreign Investment Risk Review Modernization Act of 2018. For additional details, please see our blog.

1 Statistics as of April 22, 2024.

2 Transactions signed before July 1, 2023, may be called in for ex officio review for up to two years after closing of the transaction (up to five years in case of indications of bad faith).

3 https://www.wsj.com/world/europe/germany-considers-watering-down-plan-to-scrutinize-chinese-investments-5edf5231


5 The formal decision-maker is the Minister of Economic Affairs and Climate Policy (the “Minister”).

6 Rotterdam District Court, Case ROT 24/3256, ECLI:NL:RBROT:2024:3747.