The Disciplines of M&A
A different question from antitrust, before a different agency, on a different clock — and in several jurisdictions it reaches back years after closing.
Foreign investment screening — also called national security review or foreign direct investment (FDI) control — is the body of law under which a state examines, conditions or blocks the acquisition of domestic assets by foreign persons on grounds of security or public order. Alongside merger control it is one of two systematic regulatory gates through which cross-border M&A must pass, and in sensitive sectors it is often the binding constraint on deal timing.
Foreign investment screening: fifteen regimes, no common shape
| Jurisdiction | Regime | Character | Clock |
|---|---|---|---|
| United States | CFIUS under Section 721 Defense Production Act, as amended by FIRRMA 2018 | Voluntary | Declaration 30 calendar days; notice 45-day review, 45-day investigation, 15-day presidential decision |
| United Kingdom | National Security and Investment Act 2021, in force 4 January 2022 | Mandatory · 17 sectors · 5-yr look-back | 30 working days from acceptance; if called in, 30 working days extendable by a further 45 |
| European Union | Regulation (EU) 2019/452 cooperation mechanism; no Commission power to approve or block | Voluntary | 15 calendar days to indicate interest; 35 calendar days for comments or an opinion |
| European Union | Replacement Regulation adopted 8 June 2026; applies 18 months after entry into force | Mandatory · 5-yr look-back | Harmonised initial review of 45 calendar days; own-initiative windows of at least 15 months |
| Germany | Foreign Trade and Payments Act (AWG) and Ordinance (AWV) | Mandatory | Pre-examination two months; formal review four months, extendable |
| France | Article L.151-3 Code monetaire et financier, Bercy screening | Mandatory | Phase 1 30 working days; Phase 2 a further 45 |
| Italy | Golden power regime established 2012 | Mandatory | Filing due within 10 days of a binding agreement; review 45 business days |
| Spain | Article 7 bis Law 19/2003, Royal Decree 571/2023 in force 1 September 2023 | Mandatory | Maximum decision period three months |
| Poland | 2020 regime overseen by UOKiK, supplementing a 2015 statute | Mandatory | Preliminary phase 30 business days; a further 120 calendar days if control proceedings open |
| China | Measures for the Security Review of Foreign Investment, effective 18 January 2021 (NDRC office) | Mandatory | 15 working days preliminary, 30 working days general, 60 working days special review |
| Japan | Foreign Exchange and Foreign Trade Act; 2019 amendment effective 2020 | Mandatory | 30 calendar days, shortenable to two weeks and extendable to five months |
| Australia | Foreign Acquisitions and Takeovers Act 1975; zero-dollar threshold for national security | Mandatory | Not stated in source; Treasurer holds call-in power while the asset remains foreign-owned |
| Canada | Investment Canada Act: net benefit review plus threshold-free national security review | Mandatory | Not stated in source; national security guidelines updated 5 March 2025 |
| India | Press Note 3 of 2020: approval for investors from land-border countries, any sector or size | Mandatory | Not stated in source |
| United States | Outbound Investment Security Program, effective 2 January 2025 (China, Hong Kong, Macau) | Mandatory · 3 sectors | Notification due within 30 days of completion |
Merger control asks whether a transaction would substantially lessen competition in a defined market. A competition authority applies an economic test subject to judicial review, and the remedy is structural: divest an overlap so the market retains an independent competitor.
Screening asks whether the acquirer's identity, and the control or access the deal confers, creates a national security risk. Nationality is dispositive in a way it never is in competition analysis: the same acquisition by a domestic buyer is usually outside the regime entirely. The decision-maker is typically an interagency executive body or a ministry with intelligence input; the standard is a broad, often statutorily undefined "national security" or "public order" test; and the remedy is behavioural and continuing — governance restrictions, security officers, data controls, supply commitments — rather than divestiture. Judicial review is narrow, and in several regimes the final decision is expressly political.
The Committee on Foreign Investment in the United States operates under Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. § 4565). The power to suspend or prohibit was added by the Exon-Florio amendment in 1988; the Foreign Investment and National Security Act of 2007 placed the Treasury-chaired Committee on a statutory footing. The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) was the most comprehensive revision since 2007, extending jurisdiction beyond control transactions to certain non-controlling investments and to certain real estate.
Under 31 C.F.R. Part 800, a "covered transaction" includes a covered control transaction — any transaction that could result in foreign control of a U.S. business — and a covered investment: a non-controlling investment in an unaffiliated TID U.S. business affording access to material non-public technical information, board or observer rights, or involvement in substantive decision-making. A TID U.S. business produces, designs or develops critical technologies; performs specified functions in relation to covered investment critical infrastructure; or maintains sensitive personal data on U.S. citizens. Critical technologies are defined by cross-reference to export control lists — the Munitions List, the Commerce Control List, nuclear items, and controlled emerging and foundational technologies.
Covered real estate is regulated separately under Part 802 and turns on location: purchases and leases in or around specified ports and within defined distances of identified military installations.
Most filings are voluntary. Two mandatory declaration categories exist: acquisition of a 25 percent or greater voting interest in a TID U.S. business by an entity in which a single foreign government holds a 49 percent or greater voting interest; and certain critical technology investments where a U.S. authorisation would be required to export the relevant technology to the investor.
The clock is the 45/45/15 sequence. A short-form declaration carries a 30-calendar-day assessment, after which CFIUS may clear, decline to conclude action, or request a full notice. A notice triggers a 45-calendar-day review, which may be followed by a 45-calendar-day investigation and then a 15-calendar-day presidential decision period.
CFIUS may clear, negotiate mitigation, or refer the matter to the President, who alone may suspend or prohibit on a finding of credible evidence of a threat to national security. The block is rare — CRS records eleven prohibitions in the regime's history — because parties usually withdraw rather than force a referral. In CY2024, 116 declarations and 209 notices were filed; 49 notices were withdrawn after an investigation commenced, of which 42 were refiled and 7 abandoned; and mitigation was adopted for 25 notices, about 12 percent of filings.
Treasury's final rule, effective 26 December 2024, raised the maximum civil penalty for material misstatements and omissions from $250,000 to $5 million per violation; set the penalty for failing to file a mandatory declaration at $5 million or the transaction value, whichever is greater; and set the penalty for breaching a mitigation agreement at $5 million per violation or, if greater, the transaction value or the value of the violator's interest.
The United States is unusual in also screening outbound capital. Treasury's Outbound Investment Security Program, made under the Executive Order of 9 August 2023 and effective 2 January 2025, applies to U.S. persons investing in covered foreign persons connected to China, Hong Kong or Macau in semiconductors and microelectronics, quantum information technologies, and artificial intelligence.
Transactions are prohibited or notifiable. Prohibited activity includes electronic design automation software, advanced fabrication and packaging tooling, advanced integrated circuit design and fabrication, supercomputers, quantum computing, sensing and networking, and AI systems designed exclusively for specified military, intelligence, surveillance or cyber end-uses. Notifiable activity includes other integrated circuit work and AI systems meeting defined compute thresholds. Notification is due within 30 days of completion. Exceptions cover publicly traded securities, qualifying limited partner interests in non-U.S. funds, derivatives and secondary purchases. Enforcement runs through the International Emergency Economic Powers Act.
Broadcom / Qualcomm (2018). On 12 March 2018 the President prohibited Singapore-domiciled Broadcom's proposed takeover of Qualcomm under Section 721, barred all fifteen Broadcom-nominated director candidates from standing for election, and ordered permanent abandonment.
Ant Financial / MoneyGram (2018). On 2 January 2018 MoneyGram announced termination of its amended merger agreement with Ant Financial, at $18.00 per share in cash, "following the inability of the companies to obtain the required approval for the transaction from the Committee on Foreign Investment in the United States, despite extensive efforts to address the Committee's concerns." Ant paid a $30 million termination fee.
Nippon Steel / U.S. Steel (2023-2025). Nippon Steel agreed to acquire U.S. Steel on 18 December 2023. CFIUS could not reach consensus, the matter was referred, and on 3 January 2025 President Biden prohibited the transaction. On 7 April 2025, after litigation, President Trump directed a fresh CFIUS review, and on 13 June 2025 an order amended the January prohibition so the deal could proceed provided the parties executed a National Security Agreement materially consistent with a draft submitted that day. Closing followed on 18 June 2025 at $55.00 per share, valuing U.S. Steel at approximately $14.2 billion. The agreement commits Nippon Steel to approximately $11 billion of new investment by 2028 and requires U.S. incorporation, a Pittsburgh headquarters, and a U.S.-citizen majority board and chief executive. The U.S. government holds a "golden share" carrying the right to appoint one independent director and presidential consent rights over capital investment reductions, headquarters relocation, plant closures and changes to sourcing. The case converted a completed presidential prohibition into a conditional clearance, and its perpetual governance interest departs from the preference for time-limited commitments in earlier CFIUS practice.
The NSI Act came into force on 4 January 2022, replacing a public-interest intervention power previously exercised through merger control.
Acquisitions of qualifying entities active in any of 17 specified sectors require mandatory notification and are void if completed without approval, subject to retrospective validation. The sectors are advanced materials; advanced robotics; artificial intelligence; civil nuclear; communications; computing hardware; critical suppliers to government; cryptographic authentication; data infrastructure; defence; energy; military and dual-use; quantum technologies; satellite and space technologies; suppliers to the emergency services; synthetic biology; and transport.
There is no de minimis: as the regime is generally described, no minimum turnover, value or volume threshold must be met for a transaction to be notifiable. Control is triggered by crossing 25, 50 or 75 percent of shares or voting rights, or by acquiring voting rights sufficient to secure or block any class of resolution.
Outside those sectors the Secretary of State may "call in" any qualifying acquisition, including asset acquisitions and acquisitions of material influence. The call-in power runs for up to five years after the trigger event, but no notice may issue more than six months after the Secretary of State became aware of it. Notified transactions are assessed within 30 working days of acceptance; if called in, a 30-working-day assessment runs from the call-in notice, extendable by a further 45 working days. Penalties reach the greater of 5 percent of worldwide turnover or £10 million, with criminal sanctions of up to five years' imprisonment.
The fifth annual report, covering 1 April 2025 to 31 March 2026, records 1,324 notifications: 1,135 mandatory, 147 voluntary and 42 retrospective validation applications. Of 1,220 notified acquisitions, 54 were called in (4.4 percent), producing 9 final orders, 4 abandonments and 1 outright prohibition. Acquirers associated with China made up roughly 2 percent of accepted notifications but around 30 percent of call-in notices and about a third of final orders.
A 2025 consultation on the Notifiable Acquisition Regulations closed in October 2025, with a response published on 12 March 2026. Confirmed changes add a water sector — the first added since commencement — covering major water companies and larger independent providers but not the general supply chain; separate critical minerals and semiconductors into standalone schedules previously folded into advanced materials; and expressly exclude off-the-shelf and licensed third-party AI systems and their routine use or minor modification.
Regulation (EU) 2019/452 was adopted on 19 March 2019 and applied fully from 11 October 2020. It gives the Commission no power to approve or block: Member States retain sole authority over the final screening decision, and the Regulation does not oblige a Member State to have a screening mechanism at all. It creates instead a cooperation mechanism. Member States notify screened transactions; other Member States and the Commission may indicate an interest within 15 calendar days and submit comments or an opinion within 35 calendar days; the screening Member State must give those views due consideration without being bound. Article 4 lists factors that may be considered, including critical infrastructure, critical technologies such as AI, semiconductors and quantum, supply of critical inputs, access to sensitive information, and whether the investor is government-controlled.
The fifth annual report records 477 transactions notified into the mechanism in 2024, with 92 percent closed in Phase 1 within 15 calendar days and Commission opinions issued in fewer than 2 percent of cases. Of formally screened investments with reported national decisions, 86 percent were authorised unconditionally, 9 percent with conditions, 1 percent prohibited and 4 percent withdrawn. The United States accounted for 40 percent of notifications, the United Kingdom 11 percent and China including Hong Kong 9 percent. By end-2024, 24 of 27 Member States had screening legislation in place, against a substantially smaller number when the Regulation was adopted; the exact starting figure could not be confirmed from a primary source and is therefore omitted.
The Commission proposed a replacement Regulation, COM(2024)23, on 24 January 2024. Parliament adopted its first-reading position on 8 May 2025 and trilogues produced a provisional political agreement on 11 December 2025. Parliament approved the agreed text on 19 May 2026 and the Council adopted it on 8 June 2026. It enters into force 20 days after publication in the Official Journal and applies 18 months later.
The new Regulation makes a national screening mechanism mandatory for every Member State and prescribes a common minimum sectoral scope. It extends the definition of foreign investment to EU-established subsidiaries of non-EU investors, harmonises an initial review period of 45 calendar days, and requires own-initiative review windows of at least 15 months and up to five years. The Commission gains power to propose mitigating measures by opinion, including on two or more investments considered together. Accounts differ on whether greenfield investment falls within the common minimum scope; one detailed practitioner analysis states that it is excluded.
Germany. Screening rests on the Foreign Trade and Payments Act (AWG) and Ordinance (AWV). The cross-sectoral review applies to non-EU/EFTA acquirers at 25 percent of voting rights generally, at 20 percent for certain critical technology categories, and at 10 percent where the target operates critical infrastructure; a sector-specific review applies at 10 percent to any foreign acquirer of arms, military equipment, encryption and certain defence technologies. Pre-examination runs two months, formal review four months, extendable.
France. Control rests on Article L.151-3 of the Code monétaire et financier, covering defence and security, public health, critical infrastructure, critical raw materials, R&D in critical technologies, and food security. The threshold is 25 percent of voting rights for non-EU/EEA investors, and 10 percent for listed companies — introduced by Decree No. 2020-892 of 22 July 2020 as a temporary measure and later made permanent. The list has expanded after politically salient transactions: the 2014 decree associated with the Alstom energy sale, and the 2020 additions covering biotechnology and food security during the contested Danone speculation. Phase 1 runs 30 working days, Phase 2 a further 45. In 2023 more than 44 percent of authorised investments carried conditions.
Italy. The "golden power" regime, established in 2012, is among the broadest in Europe in both coverage and volume, reaching defence, energy, transport, telecommunications and aerospace, financial services, health, critical technologies, agri-food, media and 5G networks. Non-EU investors face a 10 percent threshold in strategic sectors with a €1 million minimum value; defence transactions have graduated thresholds from 3 to 50 percent. Filings are due within 10 days of a binding agreement; review runs 45 business days. Volume reached approximately 727 filings in 2023 including 150 pre-filings, up about 11.7 percent on roughly 651 in 2022.
Spain. Screening rests on Article 7 bis of Law 19/2003, developed by Royal Decree 571/2023 in force from 1 September 2023, and applies where a foreign investor takes at least 10 percent of share capital or acquires control in critical infrastructure, critical and dual-use technologies, fundamental inputs, sensitive information or media. Targets with prior-year turnover below €5 million are exempt except in energy, communications and raw materials; the maximum decision period is three months.
Poland. A 2020 regime overseen by the competition authority UOKiK supplements an earlier 2015 statute. Clearance is required at 20 percent of votes, capital or profit share, and on crossing 40 percent, for individually designated protected entities — 23 at the time of the source consulted. The preliminary phase is 30 business days, with a further 120 calendar days if control proceedings open.
China operates its own inbound security review. The Foreign Investment Law is supplemented by the Measures for the Security Review of Foreign Investment, effective 18 January 2021, administered through an office at the National Development and Reform Commission. Review covers defence-related industries and investment near military facilities, and — where the investor acquires actual control — agriculture, energy, equipment manufacturing, infrastructure, transport, information technology, financial services and key technologies. Actual control includes holdings above 50 percent and sub-50 percent influence through voting or board rights. Phases run 15 working days preliminary, 30 working days general and 60 working days special review.
Japan screens under the Foreign Exchange and Foreign Trade Act. The 2019 amendment, effective in 2020, cut the prior-notification threshold for listed shares from 10 percent to 1 percent where the target operates in a designated "core" sector; 10 percent remains for other designated sectors. The waiting period is 30 calendar days, shortenable to two weeks and extendable to five months. The core list was expanded in 2024 to add semiconductor manufacturing equipment, advanced electronic components, machine tool components and marine engines.
Australia screens under the Foreign Acquisitions and Takeovers Act 1975. Monetary thresholds do not apply to national security: acquiring a direct interest in a national security business, or in national security land, is a notifiable national security action at a zero-dollar threshold, and foreign government investors must notify relevant investments regardless of value. The Treasurer holds a call-in power over non-notified investments while the asset remains foreign-owned, and a last resort power to impose conditions or require divestment.
Canada runs two tests under the Investment Canada Act. Net benefit review applies only above monetary thresholds, set for 2026 at C$1.452 billion enterprise value for private-sector WTO investors, C$2.179 billion for private-sector trade-agreement investors, and C$578 million in asset value for WTO state-owned enterprises. National security review operates with no threshold; guidelines were updated on 5 March 2025.
India applies a nationality-based approval route rather than a conventional security screen. Press Note 3 of the 2020 series requires government approval for investment by entities incorporated in, or beneficially owned by persons situated in or citizens of, countries sharing a land border with India — China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan and Afghanistan — regardless of sector or size. The beneficial ownership test means the restriction cannot be avoided by interposing an intermediate holding company. The original DPIIT text could not be retrieved from a government source; the description rests on a practitioner survey.
The most consequential effect is cumulative. One cross-border transaction in a sensitive sector may need merger clearances in several jurisdictions, FDI approvals wherever the target has a qualifying subsidiary — and the EU's new Regulation extends that to EU subsidiaries of non-EU investors — plus export control and sanctions diligence. Because FDI conditions precedent are rarely waivable, the longest clock governs. The statutory timetables above are individually short, but pre-filing engagement, information requests that stop the clock, and the U.S. practice of withdrawing and refiling extend elapsed time considerably. Nippon Steel's acquisition of U.S. Steel ran 18 months from signing to closing, and included a presidential prohibition, litigation and a second review.
Remedies also stack in a way antitrust remedies do not. Conditions attached to more than 44 percent of authorised French investments in 2023, and the U.S. Steel agreement created continuing consent rights over plant closures, headquarters location and sourcing. Such obligations survive closing and increasingly carry enforcement exposure, against CFIUS penalties raised to $5 million per violation from 26 December 2024.
The regimes are asymmetric. Chinese acquirers accounted for around 2 percent of accepted UK notifications but roughly 30 percent of call-in notices and about a third of final orders in 2025-26; in the EU mechanism, China including Hong Kong accounted for 9 percent of 2024 notifications against 40 percent for the United States. Combined with the U.S. outbound programme restricting American capital into Chinese semiconductor, quantum and AI ventures, the result is a narrowing corridor for Chinese investment into Western technology and infrastructure. Screening has also become an instrument of industrial policy in substance if not in form: Italy's golden power reaches agri-food and media, and the U.S. Steel outcome secured domestic headquarters, capacity and employment commitments through a national security instrument. It interlocks with export controls and sanctions: the U.S. definition of critical technologies is drawn directly from export control lists, so a change in export classification can pull a transaction into mandatory filing, and the outbound programme is enforced under the authority that underpins U.S. sanctions.