FDI Screening in 2025–2026: A 360° EU–France–US Outlook on the latest FDI Developments Impacting Global M&A

Mayer Brown hosted a luncheon program on the fast‑evolving landscape of foreign direct investment (FDI) screening and adjacent regimes across the European Union (EU), France, and the United States.

The event offered a 360° view from regulators and deal practitioners from across the EU, France, and the United States.

Our panelists shared practical insights on existing FDI tools, the main changes and challenges ahead, and their implications for global business operations and M&A activities.

KEY TAKEAWAYS

1. EU reform of FDI screening: expect more coverage, more coordination and more convergence possibly by 2027

• Increased coverage: all EU Member States ultimately agreed to screen a minimum common list of sensitive sectors, as well as intra-EU deals with investors controlled by non-EU investors
• Increased cooperation: while Member States will retain the final say on investments in their country, they will have the ability to consider the Commission’s or other Member States’ concerns and to impose remedies to address them
• Harmonization of procedures and possible single filing portal: two-phase review periods to become the norm, with the possibility for the Commission to create an optional single electronic notification portal. These improvements should foster collaboration among EU FDI authorities, with a view to make multijurisdictional filings to EU-Member States FDI authorities easier, while allowing the Commission to monitor serial-investments in different targets in the same sector across various Member States.
• Increased transparency: each EU FDI Authority to give investors an opportunity to respond to any alleged adverse effects before taking a final decision.

2. Anticipating FDI-related risks as an investor

• A core execution risk impacting investment strategy and value: in an ever-growing regulatory environment, FDI theories of harm and remedies can be difficult to anticipate. FDI reviews are often opaque and sensitive to geopolitical context, national security priorities, and sectoral exposure. This makes outcomes less predictable and mitigation harder to pre‑price, especially where it impacts a target’s core operations or governance. That can change the value story post‑completion and should be reflected in diligence, valuation modeling, and integration planning.
• Assessing requirements under tight deadlines: Investors need clarity on how FDI filing requirements may impact their timeline, but the diversity, complexity and breadth of the regimes make it difficult to run a full FDI reportability analysis within the very tight deadlines (especially in competitive bids), which rarely allow for pre‑filing dialogue with authorities. Yet FDI review can drive the critical path. The challenge is to produce a robust reportability and risk analysis quickly and build credible, evidence‑based timetables into the bid, even when official guidance is thin.
• Negotiating the allocation of FDI risk. Long‑stop dates, reverse break fees, and the scope of “hell or high water” undertakings are increasingly central. Both pressure from sellers for stronger execution commitments and buyers resistance to open‑ended mitigation obligations are stronger in FDI due to lack of predictability. Bridging this gap often calls for carefully tiered obligations, targeted cooperation covenants, and pre‑agreed parameters around what may constitute acceptable remedies.

3. FDI authorities are taking steps to offer increased predictability

• EU – Commission to issue guidelines: Commission to take the opportunity of the creation of a common minimum scope to issue guidelines on how to assess EU FDI provisions consistently across the European Union, which should increase both harmonization and predictability. Guidance should also be given on the interplay between national FDI regimes and the EU Treaty.
• France – tailored intervention in case of potential threats: while they are frequent, Phase 2 reviews are generally for cases where remedies are likely. The French FDI Unit actively engages with the parties and maintains updated guidelines and an open‑door policy for informal consultations (c.1-2 months), alongside a streamlined prior‑opinion process. Where timing allows, early outreach can materially shape the review path.
• United States: steady scrutiny with sectoral hotspots. Transactions involving trusted‑ally investors may see fewer mitigation where risks are well‑bounded and faster reviews, but deals touching traditionally sensitive areas—energy and grid access, cybersecurity, semiconductors, AI, data‑rich assets, and supply chain resilience—should assume closer review. Election cycles, state‑level political exposure, and national security developments can tighten oversight around the margins.

4. Imposition of remedies: a proportionality exercise tied to specific sensitive assets

• In France, remedies are much more frequent than in most other countries: half of FDI approvals are given conditionally in Phase 2, but the type of conditions to be expected is now more predictable
• The French FDI Unit aims for proportionality and tailoring through close engagement with the parties to find adequate, targeted and manageable measures, e.g.:
  • Retaining sensitive activities and IP: to preserve capacities on French soil, and ensure an ability to screen future transactions involving the same activities, the French FDI Unit can require that the activities and/or related IP remain in France and held by a French legal entity
  • Reporting and corporate governance requirements: to keep an eye on sensitive activities, reporting requirements are generally imposed and the French FDI Unit can also in some cases require the creation of a security risk committee that includes a French representative with special rights.
• Decrease in US mitigation measures : the Trump administration is imposing less remedies in recent transactions. It has also reduced the burden of existing mitigation measures (e.g. by amending periodicity of reporting obligations after clean compliance histories).

5. Outbound investments, the new kid on the block?

• US – starting the learning curve: New regime restricts or requires notification for US outbound investments by US persons in Chinese companies (incl. their US subsidiaries) active in semiconductors, AI and quantum technologies. Ripple effects are starting to show up in financial covenants and risk allocation.
• EU and France – activating the assess, see and act mode: Both the Commission and other Member States (including France) are currently assessing the opportunity to start filtering outbound investments (in limited sectors, in particular semiconductors, AI and quantum technologies) – with the main concern being technology leakage. Expect more clarity by mid-2026 on the need, and if need be the best tools; to review EU outbound investments.