On October 11, 2020, the EU Foreign Direct Investment Regulation—which establishes a European framework for the screening of foreign investments into the European Union—entered into force.
The legislation attempts to address growing concerns (compounded by the COVID-19 pandemic) regarding inbound investments at a European level.
The Regulation does not grant the European Commission (or any other European institution) the ability to veto foreign investments; this power is retained by Member States under national legislation.
Rather, it lays down a common framework for review by Member States and seeks to coordinate national enforcement action, including by enabling the Commission and other Member States to comment on national reviews.
This memorandum provides an overview of the new Regulation and its expected practical impact on foreign investment review in the EU.