Gotta Catch 'Em All: Extending The Scope Of The Romanian FDI Screening Regime To EU Investors And Below-Control Acquisitions

• Published date: 12 December 2023
• Subject Matter: Government, Public Sector, Inward/ Foreign Investment
• Law Firm: Kinstellar
• Author: Mr Iustinian Captariu and Catalin Graure

December 2023 - A little over one year since Romania's new foreign direct investment ("FDI") screening regime (that we previously wrote about here and here) became fully operational, the Romanian government passed an emergency ordinance meant to further clarify particular aspects under the law (such as the scope of the screening regime, which is further extended) or to translate into law the lessons learnt or the authorities' reading of the rules since applying the new FDI law.

The new changes to the FDI law were introduced by Government Emergency Ordinance no. 108/2023 on amending the supplementing Competition Law no. 21/1996, as well as other normative acts (the "FDI Amendment Law", published in the Official Gazette on 6 December 2023. The new law also aims to transpose under Romanian law some remaining aspects in the ECN+ Directive (please see our comments on the newly introduced competition law changes here) and to further strengthen the investigative powers of the Romanian Competition Council ("RCC"). The RCC is also the authority in charge of formally issuing FDI clearances for no-issue cases, whereas the FDI screening itself is conducted by a separate body under the government's authority, i.e., the FDI Screening Commission ("CEISD").

With the latest changes to the FDI screening regime, the Romanian authorities have reconfirmed their overly cautious approach in terms of assessing and reviewing investments with a local nexus. The previous wording in the FDI law dealing with EU investors that was very ambiguous and led to heated debate and uncertainty on the market as to the scope of screening has now been clarified and made clear that EU investors (including Romanian investors) fall under the scope of FDI screening. At the same time, and in line with the authorities' position that screening would not come as too much of a burden for investors (in a balanced approach between private and national security interests), the FDI Amendment Law hints towards an expedited process for EU investors. This all comes in the aftermath of the Xella decision of the European Court of Justice, where some clear boundaries were set as to the Member States' ability to restrict investments and the interplay between FDI screening and EU law (particularly the freedom of establishment). In this regard, there have also been voices arguing that the local screening of EU investments itself could be perceived as disproportionate and amounting to some form of obstruction of the...