Reed Smith Client Alerts

Key takeaways

  • EC urges EU Member States to review outbound investments in semiconductors, AI and quantum technologies to assess risks to EU’s economic security
  • Reviews apply retroactively to transactions since 1 January 2021, with Member States required to report risk assessments to the EC by 30 June 2026
  • Potential EU-wide controls could increase regulatory scrutiny of outbound investments in the future, in addition to existing merger control and FDI scrutiny, impacting international M&A

Background

On 15 January 2025, the European Commission (EC) issued a non-binding recommendation calling on Member States to review outbound investments in three technology areas critical to the EU’s economic security: semiconductors, AI and quantum technologies. The EC’s recommendation follows a public consultation that highlighted the need for a systematic review of outbound investments and emphasises the importance of assessing risks associated with such investments to prevent technology leakage that could undermine the EU’s security.

This recommendation is part of the broader EU Economic Security Package, launched in January 2024, which is aimed at safeguarding the EU’s technological leadership and economic security amidst rising geopolitical tensions and profound technological shifts. This strategy also includes revisions to the EU’s Foreign Direct Investment Screening Regulation and recommendations on improving export control rules. Outbound investment review rules have been in effect in the U.S. since the start of January 2025, while the UK is currently exploring whether to implement a system for the active screening of outbound investments.

This client alert provides an overview of the EC’s recommendation and its implications for businesses and individuals engaged in the relevant technology areas.