CELIS Update on Investment Screening and Economic Security - January 2025
by Helene Schramm with the help of intern Surbhi Gupta
ECONOMIC SECURITY STRATEGIES
European Union – Commission Recommendation calling on EU Member States to review outbound investments into non EU-countries
As Foreign Direct Investment (FDI) regimes have expanded globally in recent years, concerns have also risen about the economic security risks posed by outbound investments, especially in critical technologies. On 15 January 2025, the European Commission has published the Recommendation (EU) 2025/63 (“Recommendation”) urging EU Member States to review outbound investments made by their companies into non-EU countries between January 2021 and June 2026. The recommendation is based on the premise that outbound investments by EU companies could result in the exposure of sensitive technologies or bolster supply chains in third countries with conflicting interests, which could potentially undermine the strategic interests of the European Union.
The Recommendation is part of the EU's broader Economic Security Strategy introduced in June 2023. It builds on the EU Expert Group on Outbound Investments set up in July 2023 identifying a lack of systematic data collection, followed by a White Paper and public consultation, which highlighted the need for assessing the risks of critical technology and know-how leaking from the EU to third countries.
The Recommendation focuses on transactions involving semiconductor technologies, artificial intelligence technologies, and quantum technologies. It includes investments that give control or significant influence over a company, such as joint ventures, greenfield investments, or acquisitions of assets and IP. The review applies to investments in non-EU countries, with an emphasis on those with higher risk profiles, based on factors like past violations of the UN Charter. It covers investments by any EU-based individuals or entities and includes both new, ongoing, and transactions completed since January 2021, or earlier if necessary.
The Commission, although it is not legally binding, strongly recommends that Member States implement voluntary or mandatory notification requirements, requiring detailed information on the parties, investment type and value, associated intellectual property, and potential economic security risks, particularly those linked to the accelerated development of critical technologies in countries that may pose threats to international peace and security.
The Recommendation emphasizes the need for strengthened cooperation between Member States and the Commission to share data, align review processes, and jointly address risks, thereby streamlining procedures and reducing administrative burdens for businesses with consistent EU-wide standards.
Member States are required to submit a progress report by 15 July 2025, and a final report on their findings and actions by 30 June 2026. The overarching goal is to safeguard the EU’s technological and economic future by addressing potential security risks posed by outbound investments in critical sectors.
The Commission Recommendation (EU) 2025/63 of 15 January 2025 can be accessed here.
United States – The White House issued Order Regarding the Proposed Acquisition of United States Steel Corporation by Nippon Steal Corporation and delayed its enforcement until June 2025
On 3 January 2025, President Joe Biden issued the Order Regarding the Proposed Acquisition of United States Steel Corporation by Nippon Steal Corporation prohibiting the merger between United States Steel Corporation and Japan-based Nippon Steel Corporation, Japan’s largest steelmaker - a move that has raised significant concerns about the future of the steel industry. The merger, which was valued at $7.3 billion, was aimed at consolidating two major players in the global steel market. The Committee on Foreign Investment in the United States referred the transaction to the President on 23 December 2024.
U.S. regulators cited national security concerns and potential harm to competition as the primary reasons for blocking the deal. They argued that the merger would have resulted in excessive market concentration and reduced competition in the steel sector, which is vital to U.S. economic and military security. Additionally, there were fears that such consolidation could lead to higher prices for U.S. manufacturers and consumers. This decision also comes amid broader efforts by the Biden administration to prioritize American manufacturing and safeguard strategic industries.
The Biden administration has extended the deadline for Nippon Steel to abandon its $14.9 billion bid for U.S. Steel until June 2025, allowing more time for the courts to review a legal challenge the steelmakers brought against Biden’s order. Previously, the companies were required to unwind the deal within 30 days. The extension, which now runs until June 18, 2025, coincides with the expiration of the current acquisition contract, with both companies expressing their intention to complete the deal and secure the best future for the American steel industry.
The Order Regarding the Proposed Acquisition of United States Steel Corporation by Nippon Steal Corporation of 3 January 2025 can be accessed here.
United States – Executive Order on Advancing United?States Leadership in Artificial Intelligence Infrastructure
On 14 January 14 2025, the Biden administration unveiled the Executive Order 14141 on “Advancing United States Leadership in Artificial Intelligence Infrastructure” aimed at strengthening the U.S. artificial intelligence (AI) infrastructure. The order aims to reduce reliance on foreign AI technologies and promote the development of secure, domestically-driven AI systems, ensuring that the U.S. remains competitive in this critical sector. By enhancing AI resilience and fostering innovation, the administration seeks to protect national economic interests and maintain the United State's leadership in the global AI landscape.
The order focuses on reducing reliance on foreign AI infrastructure while promoting the development of secure, resilient, and innovative AI technologies within the United States. Key goals include enhancing the security of AI systems to protect against cyberattacks and adversarial threats, ensuring they are more robust and trustworthy. The executive order also emphasizes the need for greater collaboration between federal agencies, private sector companies, and academic institutions to accelerate AI research and development.
This initiative seeks to maintain the U.S.’s leadership in the global AI race, prioritizing innovation while safeguarding national security. It calls for significant investments in AI infrastructure, creating a more sustainable ecosystem for AI technologies to flourish. Additionally, the order sets the stage for improved AI governance and ethical standards, promoting transparency and accountability.
The Executive Order on “Advancing United States Leadership in Artificial Intelligence Infrastructure” can be accessed here.
领英推荐
INVESTMENT SCREENING MECHANISMS
European Union – European Parliament publishes Draft Report on the proposal for a regulation on the screening of foreign investments in the Union
In January 2024, the European Commission proposed a revised regulation to strengthen the EU’s foreign investment screening framework, replacing Regulation (EU) 2019/452. The proposal seeks to address inconsistencies in national screening mechanisms by mandating EU-wide standards and improving coordination among Member States.
On 17 January 2025, the Draft Report on the proposal for a regulation of the European Parliament and of the Council on the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 of the European Parliament and of the Council (Draft Report on the proposal for a regulation) was published by the European Parliament’s International Trade (INTA) Committee. It supports these changes, emphasizing the need for harmonized screening procedures and clearer timelines. It also calls for expanding the list of critical sectors and EU-interest programs subject to scrutiny, ensuring that foreign investments do not undermine security or public order. While Member States retain ultimate decision-making authority, the revised regulation reinforces the importance of assessing investments’ broader EU-wide implications.
The Draft Report on the proposal for a regulation of the European Parliament and of the Council on the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 of the European Parliament and of the Council can be accessed here.
Romania & Hungary – Romanian Energy Ministry refers acquisition of E.ON Energie Romania by MVM Zrt to the Foreign Direct Investment Review Commission
In December 2024, Germany’s E.ON SE announced plans to sell its 68% stake in E.ON Energie Romania to Hungary’s state-owned MVM Zrt. Given E.ON Energie Romania’s strategic role in supplying 3.4 million customers, Romania’s Ministry of Energy referred the transaction to the Commission for the Examination of Foreign Direct Investments (CEISD) in January 2025 under its FDI screening mechanism and EU Regulation 2019/452.
The Ministry raised national security concerns over MVM’s ties to Russian entities, including Gazprom and Rosatom, which could heighten Romania’s dependence on Russian energy. There were also apprehensions about potential share transfers to non-EU entities, posing risks to compliance with EU energy regulations.
Energy Minister Sebastian Burduja reaffirmed Romania’s commitment to energy security, stating that the government would act decisively to reduce reliance on Russian gas. This case highlights the EU’s growing scrutiny of foreign investments in critical sectors, balancing economic openness with national security and regulatory compliance.
China & European Union – China’s Ministry of Commerce determines that the EU’s investigation constitute trade and investments barriers
In July 2024, China's Ministry of Commerce (MOFCOM) initiated an investigation under the Foreign Trade Law and the Rules on Investigations on Foreign Trade Barriers, targeting the European Union’s Foreign Subsidies Regulation (FSR). This followed concerns from the China Chamber of Commerce for Import and Export of Machinery and Electronic Products about EU scrutiny of Chinese firms in railway locomotives, photovoltaics, wind power, and security inspection equipment.
By January 2025, MOFCOM determined that the EU’s measures constituted trade and investment barriers, citing selective enforcement, lack of transparency, and procedural unfairness. These findings suggested violations of World Trade Organization (WTO) principles, particularly the Most-Favored-Nation and National Treatment obligations, restricting fair competition for Chinese businesses in the EU market. China has urged the EU to resolve these issues through bilateral consultations and legal remedies under WTO dispute settlement mechanisms.
… for further information, take a look at the following CELIS Blog Posts:
An overview of the U.S. outbound screening program and considerations for private and public actors by John Kabealo
Empowering the Forgotten: Competitors’ Rights and Remedies under the Foreign Subsidies Regulation by Alessandro Carpi