8
SPECIAL ISSUE NO. 4
MAY 2020
IPM
Already before the outbreak of the pandemic, according to UNCTAD’s count, at least 29 countries had a
specific FDI screening mechanism in place.
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In responding to the pandemic, additional investment policy
measures have been implemented.
For instance, in Spain, the FDI liberalization regime has been suspended.
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The underlying Royal Decree-
Law 8/2020 explains that the pandemic "poses a certain threat to listed Spanish companies, but also to
unlisted Spanish companies that are seeing their equity value decline, many of them in strategic sectors
of our economy" and that such companies have become an easy target of foreign takeovers, which poses
certain risks for public order, public safety and public health. Consequently, in numerous sectors, an ex
ante governmental approval is required for the acquisition of 10% or more of stock.
34
Other countries have strengthened their screening mechanisms or have taken other action in this respect:
In Australia, for example, the monetary screening threshold for all foreign investments has been
temporarily lowered to zero to “protect Australia’s national interest” thus now covering all foreign
acquisitions.
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Likewise, the time frame for the screening procedures has been extended from 30
days to 6 months.
In the same vein, the Italian Government strengthened its special powers in sectors of strategic
importance by expanding the scope of FDI screening to the financial, credit and insurance sector
and temporarily applying it also in relation to foreign acquisitions from within the European Union.
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The Government is also authorized to initiate relevant procedures ex officio, even if a foreign
acquisition is not notified as prescribed by law.
On 18 April 2020, the Canadian Government published its Policy Statement on Foreign Investment
Review and COVID-19, which announced “enhanced scrutiny” of “foreign direct investments of
any value, controlling or non-controlling, in Canadian businesses that are related to public health
or involved in the supply of critical goods and services to Canadians or to the Government”.
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This
measure is a response to “opportunistic investment behaviour” caused by declines in valuations
of Canadian businesses as well as by investment of State-owned enterprises that “may be
motivated by non-commercial imperatives that could harm Canada’s economic or national
security interests, a risk that is amplified in the current context”. The new policy will apply until
economic recovery from the COVID-19 pandemic.
At the regional level, on 25 March 2020, the European Commission issued a Guidance to Member
States urging them to “make full use” of existing FDI screening mechanisms “to take fully into
account the risks to critical health infrastructures, supply of critical inputs, and other critical
sectors” or “to set up a full-fledged screening mechanism”, if a Member State does not already
have one in place.
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The reason behind these guidelines is to adequately respond to “an increased
risk of attempts to acquire healthcare capacities (for example for the productions of medical or
protective equipment) or related industries such as research establishments (e.g. developing
vaccines) via foreign direct investment” during the COVID-19 pandemic. Thus, “vigilance is
required to ensure that any such FDI does not have a harmful impact on the EU’s capacity to cover
the health needs of its citizens”.
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https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2582
33
Real Decreto-ley 8/2020, de 17 de marzo, de medidas urgentes extraordinarias para hacer frente al impacto económico y social del COVID-19 and Real
Decreto-ley 11/2020, de 31 de marzo, por el que se adoptan medidas urgentes complementarias en el ámbito social y económico para hacer frente al COVID-
19. The latter provides some additional amendments to the FDI screening regime introduced by the former. In particular, it specifies that EU resident firms
controlled at least 25% by non-EU entities are also considered foreign investors for investment screening purposes.
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These sectors include i) critical infrastructure (energy, transport, water, health, communications, media, data treatment or storage, aerospace, defence, election
or finance, and sensitive facilities); ii) critical technologies and dual-use products, including artificial intelligence, robotics, semiconductors, cybersecurity,
aerospace technologies, defence, energy storage, quantum and nuclear technologies, as well as nanotechnologies and biotechnologies; iii) supply of fundamental
inputs, in particular energy or those related to raw materials, as well as food security; iv) sectors with access to sensitive information, particularly personal data,
or with the ability to control such information; and v) media.
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https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/changes-foreign-investment-framework
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Decreto-Legge 8 aprile 2020, n. 23 Misure urgenti in materia di accesso al credito e di adempimenti fiscali per le imprese, di poteri speciali nei settori strategici,
nonche' interventi in materia di salute e lavoro, di proroga di termini amministrativi e processuali. (20G00043)
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https://www.ic.gc.ca/eic/site/ica-lic.nsf/eng/lk81224.html
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https://ec.europa.eu/commission/presscorner/detail/en/ip_20_528