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Michelle Adam

Michelle is an associate in Covington’s antitrust and EU competition team in Frankfurt. Her practice focusses on all aspects of German and European antitrust and competition law as well as on foreign direct investment (FDI) regulations.

Michelle advises clients from various sectors, including technology, life sciences and energy.

The European Commission (the “Commission”) issued a White Paper on Outbound Investments (the “White Paper”) on 24 January 2024, setting out non-binding proposals for a detailed analysis of EU outbound investment. With its initiative, the Commission aims to understand whether the current limited regulation in the area of outbound investments is allowing leakage of strategic technologies and leading to potential risks to security. The conclusions of any review would inform possible EU policy responses, including whether to adopt EU-level rules regarding the screening of outbound investment to third countries. The White Paper is one of five initiatives set out in the Commission’s European Economic Security Package (the “EESP”) that aim to address the national security and public order concerns that the Commission has identified (see our Global Policy Watch blog).

In this blogpost, we discuss the key aspects of the outbound investment White Paper at the EU level. These are the main takeaways:

  • The White Paper does not introduce any immediate change to legislation or create an EU- level outbound investment screening framework, but is a step towards the EU identifying whether (and what) legislation may be necessary to close perceived ‘gaps’ in regulation that permit outbound investments made by EU businesses which could lead to potential security risks.
  • The White Paper envisages a joint effort by the Commission and Member States to explore the need to regulate and control outbound investment, prompted by the Commission’s perception of growing geopolitical tensions and technological shifts.
  • The Commission suggests a multi-stage process to evaluate risks potentially associated with outbound investments. This process began with a consultation (following the White Paper’s publication) followed by a monitoring period. Based on the findings of both the public consultation and monitoring, the Commission will assess the need and possible content of any policy response in Autumn 2025.

Continue Reading Outbound investment screening in the EU – A major step forward?

On 24 January 2024, the European Commission (the “Commission”) published its European Economic Security Package (the “EESP”), which included the long-awaited proposal to reform the EU Regulation which established a framework for Foreign Direct Investment screening (the “EU FDI Regulation”). The EESP’s proposed regulation (the “Proposed Regulation”) is one of the EESP’s five initiatives to implement the European Security Strategy (published in June 2023) – for an overview of the EESP, see our Global Policy Watch blog.

The Proposed Regulation seeks to improve the legal framework for foreign investment screening in the European Union and builds upon feedback that the Commission received during its public consultation in 2023. If adopted as proposed, it will significantly change the landscape of foreign investment screening regimes across the EU (for a full report of the public consultation see here).

This blog highlights the key changes under the proposed reform and analyses their impact on global deal making. We also provide an outlook on the next steps for the proposals.

Key takeaways and comment

  • Extended scope to include indirect foreign investments through EU subsidiaries and greenfield investments.
  • Minimum standards and greater harmonisation across the EU.
  • Introduction of call-in powers to review all transactions for at least 15 months after completion.
  • Coordinated submission of foreign investment filings in multi-country transactions.
  • Focus cooperation between Member States and the Commission on cases more likely to be sensitive.
  • More prescriptive guidance on substantive assessments and remedies, including a formal obligation for national screening authorities to prohibit or impose conditions on transactions they conclude are likely to negatively affect security or public order in one or more Member States.
  • Increased reporting, while protecting confidential information.

Continue Reading Draft EU Screening Regulation – a new chapter for screening foreign direct investments in the EU