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If you are planning to invest in data centers in France, there’s one thing you can’t afford to overlook: regulatory approvals.
While merger control may apply, this article will deal specifically with foreign investment and foreign subsidy screenings in France and the EU.
Investment, development and infrastructure
Why data centers are in the spotlight
France is positioning itself as a key player in the global competition for artificial intelligence (AI) infrastructure. The French President announced during the ‘National AI Action Summit’ on February 10, 2025 that it was seeking to attract €109 billion in private investment for AI-related infrastructure. Central to this investment effort are data centers, which support advanced machine learning and large language models.
International investors have responded quickly, with commitments in the hundreds of millions of euros from companies based out of Japan, the United States and the United Arab Emirates. However, the government’s commitment does not exempt companies from applicable regulatory obligations. The following tips will help you determine whether these obligations apply to your situation.
Am I investing in a sensitive activity?
Concerns are growing in Europe about the impact that certain foreign acquisitions may have on security and public order.
To address these concerns, the European Union in 2019 set up a framework for the screening of foreign direct investments (FDI) into the EU, to make sure the European Union is better equipped to identify, assess and mitigate potential risks to security or public order (see EU Commission fact sheet).
France also relies on its national FDI screening mechanism, which triggers a mandatory notification to the French Ministry of the Economy. The investment cannot proceed until approval is granted.
The French FDI regime is triggered when four conditions are met:
- The investor is classified as “foreign”; that is, a member of its chain of control is established outside of France.
- The investment involves a French entity or activity.
- The investment exceeds certain thresholds (acquisition of control, 25% or more of voting rights by a non-EU investor, or 10% or more of voting rights in a listed company by a non-EU investor).
- The investment is carried out in a sensitive sector.
Investments in the data center ecosystem may be considered as carried out in a sensitive sector under the French FDI regime for several reasons, including if they target:
- Storage of sensitive data. If a data center supports public services – such as health care, government or utilities – it may be considered critical.
- Infrastructure crucial to national resilience. This covers electronic communications systems and energy continuity. Data centers that incorporate features like high-voltage grid connections or heat reuse technology may meet this threshold.
- R&D connected to critical technologies. A 2019 decree lists “critical technologies,” such as semiconductors, as areas subject to oversight. Because AI infrastructure often relies on components like GPUs, ASICs and advanced memory, operators involved in R&D or partnerships in these areas may also trigger regulatory review.
Has a party to the transaction benefited from foreign subsidies?
Foreign investors should also be mindful of additional European-level scrutiny, particularly under the EU Foreign Subsidies Regulation (FSR) of December 2022, which came into full effect in 2023.
This regulation introduces procedural tools, including two mandatory notification mechanisms:
- In mergers involving foreign financial contributions granted by non-EU governments, where the acquired company, one of the merging parties or the joint venture generates an EU turnover of at least €500 million and the parties were granted foreign financial contributions of more than €50 million in the last three years preceding the transaction.
- In public procurement procedures involving foreign financial contributions by non-EU governments, where the estimated contract value is at least €250 million and the bid involves a foreign financial contribution of at least €4 million per third country in the three years prior to the transaction.
A key difficulty in this regime lies within the broad nature of foreign financial contributions, which may include direct as well as indirect contributions from public bodies and related entities, including tax exemptions or incentives, grants, interest-free or low-interest loans, state-funded R&D, government contracts and more.
For instance, in the case of a public tender launched by a local authority for the construction of a data center at a cost over €250 million, the submission made by a foreign state-controlled telecom company could trigger an FSR screening.