procedures, harmonize the scope of screening and reinforce the role of the Commission in ensuring consistency amongst Member States. The European Parliament adopted its position on the Reform Proposal on May 8, 2025. In December 2025, the Council and the European Parliament reached a provisional political agreement on the New Regulation. The agreed compromise text was published in February 2026. On May 19, 2026, the European Parliament approved the New Regulation that now awaits the formal approval of the Council before being published in the EU’s Official Journal and entering into force, likely by the end of 2027. Outbound Investments The Commission is considering advancing an outbound investment review mechanism to prevent the leakage of sensitive technology and know-how, and to safeguard the EU’s security interests. The Commission first announced its plan to investigate outbound investment review as part of the European Economic Strategy in June 2023 and released a non-legislative white paper in January 2024 (the White Paper) that outlines a comprehensive plan to assess potential security risks associated with EU businesses investing abroad. Following a public consultation on the White Paper that confirmed the need to assess security risks associated with outbound investments, the Commission issued a “Recommendation on Reviewing Outbound Investments in Technology Areas Critical for the Economic Security of the Union” on January 15, 2025 (the Recommendation). The Recommendation identifies three technology sectors of strategic importance and elevated risk: (i) semiconductors, (ii) artificial intelligence and (iii) quantum technologies. It calls on Member States to assess the economic security risks arising from outbound investments in these areas. Member States were asked to review outbound investments by EU investors in these sectors dating back to January 1, 2021, and to submit a progress report to the Commission by July 15, 2025. Member States are also expected to submit a comprehensive report
on their implementation of the Recommendation and any risks identified by June 30, 2026. Based on the reports, the Commission is expected to assess the need and possible content of policy response in this field. At present, no details regarding the potential introduction of an outbound investment screening mechanism at the EU level are publicly known. It is possible that an EU outbound control framework would, similar to the inbound control model, include a list of sensitive activities/areas but ultimately leave the scope to the discretion of the Member States. The focus would likely be on the transfer of strategic capabilities and/or manufacturing/supply chains. Industrial Accelerator Act On March 4, 2026, the Commission adopted a legislative proposal for the Industrial Accelerator Act (IAA), described as the EU’s new plan for sustainable prosperity and competitiveness. In addition to targeting certain key manufacturing sectors and introducing “Made in EU” initiatives for priority treatment in EU green public procurement, the IAA proposes a new FDI-related mechanism applicable to investments in certain emerging strategic sectors, notably battery value chains, electric vehicles, photovoltaic technologies and critical raw materials. Under the proposed mechanism, a pre-investment approval requirement would apply to investments that satisfy all of the following criteria: ^ The foreign investment exceeds €100 million; ^ It is made by a non-EU investor whose home country holds more than 40% of global manufacturing capacity for the relevant strategic sector or technology – a threshold understood to be calibrated principally to capture investors from China given its dominant position in the targeted industries; and ^ It involves the acquisition of 30% or more of the share capital or voting rights in an EU target, or 30% or more of ownership, leasehold or other rights conferring control over an EU asset.
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