European Commission issues guidance on Foreign Direct Investment enforcement during the Covid-19 crisis

European Commission issues guidance on Foreign Direct Investment enforcement during the Covid-19 crisis

March 26, 2020, Covington Alert

On March 25, 2020, the European Commission (“Commission”) published a policy paper to provide guidance to the EU Member States regarding takeovers by non-EU (“foreign”) investors of EU companies and assets in "strategic industries" during the Covid-19 crisis (the “Guidance Paper” or the “Guidelines”). The Commission emphasizes the importance of vigorously deploying the Foreign Direct Investments (“FDI”) screening mechanisms in place at the Member State level. Such screening mechanisms have been developed for governments to observe foreign investments in strategic industries including infrastructure, critical technology or raw materials on grounds of security and public order. According to the Commission, the current crisis caused by the Covid-19 pandemic has made such FDI screenings particularly urgent and important.