Impact Of The New Foreign Direct Investment (FDI) Screening Framework Of The EU For Foreign Companies In Austria

Author:Mr Christoph Mager and Tuğçe Yalçın
Profession:DLA Piper
 
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In the shadow of Brexit negotiations, the European Parliament agreed on 14 February 2019 to set up an EU level tool to screen FDIs on grounds of security or public order to protect sectors. The new "Regulation (EU) 2019/452 establishing a framework for screening of foreign direct investments into the European Union" (EU-FDI Regulation) shall apply from 11 October 2020 and be binding in its entirety as well as directly applicable in all member states.

In view of the increasing number of the FDI into the EU in the form of acquisitions in high-tech sectors such as aircraft manufacturing, specialized machinery and pharmaceuticals, skepticism towards such FDIs seems to be growing. With more than 35% of total EU assets owned by foreign-owned companies, the EU has one of the world's most open investment regimes according to the FDI Regulatory Restrictiveness Index of the OECD.

In 2015 and 2016, for example, the EU received the most direct investments in the world. In 2017, Chinese investors invested $57.6 billion in European companies. Just to give a few examples from the recent past: in August 2016, Greece sold 51% of the shares in the Port of Piraeus (OLP), the country's largest port, to the Chinese state-owned logistics group China COSCO SHIPPING Corporation Limited. In Germany, investments were made through Chinese acquisitions in connection with KUKA Aktiengesellschaft, AIXTRON SE und OSRAM GmbH. In Austria, the Chinese Wanfeng Auto Holding Group acquired the leading Austrian aircraft manufacturer Diamond Aircraft.

Following a joint letter from the Economy Ministers of Germany, France and Italy to the European Commission in February 2017, the European Commission presented a proposal for a "Regulation establishing a framework for screening of foreign direct investments into the European Union" on 13 September 2017. The first EU-wide investment screening framework shall establish a close cooperation between the member states of the EU and the European Commission to screen FDIs on grounds of security or public order to protect critical sectors, technologies and infrastructure such as energy, transport, communications, data, space and finance as well as semiconductors, robotics and artificial intelligence.

According to an initial analysis, the new EU-FDI Regulation would have the following consequences for foreign investments in Austria:

  1. Investments covered by the Austrian Foreign Trade Act (Außenwirtschaftsgesetz 2011)

    Subject matter and scope...

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