Towards a European framework for FDI screening: what the political agreement means for France
A turning point for European economic security
The recent political agreement between the European Parliament and the Council on the reinforcement of the EU mechanism for FDI screening marks a new stage in building a genuine European economic security policy. For the first time, all Member States will be required to put in place an operational system of FDI screening across the Union, based on a common core of sensitive sectors and harmonised procedural rules.
This evolution reflects deeper trends: rising geopolitical tensions, the strategic use of capital to acquire critical infrastructure, the race for advanced technologies, and the quest for greater strategic autonomy. In this context, this new control tool is becoming one of the main pillars of the European economic security toolbox, alongside export controls, anti-coercion instruments, the regulation of foreign subsidies and tools relating to critical raw materials.
The European Union is not a federal state
A fundamental point must be recalled: the European Union is not a federal state, and it is not creating a “European CFIUS”. In the field of FDI screening, the power to authorise or block a transaction remains in the hands of the Member States. EU law organises a common framework, coordinates information-sharing and sets a minimum baseline, but it does not replace national FDI screening regimes.
The future regulation is therefore best understood as a convergence instrument: it aims to strengthen cooperation, close loopholes, avoid “weak links” in the Single Market and ensure that all Member States apply at least a credible and effective form of this type of control.
The three pillars of the future regulation
The draft regulation relies on three main pillars. First, each Member State will have to establish a national mechanism for FDI screening where such a system does not yet exist. Second, the regulation will define a minimum list of critical sectors – defence, dual-use items, “hyper-critical” technologies, critical raw materials, key transport and digital infrastructure, electoral systems and certain systemic financial market infrastructures – that national FDI screening regimes will need, at a minimum, to cover.
Third, the text will introduce coordinated timelines, common procedural safeguards and a more structured cooperation mechanism between Member States and the Commission, especially when an investment in one Member State may have security or public order implications for others.
A robust French regime, but one that will need to adjust
For France, which already operates a sophisticated regime for foreign investments (IEF), this evolution does not start from scratch. The current scope already captures many sensitive activities, and administrative practice in FDI screening is now well established. However, the European agreement will necessarily trigger adjustments in French law, both as regards the sectors covered and the types of transactions that may fall under FDI screening.
On the sectoral perimeter, the future EU framework puts particular emphasis on domains such as electoral infrastructure and some systemic financial market infrastructures that are not yet as explicitly targeted in French law. It is therefore likely that France will have to adapt the list of sensitive sectors in order to align its approach with the European baseline, while retaining the option to go further on specific national priorities.
The decisive question of greenfield investments
The other major evolution concerns the nature of transactions. Historically, the French regime has been designed around the acquisition of control over existing companies, the crossing of voting rights thresholds and certain asset deals. The emerging European line clearly pushes towards ensuring that certain greenfield projects in critical sectors can also be captured by FDI screening.
This is particularly relevant where an investment entails, for example, the creation ex nihilo of a key data infrastructure, the construction of a strategically located industrial plant or the deployment of sensitive facilities in or near critical infrastructure. In all these cases, FDI screening may become a central part of the regulatory analysis.
For companies and investors: more predictability, more files
For French companies and foreign investors, this movement has a dual effect. On the one hand, a shared vocabulary and common baseline criteria should bring greater clarity and predictability to FDI screening across the European Union. On the other hand, the range of transactions potentially in scope will expand: more projects, including greenfield or intra-group restructurings, will need to be assessed through the prism of FDI screening, particularly in technology, energy, defence, data, critical infrastructure and critical raw materials.
In practice, it will no longer be sufficient to ask whether a planned transaction entails crossing a control threshold in a French company already known to be sensitive. It will be necessary to map value chains, data flows, technological partnerships and industrial footprints in order to identify the situations in which this mechanism may be triggered or at least advisable on a precautionary basis.
The strategic role of specialised advisors
In this context, the role of specialised advisors becomes critical. A purely formal or legalistic reading of FDI screening is no longer enough. What is needed is a combination of in-depth understanding of the legal framework, familiarity with the expectations of the competent authorities, mastery of sector-specific issues (defence, space, digital, health, energy, data centres, critical raw materials, etc.) and an ability to structure a credible and constructive dialogue with government.
At Relians, we support companies and investors throughout the entire process: early-stage eligibility analysis, qualification of activities and technologies, economic security risk mapping, preparation of filings, management of exchanges with the French Treasury and design of mitigation commitments when needed. We also help clients anticipate how the revised European framework may affect their future projects, in particular when they involve greenfield investments in sensitive sectors subject to this form of control.
Turning the new framework into a strategic asset
The rise of FDI screening at EU level is neither a temporary fashion nor a reflex of protectionist closure. It reflects a deeper realisation: in a world of heightened rivalry, capital is not always neutral and can become a vector of influence or strategic dependence. For economic actors, the issue is not how to circumvent this tool, but how to integrate this dimension as a fully-fledged parameter of corporate strategy, in France and across Europe, and how to turn compliance with it into a genuine strategic asset rather than a mere constraint.
