The European Commission (EC) on March 25, 2020 issued new guidance on foreign investment screening in response to the COVID-19 emergency¹ (the “Guidance”). The Guidance, which addresses the now 27 EU Member States and relates in particular (but which is “by no means limited”) to health care-related industries, sets out a threefold action plan to tackle COVID-19-related foreign investment risk:

• The EC asks that those Member States which already have national foreign direct investment (FDI) screening mechanisms in place, “make full use” of those mechanisms in order to take into account risks to critical health infrastructures, supply of critical inputs and other critical sectors in Europe.
• Member States that have only limited mechanisms in place, or none at all, are being asked to set up “fully-fledged” screening mechanisms now, and to leverage other available tools in the interim in order to counter critical risks.
• In an unusual request from an EU institution, the Guidance sets out certain restrictions on the free movement of capital, which Member States are asked to deploy alongside more targeted FDI screening tools in order to manage relevant risks.