On 15 January 2025, the European Commission (“Commission”) issued a recommendation1 on reviewing investments in Non-EU countries in technology areas deemed critical for the economic security of the European Union. The Commission calls on the Member States to introduce national screening regimes for the review of investments by EU investors in third countries (“Outbound Investments”) in certain key technology areas. The aim of the recommended mechanism is to identify and assess potential security risks and loopholes in the EU’s existing strategies with regard to Outbound Investments. The EU rules currently only provide for a framework of review by the Member States for investments by foreign investors in European target companies (“Inbound Investments”) in the context of Foreign Direct Investment (“FDI”) control. The national provisions based on the recommendation are initially to be implemented by the Member States for the term of 15 months and shall be evaluated afterwards. Investments made after 1 January 2021 may be reviewed retrospectively while investments “of particular concern” may be reviewed even further back in time.
The recommendation is part of the Commission’s efforts to implement the European Economic Security Strategy.2 Its purpose is to secure supply chains, critical infrastructures and technologies as well as to prevent economic dependencies and the outflow of know-how to third countries. The technology areas that shall be reviewed by the Member States are advanced semiconductor technologies, artificial intelligence and quantum technologies (“Key Technologies”, see Section 1 (a) to (c) of the recommendation).
In the Commission’s view, these Key Technology areas are associated with “the most sensitive and immediate risks” to security and a possible outflow of technology. They are of fundamental transformative importance for the modern life and their potential can be used for civil and military applications. While advanced semiconductors are used in electronic devices in all critical areas (e.g. communications, health, transportation, defense and space), artificial intelligence is already crucial for processing and analyzing large amounts of data, including making decisions and predictions for the future. In contrast, the full potential of possible future quantum technologies and the associated consequences cannot be fully assessed, yet.3
The national provisions to be introduced by the Member States for the review of Outbound Investments relate to the screening of
The list of investments that shall be covered by the national provisions have been openly defined by the Commission. They explicitly include the following transactions that would be covered by merger control rules as well: acquisition of control over a company, mergers and the formation of a joint venture (by pooling resources). The relevant test for the acquisition refers to individual companies only – unlike in merger control. Additionally, the following unilateral conducts by a company in a third country should trigger a review:
As the definition of the term “investment” refers to individual companies only, the test of a covered investment also extends to all indirect investments by an EU investor as well as to possible circumvention constellations. Consequently, investments by EU investors are also covered if they are implemented by an existing subsidiary that is already located in a third country. Mere minority shareholdings as well as certain banking and securities transactions should be generally excluded from the review.
The Commission leaves it up to the Member States to decide whether the implemented national provisions for the review of Outbound Investments will be associated with voluntary or mandatory notifications (whereby no standstill obligations are currently on the table). Additionally, the Member States may implement the new review in “existing mechanisms”. This could, for example, refer to the Member State’s national FDI control regimes.4 Those are currently more or less based (without binding effect) on the Regulation (EU) 2019/4525 establishing a framework for the screening of foreign direct investments into the EU (“FDI-Screening-Regulation“). Last year, the Commission already presented a revised draft of the FDI-Screening-Regulation that includes – for the first time – the implementation of mandatory notification obligations within the FDI control regimes of the Member States.6
As part of the review mechanism for Outbound Investments the Member States shall request information on the parties concerned, the relevant goods, services and technologies, as well as regarding possible agreements concerning R&D and IP rights, key personnel, other transactions and received subsidies.
Within the material test, the Commission recommends that the Member States shall carry out an assessment of the possible risks to economic security by the respective investment “with the support of the Commission”. The scope of review refers to possible implications for existing EU projects and programs and technology leakages. Relevant criteria shall be, e.g., the availability of Key Technologies (including current R&D-activities), the assessment of the relevant value and supply chain, and the degree of global interconnectivity in the relevant ecosystem. If any relevant risks have been identified in an individual case, the Member States shall intervene within their framework of existing instruments (e.g., national export control mechanisms).
Following the example of the mechanism introduced in the US in 2024 to review Outbound Investments by US companies in China, the Commission’s recommendation paves the way for a uniform action within the EU in this regard. In contrast to the US approach, the review of Outbound Investments by the Member States shall be “country-neutral“. However, according to the Commission, Member States are free to prioritize certain countries on the basis of risk profiles.
The recommendation addresses a previously open “flank” alongside the existing national FDI control regimes. It cannot be ruled out that the Member States will already implement, beyond the Commission’s recommendation, intervention measures within the scope of their regulatory powers for the event of actual concerns with regard to the outflow of technology. Respective activities of European companies abroad, e.g. through local branches, joint ventures or cooperations, as well as the corresponding organic growth of companies in third countries, have so far not been monitored under EU regulations.
Depending on the outcome of the evaluation of the Commission’s initiative, a future binding legislative act at EU level and the extension to other technologies also seems likely. For example, biotechnologies could be covered in the future, which, in addition to the already implemented Key Technologies, were also con-sidered particularly critical by the Commission in the previously cited recommendations from 2023. In its “Joint White Papers for European Defense Readiness 2030”, the Commission also recently identified robotics and hypersonic technologies as crucial elements for long-term economic growth and military superiority.7 In the USA, there are currently similar considerations regarding the addition of further technologies, e.g., with regard to advanced manufacturing technologies, directed energy and space technologies. We will certainly keep you updated on any new developments.
This publication is intended to highlight issues. It is not intended to be comprehensive nor to provide legal advice. Any liability which might arise from the reliance on the information is excluded.
Connect with us and stay informed. 
