From economic security to legal uncertainty: exploring the impact of the FDI screening regulation and foreign subsidies regulation on mergers and acquisitions in the EU

FDI and Economic Growth vs. Security Concerns: Foreign Direct Investment (FDI) plays a significant role in economic growth, but it also raises security concerns for host countries, particularly regarding the public security of strategic sectors like defense, technology, and energy. EU's Strategic Autonomy and Chinese FDI: the European Union's concern over China's increasing outward FDI, particularly from State-Owned Enterprises, has heightened fears of market distortions and security risks in key sectors, fueling the EU's push for protective regulations. Introduction of FDI Screening and Foreign Subsidies Regulations: in response to these concerns, the EU introduced the FDI Screening Regulation and the Foreign Subsidies Regulation to address security risks and competitive distortions, complementing the pre-existing Merger Regulation. Negative Impact on Legal Certainty: although these new regulations strengthen the EU's ability to control foreign investment and to limit distortions to the internal market, they also create additional legal uncertainty for firms pursuing mergers and acquisitions in the EU, potentially deterring future FDI.