‘A Chain Works Just as Well as its Weakest Link’ – CFIS Keynote and Roundtable on the Review of the EU FDI Screening Regulation

By Ass.-Prof. Dr. Lena Hornkohl, University of Vienna / CELIS Deputy Director


The annual conference of the CELIS Institute dealt with the pivotal question of Investment Screening and Economic Security and its current challenges. CFIS 2023 was held in Prague from 11 – 13 October 2023 and consisted of a private and a public part.

Damien Levie, Head of the Technology & Security, FDI Screening Unit in DG Trade of the European Commission, kicked off the public part of the conference on Thursday afternoon with his keynote the room was waiting for. Following a consultation period in the summer, the European Commission prepared a report evaluating the functioning and effectiveness of the EU FDI Screening Regulation (see our blogpost by Sophie Bohnert on the report here). The review will include a reworked Regulation down the line, which the Commission promised to propose before the end of 2023. Damien presented the state of play of the review process. He was joined by three commentators, Ana-Maria Belacurencu, Case handler in the Foreign Investment Department of the Romanian Competition Council, Romain Rard, Partner at Gide and Chair of the Foreign Investments Taskforce of Invest Europe, and Juan Ignacio Gonzalez Bastero, Principal Manager of the Chamber 4 Directorate: Regulation of markets and competitive economy of the European Court of Auditors. I had the pleasure to moderate this discussion.

In his keynote, Damien Levie looked back and forward. He looked back on what we sometimes forget is only three years of application of the EU FDI Screening Regulation. His main takeaway circled around the fact that the cooperation mechanism seems to work well and does not delay national decisions on transactions. The system also guarantees a high level of confidentiality, allowing for a smooth and trustworthy cooperation. The EU in a whole remains open to foreign investments: Commission opinions are requested in less than 3 % of the cases and Member States seem to only block 1 % of the cases overall.

Damien referred to the – at the time of CFIS only to be expected – Commission report, as well as the 2022 OECD Report when addressing the shortcomings of the current system. Under the current EU FDI Screening Regulation, Member States are encouraged but a national screening system is not mandatory. Even though several Member States are expected to implement a national screening system soon, he stressed that there are still missing links in the EU – and with that, some links in the chain are missing. Damien also covered other critics posted by the OECD Report, such as the heterogeneity of sectors, procedures, and timeframes as well as a lack of accountability. Furthermore, as the CJEU also established in Xella (see blogposts by Balínt Kovács and Alexia Crivoi), the Regulation does not cover EU subsidiaries of foreign companies.

Damien’s intervention certainly revealed a tendency for what the upcoming EU Commission revision might look like. His intervention was also largely backed by the answers of the public consultation. He allowed a certain glimpse into the crystal ball and presented a three-pillar strategy for the Commission EU FDI Screening Regulation review : 1) the six missing links need to be closed, 2) the links must all have a minimum strength, and 3) the links must reasonably and effectively work with each other, particularly in terms of accountability and interdependence.

The first commentator, Ana-Maria Belacurencu, largely agreed with Damien and praised the cooperation mechanism. She underlined that Member States in the EU cannot act in isolation. Some form of screening should indeed become mandatory, she agreed upon. Next to uniform filters, she also opted in favor of harmonized timelines. In order to tackle the most problematic cases, Ana highlighted the importance of information sharing between authorities.

Romain Rard represented the investors perspective and highlighted that investors are faced with an increased complexity for transactions. The strength of an EU-wide system should lie in its harmonization potential. An alignment of sensitive sectors for investment screening would foster predictability, particularly for multijurisdictional filings.

It is to be expected that the European Court of Auditors will publish their audit report on the FDI Screening Regulation soon. It is not officially adopted, but Juan Ignacio Gonzalez Bastero urged us to keep our eyes open in the coming weeks. At CFIS 23, provided a sneak-peak. He underlined that the situation under the EU FDI Screening Regulation has already much improved in the last three years. Similar to Damien, he stressed the geopolitical moment to push the Regulation further – we don’t want to go back. He also backed the idea of a mandatory filing system that leaves Member States to decide on the cases, giving them enough freedom apart from the fact that they must have a meaningful screening mechanism. Juan further criticized that Member States are not notifying cases on the same level and that we should learn from the experiences we have.

The following short Q&A-session circled around questions from, inter alia, Jonas Fechter on intra-EU screening and the single market objective of mutual trust, which was also followed by Steffen Hindelang, who stressed that the definition of third country investor remains unclear but pivotal for the system. Other interventions included, for example, Sophie Meunier, who questions if there ever will be a screening system on the EU level.

The discussion showed us two things: 1) the coming months will be exciting for FDI scholars (so you better follow the CELIS Blog for updates) and 2) we have several issues the experts and audience agreed upon: mandatory filing and minimum harmonization, especially for multijurisdictional filings. It also demonstrated much potential for further discussion –during CFIS 2024 and then potentially on a revised EU FDI Screening Regulation.

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