The European Union has for many years regulated mergers in order to address potential problems of market power arising from such deals. That is a process known as “merger control”, which is determined by the EU Merger Regulation, which has been in force for over 30 years. Under that regime, mergers of a certain size have to be pre-notified for approval to the European Commission and may not be completed before clearance.
In recent years there has been a concern about the rise of foreign investment in EU companies, especially by Chinese state-owned companies. This has resulted in a new EU Regulation to screen investments from third countries. Unlike the EU Merger Regulation, that process is devolved to the EU Member States with the Commission playing a coordinating role. Foreign investments may require pre-notification in a number of EU Member states and may not be completed until cleared by all of them. Since the UK’s excit from the European Union, the UK National Security and Investment Act (NSIA) filing it outside of this framework, but nevertheless it needs to be considered and taken very seriously.
Whereas the EU Merger Regulation is a legal process with legal tests that are well-understood, the FDI reviews are often based on political considerations relating to national security. Although the Commission is seeking to put a framework around these disparate regimes, expert knowledge is crucially important to ensure a coordinated pan-European approach to such questions. We have an excellent network of local contacts who can help you navigate this regulatory maze.