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European Commission: Guidelines for the protection of critical European assets and technology

The Commission intends to preserve and protect certain critical EU-assets and technologies, particularly in areas such as health, medical research, biotechnology and infrastructures. To this end, it provides Member States with Guidelines on Foreign Direct Investment Screening (C(2020 1981 final) ("the Guidelines").

The current crisis and – one may suspect - the interest of certain foreign investors in promising European researchers working on innovative vaccination solutions against COVID-19, are acting as a catalyst for increased efforts by the Commission in the field of investment control. The vibes are quite clear: Commission President von der Leyen reminds the Member States quite openly of the existing investment control tools and urges them to "make full use of them".

Under existing EU rules, Member States are empowered to screen foreign direct investments from non-EU countries on grounds of security or public order. According to the Guidelines, this includes the protection of public health.

With the Guidelines, the Commission aims to

  • provide clarity on how to use the existing legal framework to protect strategic assets.
  • stress the need to effectively protect legitimate public interests.
  • call for the use of existing mechanisms to prevent capital movements from non-EU countries that could create a risk to security or public order. Currently, national screening mechanisms are already in force in 14 Member States. The remaining Member States are called upon to set up a full-fledged screening mechanism.
  • make it clear that portfolio investments in principle do not constitute direct investment unless they confer the investor effective influence over the management or control of the company.
  • underline the importance of Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investment. This instrument is intended to improve EU-wide coordination of investment control screening. From October 2020, the European Commission may issue comments to Member States, thereby giving the EU's position on sensitive transactions a stronger voice. The objective is clear. The Commission wants to encourage Member States to block transactions even if they are likely to have an impact on security and public order not only in the Member State concerned but also in other Member States or the EU as a whole.


Time will tell whether an equilibrium can be found in attracting the investment necessary for a strong, competitive and innovative business location and, on the other hand, keeping a watchful eye on who invests in strategically important industries and for what purpose. In any case, the representatives of the European Commission are very clear in their statements:

Ursula von der Leyen: "The EU is and will remain an open market for foreign direct investment. But this openness is not unconditional."

Phil Hogan: "We need to know who invests and for what purpose. The EU and its Member States have the right legal tools for that. [...] The Guidelines […] will bring additional clarity on how to use our investment screening framework to prevent a sell-off of strategic EU assets in the current crisis".

We'll keep our fingers on the pulse for you. In Austria, there have been plans for some time to tighten investment controls (§ 25a AußWG 2011).


Please note: This newsletter merely provides general information and does not constitute legal advice of any kind from Binder Grösswang Rechtsanwälte GmbH. The newsletter cannot replace individual legal consultation. Binder Grösswang Rechtsanwälte GmbH assumes no liability whatsoever for the content and correctness of the newsletter.

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