On September 16, 2026, European Commission President von der Leyen opened her annual State of the Union address with the warning that “[a] fight for industrial capacities is shaping global competition“. Her speech indicated how the European Commission intends to respond to concerns about European competitiveness and economic security. Those priorities already appear in reforms and proposals such as the Draft Merger Guidelines and the proposed Industrial Accelerator Act (“Draft IAA”), alongside broader changes to foreign investment screening across the EU. The address therefore offers a useful guide to the considerations likely to shape EU merger control, competition enforcement and Member State investment screening. This post distils the implications for investors and businesses active in the EU.

Key Points

• Competitiveness, resilience and economic security will shape EU merger control to some degree, as reflected in the Draft Merger Guidelines’ focus on scale, innovation and security of supply, as well as competition enforcement and foreign investment screening.
• Foreign investment policy will continue to scrutinise strategic sectors and technologies—including AI, semiconductors, critical minerals, energy and defence—while enabling partnerships that build capacity, diversify supply chains and strengthen resilience.
• Trusted international partnerships will increasingly shape foreign investment assessments, with greater weight on investors’ jurisdictions and strategic alignment with EU industrial policy.
• Climate change and AI are identified as “tipping points” driving regulatory focus across sectors including energy and water infrastructure, agriculture and food, health, transport, advanced manufacturing, and defence and space.

European Competitiveness:  the omnipresent objective

Although President von der Leyen does not expressly use the word “competitiveness”, she frames her economic agenda around a “bold plan” for an EU in which companies can innovate, compete and grow. Her focus on scale, security of supply, sustainability and innovation provides the policy context for the competition and foreign investment implications discussed below.

Competition Policy Implications

The Draft Merger Guidelines are the clearest competition-policy expression of this agenda and the most significant development in EU merger control in two decades. Released in April 2026 for public feedback, they give greater weight to scale, innovation, resilience and security of supply in assessing whether transactions support European competitiveness. Sustainability may also feature more prominently, alongside traditional factors such as price effects.

President von der Leyen championed the overhaul of the Merger Guidelines.  Her address’ focus gives it further political impetus, with the Commission issuing formal objections on the same day to MMG’s proposed acquisition of Anglo American’s nickel assets over resilience and security-of-supply concerns. The Commission has concerns that MMG could divert low-carbon ferronickel supplies away from the EU.

The final text of the Draft Merger Guidelines, expected later this year, will determine how far resilience, scaling-up benefits and longer-term investment effects influence merger outcomes. President von der Leyen’s selective references to “scale”—focused on start-ups and collective defence capacity—are consistent with the Draft Merger Guidelines’ measured approach, which recognises that scale can be pro-competitive where it helps parties compete globally.

On competition policy, her call to unlock AI’s value “more responsibly” highlights the emerging debate over industry cooperation to develop safe AI. Executive Vice-President Ribera has invited companies to seek guidance on proposed initiatives, which could lead to further Commission comfort letters.

Foreign Investment Implications—industrial policy and partnerships

President von der Leyen’s call to help European companies compete globally “on a level playing field” and reduce strategic dependencies reflects the concerns behind the revamped Foreign Investment Screening Regulation (discussed here) and the Draft IAA. She also calls for “all tools at [the EU’s] disposal” to rebalance trade with China and reverse deindustrialisation.

The Draft IAA (discussed here), proposed in March 2026, remains under negotiation and has generated significant debate over its ‘Made in Europe’ criteria and value-creation requirements for certain foreign investments. Although President von der Leyen did not name the Draft IAA, her proposal for a European Corporation on Critical Raw Materials—to source and stockpile inputs for semiconductors, batteries and clean technologies—supports the rationale behind the Draft IAA and the EU’s wider economic security strategy.

The same concerns drove the harmonisation and enhanced cooperation introduced by the new Foreign Investment Screening Regulation. Member States can therefore be expected to scrutinise foreign investments in sectors President von der Leyen identifies as economic fundamentals for European industry and security, including clean energy, critical raw materials, finance, banking, AI, semiconductors and defence.

The address also calls for faster investment and closer EU cooperation, including through grid and storage investment, capital-markets reform and the Scaleup Europe Fund.

The address also frames economic security around trusted partnerships, not only adversary- and sector-based risks. While reaffirming the international rules-based system, President von der Leyen calls for strategic partnerships and “global coalitions” to strengthen resilience. Her proposal to deepen cooperation with Canada beyond CETA—covering critical minerals, batteries, AI, quantum technologies and cybersecurity—illustrates the approach.

This suggests that the origin and strategic context of an investment will increasingly matter in foreign investment screening. Although most Member State screening regimes remain formally origin-neutral, relationships with like-minded jurisdictions may carry greater weight alongside concerns about strategic dependencies and critical assets. Businesses navigating FDI reviews should therefore expect greater attention to investors’ jurisdictions and strategic alignment, even if Member States weigh partnership factors differently.

Critical sectors in focus—energy, artificial intelligence and downstream AI

President von der Leyen singles out two “tipping points” as critical to the EU’s future prosperity and security: climate change and AI.  These areas can, as a result, expect to attract heightened regulatory attention:

• Energy and resources: Referring to heatwaves and water scarcity, she links climate resilience to the stability of agricultural and energy supply chains. Investments in water infrastructure, food security and adaptation technologies may therefore face heightened scrutiny where targeted assets support critical infrastructure or essential services – including both ordinary course-of-business operation and maintenance, as well as disaster prevention and response.
• Artificial intelligence models: President von der Leyen describes AI as a “foundational layer” for the economy and security while warning of self-improving models and adversarial use. She proposes strengthening EU capabilities through public and private funding and working with “like minded” partners on model evaluation, verification, early warning and AI security. This language may inform how regulators assess AI-related investments from trusted partners.
• AI applications: President von der Leyen distinguishes AI development from downstream applications, acknowledging that many leading AI developers are based outside the EU. She identifies five sectors for new industrial-AI initiatives, to be announced in November 2026: health, transport, agri-food, advanced manufacturing, and defence & space. Future regulation in these sectors can be expected to seek to protect high-value European data while facilitating its use and ensuring that economic value is created in the EU, consistent with the Draft IAA.

Looking beyond SOTEU

President von der Leyen’s address overall signals continuity, rather than a wholesale shift, in competition, merger control and foreign investment policy. The Draft Merger Guidelines will show how far scale and resilience influence merger outcomes, while investment screening is likely to focus more on resilience, climate preparedness, advanced AI and trusted partnerships. The November initiatives in health, transport, agri-food, advanced manufacturing, and defence and space will indicate whether the Commission builds incrementally on existing tools or pursues broader changes. Businesses should watch those initiatives and the next Commission merger and investment-screening decisions for the practical direction of travel.