This presentation by Ignacio MEZQUITA PÉREZ-ANDÚJAR, Deputy Director General of Foreign Investments at the MINCOTUR Secretary of State for Commerce, was made during the discussion “The Relationship between FDI Screening and Merger Control Reviews” held at the 139th meeting of the OECD Competition Committee on 30 November 2022. More papers and presentations on the topic can be found out at https://oe.cd/fdimc

1. FDI screening and merger control
Ignacio Mezquita
OECD Competition Committee meeting. 30 November 2022.

2. Some preliminar considerations on FDI screening
1. The context: ¿How to handle increasing geopolitical tensions that have come to stay?
a. EU´s Open Strategic Autonomy: “cooperating multilaterally wherever we can, acting
autonomously wherever we must”: FDI screening, IPI, Anti coercion, anti subsidies, CBAM…
b. Regulation 452/2019: There was no comprehensive framework at EU level for the FDI
screening on the grounds of security or public order, while our major trading partners had
already developed such tool. Goals: legal certainty, guiding list of factors to take into
consideration, cooperation, procedural predictability, proper handling of information …
2. Last resort instrument and the handling of regulatory overlaps (i.e. prudential issues, data
protection or, in particular, competition):
3. Nature of the test: Impact of threats and vulnerabilites on security or public order Vs impact on
effective competition

3. Overlaps in FDI screening and merger control
The field in which the investment takes
place:
• Critical infrastructures
• Critical technologies and dual use items
• Supply of critical inputs
• Access to sensitive information
• Freedom and pluralism of media
The features of the investor to be considered:
• Control by the government, including state bodies
or armed forces, of a third country, including
through ownership structure or significant funding;
• Previous involvement in activities affecting
security or public order in a Member State;
• Serious risk that the foreign investor engages in
illegal or criminal activities
Most of screened FDI transactions under the EU exchange mechanism are cleared with no
mitigating measures. In Spain:
 There has only been 1 FDI prohibition. It was not subject to Merger control
 9% of screened FDI transactions where authorised subject to mitigating measures
 Only half of these were also subject to merger control, but none of them required
competition remedies

4. Merger control and FDI screening practices
1. The idea of control and the definition of the ultimate investor and of the target itself: direct
investment and the 10% threshold, ultimate investor, public control, FDI as ownership or the right
to use all or part of the assets of an undertaking, etc.
2. Analytical categories: market position, alternatives available to users, market foreclosure,
essential facilities, etc.
3. Anti-subsidy Regulation as FDI screening procedure: in the absence of rules to address the
distortive effects of foreign subsidies on the internal market, this regulation will specifically tackle
the distortions to the level playing field caused by subsidized FDI
4. Remedies: “screening mechanism is an instrument of general application to assess, investigate,
authorise, condition, prohibit or unwind foreign direct investments on grounds of security or public
order”. The Commission notice on remedies and NCAs experience may inspire principles,
substance and procedures

5. Merger control and FDI screening practices
5. Transparency & predictability: competition authorities have reached high standards in these fields.
There is substantial room for improvement in FDI screening, but some considerations to be made:
• The nature of the information handled and of the assessments made
• Legal restrictions
• Greater leeway to advance in procedural than in substantive issues
6. Room for international cooperation: again competition netwoks and practices outdo those regarding FDI
screening. When it comes to FDI Screening:
• Within the EU: it is a new tool (not deployed yet in every MS and subject to assessment) . Cooperation
mechanisms , exchanges regarding projects or programmes of EU interest, Contact Points and Group of
Experts. Ongoing analysis on potential improvements.
• With non EU countries: “Member States and the Commission may cooperate with the responsible
authorities of third countries on issues relating to the screening of foreign direct investments on grounds
of security and public order” (i.e.EU-US Trade and Technology Council or bilateral seminars)

6. FDI screening and merger control
Thank you