FDI screening was for a long time a blank spot on the regulatory
landscape for most countries in Central Eastern Europe (CEE).
Unlike Western European Member States, so far relatively few
countries in Central Eastern Europe (Austria, Poland, Hungary,
Romania) had instruments that allowed vetting foreign investments;
albeit often with little practical relevance.
In its Communication of 13 March 2020, Coordinated
Response to the COVID-19 outbreak (COM(2020) 112 final; ec.europa.eu/info/sites/info/files/communication-coordinated-economic-response-covid19-march-2020_en.pdf),
the European Commission (EC) warned that the current economic shock
due to the COVID-19 crisis poses an increased potential risk to
strategic industries in the European Union. It urged Member States
"to be vigilant and use tools available to avoid that the
current crisis leads to a loss of critical assets and
technology" as a result of buyouts from foreign (i.e.
non-EU/non-EEA) investors.
In its subsequent Communication of 25 March 2020,
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 the EU FDI Screening Regulation (C(2020) 1981 final;
trade.ec.europa.eu/doclib/docs/2020/march/tradoc_158676.pdf),
the EC specifically addressed the increased risk of attempts by
foreign investors to acquire healthcare capacities. In light of
this, the EC encouraged Member States to a) make full use already
now of its existing FDI screening mechanisms or, where such
screening mechanisms are not available or inadequate, b) to set up
a full-fledged screening mechanism.
Now that the EU FDI Screening Regulation must be transposed into
national law (see here), national legislators in Central Eastern
Europe have heard the wakeup call. In the last few weeks, Member
States across CEE have tightened or enacted new measures or
initiated legislative processes to do so. These measures are
largely shaped by the EU FDI Screening Regulation.
Thus, going forward many foreign investments in critical sectors
will have to undergo a vetting process.
Read here about the latest developments:
Austria: Austrian government proposes new FDI screening act
Hungary: New foreign investments screening rules in Hungary
Poland: New foreign investments screening rules in Poland
Slovenia: Slovenia introduces foreign investments screening rules
Further screening tools are in the pipeline in the Czech Republic (a new law is slated to undergo the parliamentary process in June 2020) and Croatia.
Originally published 03 June 2020
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