Screening of FDI – Dutch developments (part I)

By Brian Mulier, Goran Danilovic, Dick Ignacio

06-2020

The Dutch Minister of Economic Affairs announced that the Netherlands will introduce FDI screening for foreign direct investments in sensitive sectors in order to safeguard the national security. The Netherlands introduced earlier this year legislation for ex-ante as well as ex-post investment screening which is limited to the telecom sector. 

The new FDI screening mechanism for sensitive sectors is to be designed to prevent (ex-ante) or prohibit and unwind (ex-post) a merger or acquisition of (parts of) a business that is deemed contrary to the Dutch national security. Screening will cover mergers and acquisitions finalised on or after 2 June 2020, and hence, the new – still to be adopted – FDI screening mechanism will have retroactive effect. 

Sensitive sectors subject to future FDI screening will cover the following types of businesses: 

  • companies active in military or dual-use related industries 

    Military or dual-use (e.g. certain drones, surveillance products, laser or navigation equipment) products are subject to an export licence prior to the export from the EU. Companies active in the manufacturing, trade or export of military or dual-use products are explicitly mentioned as being part of sensitive sectors that will be subject to the future Dutch FDI screening mechanism. 

  • suppliers in essential processes or infrastructure

    Suppliers in essential processes or infrastructure are – amongst others – to be considered as active in the energy, nuclear or financial services sector.

By introducing FDI screening for several sensitive sectors, the new Dutch FDI screening system aligns with the FDI screening systems of various other EU Member States and is to be regarded as a step towards strategic protection of the national security as recommended by European Commission guidance and the earlier introduced EU FDI screening mechanism.  

We are of course tracking the legislative process once started and will report on any relevant progress in part II.