FDI – comprehensive investment screening reform

2026 is likely to become a landmark year for investment screening – at EU and national level. With the revision of the EU Regulation establishing a framework for the screening of foreign direct investments into the Union (“EU Screening Regulation”), the first comprehensive amendment since the introduction of the regulation is about to be finalised. At the same time, the German government is planning a new Investment Screening Act that will implement the EU reforms and modernise the German investment screening regime.

Revisions of the EU Screening Regulation

Following the publication of the first reform proposal for the EU Screening Regulation in early 2024, the European Commission entered into trilogue negotiations. On 11 December 2025, the Council of the European Union and the European Parliament reached a provisional political agreement (Noerr Insights).

The reform aims to harmonise investment screening regimes across the EU, close security-related gaps and, at the same time, preserve openness to global trade and international investment. Under the agreement reached, exclusive responsibility for screening decisions will remain with the respective member states. Another key element is the mandatory introduction of an investment screening mechanism covering, at a minimum, foreign investments in the following areas: (i) dual-use items and military equipment, (ii) hyper-critical technologies, (iii) critical raw materials, (iv) critical entities in the energy, transport and digital infrastructure sectors, (v) electoral infrastructure and (vi) certain financial system facilities. To prevent circumvention, the scope of application also extends to investments by subsidiaries of foreign investors based in the EU. In addition, the cooperation and information mechanisms between the member states and the European Commission will be further strengthened and operational procedural aspects will be streamlined.

The provisional agreement requires formal approval by the European Council and the European Parliament before being formally adopted.

German Investment Screening Act

After the last federal government unsuccessfully sought a new, independent investment screening act, the new government is planning to prepare a draft bill for 2026 which is intended to implement the reforms of the EU Screening Regulation. In addition, the rules on asset deals and atypical acquisitions of control are to be defined in more detail, intra-group restructurings are to be uniformly privileged, and case groups are to be removed or revised.

FDI enforcement in 2025

The cases discussed in public in 2025 illustrate the increasing relevance of investment screening for security of supplies and geostrategic stability:

Nexperia: In autumn 2025, the Dutch government temporarily took control of the semiconductor manufacturer – and relinquished it again following Chinese export restrictions in order to prevent supply shortages for the European automotive industry.

Covestro: After certain concerns were settled, the German Federal Ministry for Economic Affairs and Energy (the “BMWE”) cleared the takeover of the leading polymer materials manufacturer Covestro by XRG, a subsidiary of the state-owned Abu Dhabi National Oil Company.

Open Grid Europe: In contrast, the investment by Italian grid operator Snam in the long-distance gas grid operator Open Grid Europe failed due to concerns of the BMWE regarding the indirect shareholding by Chinese grid operator State Grid.

2026 is therefore likely to become a year in which the framework for investment screening will be redefined.

This article is part of the Competition Outlook 2026. You can find all Competition Outlook articles here.