On Thursday, the European Parliament adopted revised rules aimed at preventing security risks from foreign investments. The new regulations require mandatory screening by member states in sectors such as media services, critical raw materials, and transport infrastructure. These measures are intended to identify and address potential security or public order risks related to foreign investments.
The procedures for national screening mechanisms will be harmonized, allowing the European Commission to intervene independently or when disagreements arise between member states concerning potential risks from specific foreign investments. The legislation also covers transactions within the EU where the direct investor is ultimately owned by individuals or entities from non-EU countries.
Should a screening authority determine that a planned foreign investment project poses a likely threat to security or public order, it must either authorize the project with mitigating measures or prohibit it altogether.
The proposal was approved with 378 votes in favor, 173 against, and 24 abstentions.
Parliament’s rapporteur Raphaël Glucksmann (S&D, FR) stated: “Right now, the EU’s foreign investment screening system is fragmented, costly for investors, and insufficiently effective at mitigating risks. Leaving large industrial plants, energy grids, and media giants open to foreign takeovers — whether from China, the US, or elsewhere — ultimately puts our security and economic sovereignty on shaky ground.”
Glucksmann further emphasized that “screening procedures will now be streamlined across member states,” maintaining an open single market while protecting industries and key sectors. He added that this approach allows strategic industries to become more competitive and grants the Commission authority to make final decisions in case of disagreements among member states.
The existing framework for foreign direct investment screening came into effect on October 11, 2020. It was established due to concerns about certain foreign investors attempting to acquire control over EU firms providing critical technologies or holding sensitive information vital for security or public order at an EU level. The Commission’s new proposal on this matter was submitted in January 2024.
With the report now adopted in plenary session, negotiations with member states regarding the final form of the law can commence. Both Parliament and Council need to adopt the final legislative act before it can come into force.
