Is national security a game changer for foreign investment control regimes and M&A transactions in Europe?

Governments all over the world are continuing to take steps to strengthen their powers to intervene in foreign direct investments ("FDI") into their countries. These changes come at a time of increased scrutiny of foreign takeovers by governments across the globe, as economic protectionism continues to rise, while the long term response to the coronavirus pandemic is still cautiously unfolding.

This means that investors can now expect to encounter more scrutiny by respective governments and face a prolonged approval process when entering into deals. Generally speaking, government intervention under FDI screening rules is already much harder to predict than government intervention under the long-established merger control regimes, particularly as the security concerns associated with FDIs are often not communicated or discussed openly during the review process. Foreign investors or parties in M&A transactions should be mindful of various requirements to provide detailed information to regulators. This could potentially impact the timing of transactions where additional regulatory notifications and authorisations may be required.

Navigating through these laws is challenging, yet essential when conducting global M&A transactions. We have set out a high-level overview of the European foreign direct investment screening mechanisms for France, Germany, Italy, Spain and the UK including information on recently implemented or pending amendments introduced either as an effort to mitigate the potential effects of the COVID-19 pandemic or, more generally, to tighten up national FDI screening regimes.

Read more: Is national security a game changer for foreign investment control regimes and M&A transactions in Europe?


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