Screening mechanism should protect while ensuring favourable investment market in the EU

The European Commission, the European Parliament and the European Council recently finalised their trilogue negotiations on the framework for screening foreign direct investment. The proposal is a reaction to the situation where foreign investors have been more intensively involved in investing into strategic European companies in crucial sectors.

According to a survey carried out by Czech business organizations, almost two thirds of Czech companies welcomed the proposal, while almost 20 percent of those questioned expressed concern. 75 percent didn’t come across an investor with a non-transparent structure. Czech companies mainly hope that the proposal would be beneficial for strategic industrial sectors in the Czech Republic, would limit the unfair trading practices of some investors and would create a level playing field.

On the other hand, the majority of those questioned expressed worries about slowing down the process of investment and increasing the administrative burden in relation to the process of screening. In addition, certain companies worried about the misuse of sensitive company data and an increase of protectionism.

Czech business organisations therefore welcome that the negotiated text keeps balance between the Member States’ right to regulate and a favourable investment environment. Another positive outcome of the negotiations is that there won’t be any new EU authority in charge of screening of the investment. The main focus of the framework has to be to maintain a favourable investment environment in the EU while protecting strategic interests of EU Member States. In addition, the investment procedure should not be slowed down by excessive administrative burden.