Milan: The Union has finally closed a loophole that let sensitive companies change hands with barely a second glance in some countries. Ministers meeting in the Council signed off on a revised regulation for screening foreign direct investment, an overhaul that scraps the patchwork inherited from 2020 and replaces it with a single, tougher floor that every capital must respect.
The headline change is that screening becomes mandatory everywhere. Until now roughly half the member states operated national review mechanisms while the rest had none at all, meaning an investor blocked in one country could simply route the same deal through a neighbour with an open door. The new rules oblige all twenty-seven to set up a functioning system and to examine transactions in a defined list of critical areas, from advanced technology and defence supply chains to energy, transport and health infrastructure.
Just as important is what now counts as a foreign investment. The revised text reaches beyond obvious cross-border purchases to capture indirect deals structured through European subsidiaries, and it extends scrutiny to firms based inside the Union that are ultimately controlled by an individual or company outside it. That closes a favourite workaround in which a buyer from a third country acquires a target through a conveniently placed holding company on the continent, dodging review by appearing home-grown on paper.
Business groups have greeted the reform with a mixture of relief and unease. Manufacturers in industrial heartlands welcome protection for the know-how that underpins their competitiveness, mindful of the steady flow of bids for robotics, semiconductors and dual-use engineering. Others worry that a thicket of overlapping national filings, even under common minimum standards, will slow legitimate capital at a moment when the bloc is desperate to attract it. The regulation tries to answer that by harmonising procedural basics such as timelines, so that a deal touching several countries no longer moves at the speed of the slowest reviewer.
The Commission gains a stronger coordinating hand. Where a transaction affects more than one member state or a project of Union interest, Brussels can issue an opinion that national authorities must take seriously, even if the final call still rests with the country where the investment lands. That balance, respecting sovereignty over the ultimate decision while forcing information-sharing and consultation, is the compromise that made agreement possible after months of wrangling over how much power the centre should hold.
The regulation enters into force twenty days after it appears in the Official Journal, but the practical effect will unfold gradually. Member states have eighteen months to build or upgrade their mechanisms to meet the minimum requirements, a window that reflects how much work some governments face in standing up an apparatus from scratch. For strategic sectors that have watched ownership drift abroad over the past decade, the reform arrives as a belated but decisive statement that open markets no longer mean open season.
