On Wednesday 11 June, the Council of the European Union adopted its negotiating position on the regulation making it compulsory for all Member States to carry out investment screening on foreign investments (see EUROPE 13657/15). The EU27 want to avoid sending signals of closure to investors. This is why they have reduced the volume of investments subject to notification and, therefore, screening (see EUROPE 13657/15).
The EU Council has specified that any Member State wishing to do so may extend the scope of their screening. Risk analysis must be as uniform as possible between countries, and this requires common criteria to be put in place: “the security, integrity, resilience and functioning of critical entities, the availability of critical technologies or the continuity of supply of critical inputs”.
On the other hand, the EU27 want to retain control of the process and, above all, of the decision of whether or not to authorise a risky transaction.
Once the analyses have been carried out, a Member State may decide to authorise an investment, whether to put in place accompanying mitigation measures, or to simply prohibit the transaction. However, before doing so or formulating an opinion along these lines, the Member States or the European Commission must take a whole series of factors into consideration. These include the availability of the technologies being invested in, the resilience of critical entities and the protection of public health.
The European Commission and other Member States may make comments to the State carrying out screening of the investment, which the latter must take into “due consideration”. However, it will have the final say on whether or not to grant authorisation, depending on the EU Council’s position. If it disagrees with the Commission or another EU capital, it must provide reasons for its choice. The EU Council has ensured that this justification shall not be too burdensome.
On the other hand, the European Parliament would like it to be possible for a decision by a Member State to be challenged and overruled by the European Commission in certain cases (see EUROPE 13636/9). The European Commission, however, reportedly suggested that it did not deem this aspect of the text to be fundamental and that it could manage without this increased decision-making power.
On the other hand, it would like to see the EU Council make concessions on the scope, broadening it and bringing it further into line with the position of the European Parliament.
Procedures. In addition to these fundamental changes, the Member States also want to simplify procedures and make them more efficient. They have proposed making several notification deadlines shorter so that decisions can be reached more quickly.
The content of the notifications between countries, which form part of the cooperation mechanism, has also been reduced to avoid procedures becoming overly burdensome.
Furthermore, the transition period for putting the screening mechanism in place has been extended to 24 months instead of 15, thereby giving more time to those few countries who do not yet have a mechanism in place.
See the EU Council’s position: https://aeur.eu/f/h9s (Original version in French by Léa Marchal)