EU Commission calls for review of certain outbound investments
Published 11 February 2025
Category: Corporate Regulation
On 15 January 2025, the European Commission issued a recommendation urging EU Member States to review investments out of EU for risks of enabling technology transfers/leakage into third countries (‘outbound investments’). The focus is on transfers of technology or know-how within defined areas of three critical technologies:
- Semiconductors
- Artificial intelligence (AI)
- Quantum technologies
The Commission has expressed concerns that certain outbound investments in these sectors could lead to the transfer of EU technology and know-how to actors in third countries, potentially negatively impacting the economic security of the European Union. The review covers outbound investments by natural or legal persons resident or established in the Union (‘EU investors’) to carry out an economic activity related to the defined areas within these technologies.
Background and Scope and Timeline of the Review
The recommendation builds upon the Joint Communication on European Economic Security Strategy (June 2023) and the White Paper on Outbound Investments (January 2024). It calls on Member States to review outbound investments in the specified technology areas and to assess, together with the Commission, any potential risks and security concerns.
Importantly, the definition of outbound investments under this review is broad. It includes not only mergers, acquisitions and investments but also greenfield investments, joint ventures, and other business arrangements that could result in the transfer of technologies to third countries.
The review will span 15 months, covering both ongoing and past transactions dating back to 1 January 2021.
Member States are asked to provide a progress report by 15 July 2025, and a comprehensive report on their implementation of the recommendation and any risks identified by 30 June 2026.
While the recommendation does not introduce approval requirements for outbound investments – similar to inbound investment screening under the Danish Investment Screening Act – it remains unclear what regulatory measures may follow once the review concludes.
We expect that the Danish Business Authority will be responsible for Denmark’s review. However, details on how the authority will collect information or how the process will be conducted are not yet available.
What this means for Venture Funds
Certain venture fund investments may fall within the scope of the review:
- Direct or indirect investments in the critical technology sectors in third countries will fall within the scope of the review (i) when the investment is linked to certain intangible benefits if the EU investor has expertise or has previously invested in firms disposing of or developing any of the three technology areas or (ii) when the investment is deemed an “acquisition”, which includes obtaining a stake in a company that enables an effective participation in the management or control of the company.
- The review, however, will exclude non-controlling investments that are limited to seeking a return on invested capital.
- As of now, there is no official clarification on how information will be collected. However, it is likely that funds may receive requests for information on past and ongoing outbound investments within the specified review period.
What this means for Companies within the relevant sectors
- EU Companies operating in defined areas of semiconductors, AI, and quantum technologies (or in the supply chain) may also fall under the scope of this review if they have merged, acquired, transferred assets (including intellectual property), entered into joint ventures, or established business operations etc. in third countries within these sectors, potentially resulting in technology or know-how leakage.
- As with venture funds, the Danish Business Authority’s approach to gathering information is not yet clear. It remains to be seen whether companies will be contacted directly or if other sources, such as public records or transaction data, will be used.
Looking ahead
This initiative reflects the EU’s growing focus on economic security and technological sovereignty. Both venture funds and companies operating in these sectors should prepare for potential information requests and monitor updates on how the Danish Business Authority will conduct its review.
At Mazanti-Andersen, we continue to closely monitor these developments and will continue to keep our clients updated on any regulatory changes that may affect their investments and operations.
For more details, please refer to the official press release: European Commission.
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