Chinese Investment in the EU: A New Era of Scrutiny
-
2026年10月05日
-
Across major economies, geopolitics, economic security and industrial policy are reshaping the regulatory environment for cross-border M&A.1 The questions surrounding a transaction are no longer limited to whether it would significantly impede competition. Regulators and policymakers may also consider who the investor is, how the transaction is financed, whether the transaction involves critical technologies or infrastructure, and whether the transaction could affect supply chain security and resilience.2
This trend is evident in many major markets, including the United States, the United Kingdom and Australia, but it is particularly visible in the European Union (“EU”). In the EU, foreign subsidies scrutiny, foreign direct investment screening and traditional merger control are becoming more interconnected in cross-border transaction review.3, 4 At the same time, broader policy debates around competitiveness, economic security, “de-risking” and industrial resilience are also impacting the wider policy environment in which EU deals are reviewed.5
For Chinese companies expanding their investment footprint in the EU, this means transaction planning needs to move beyond a traditional M&A and antitrust mindset. That shift is most visible in the way merger control is evolving alongside other tools of regulatory and policy review.
M&A Transactions Are Facing Multiple Layers of Scrutiny
Traditionally, one of the central regulatory issues in major cross-border M&A transactions has been merger control: whether a transaction would significantly impede effective competition. That fundamental principle has not changed. On April 30, 2026, the European Commission published draft revised Merger Guidelines, which remain under review.6 The Commission has made clear that the primary mission of EU merger control remains to preserve a vibrant and competitive internal market.7
What has changed is that the Commission’s proposed framework would give greater weight to dynamic factors that previously played a less prominent role in merger control. The draft guidelines note that, amid changes in the global geopolitical and trade environment, industrial scale and global competitiveness have become increasingly important, and that merger assessment should give appropriate weight to potentially pro-competitive factors such as scale, innovation, investment and resilience.8 The draft also discusses supply chain security and diversification, security of critical infrastructure and the ability to invest in critical technologies as part of its analysis of resilience.9 It notes that mergers can strengthen supply chain resilience, but may also weaken it by increasing dependence on a small number of suppliers or particular geographic regions.10
This does not mean that industrial policy is replacing competition policy, nor that industrial policy objectives have become a new and independent approval criterion under EU merger control. Rather, competition review remains subject to the existing legal framework of the EU Merger Regulation, while the Commission’s assessment of competitive effects is placing greater emphasis on dynamic considerations such as scale, innovation, investment, security of supply and resilience.11
Early Screening Is Central to Deal Strategy
The evolving frameworks under which mergers are screened point to a practical consequence for deal teams: regulatory risk assessment should begin before the transaction structure and timetable are fixed. Early screening should help identify which aspects of a proposed acquisition could draw closer review, what additional analysis or evidence may be needed and how those issues may affect target selection, transaction structure, documentation, stakeholder engagement and timetable. This requires looking beyond merger control thresholds to assess whether the deal could raise questions linked to economic security, resilience or wider public policy concerns.12
This is particularly important when a transaction may attract attention beyond its competitive effects. Even when the commercial rationale is clear and the deal does not appear to raise substantive antitrust concerns, parties may still need to explain the funding structure, governance model, strategic intent and post-closing arrangements in a way that is consistent, credible and supported by evidence. Preparing that narrative early can help avoid late-stage questions that are harder to answer once negotiations, filings and external communications are already in motion.
A Broader Approach to EU Deal Risk
Taken together, these developments point to a shift in how Chinese investors should approach EU transactions. The EU remains an important market for strategic investment, but successful execution now requires a wider regulatory and policy lens. Competition analysis remains essential, but it is only one part of the diligence required to assess deal certainty, timing and stakeholder expectations.
For general counsel and deal teams, the challenge is to integrate regulatory planning into transaction strategy from the outset, rather than treating it as a confirmatory step once the main deal terms have been agreed. The next article in “Chinese Investment in the EU” will build on this foundation by examining two mechanisms that are becoming increasingly important — the EU Foreign Subsidies Regulation and foreign direct investment screening — and how Chinese companies can prepare for them before they affect deal timelines, structure or stakeholder confidence.
Footnotes:
1: European Commission and High Representative of the Union for Foreign Affairs and Security Policy, “European Economic Security Strategy,” EUR-Lex (June 20, 2023).
2: Council of the European Union, “European economic security,” Consilium (n.d.).
3: European Commission, “The Foreign Subsidies Regulation in a nutshell,” Competition Policy (n.d.).
4: European Commission, “Investment screening,” Trade and Economic Security (n.d.).
5: European Commission, Press Release, “An EU approach to enhance economic security,” (June 19, 2023).
6: European Commission, “Review of the Merger Guidelines,” Competition Policy (n.d.).
7: Ibid.
8: European Commission, Press Release, “Commission opens consultation on draft of new Merger Guidelines” (Apr. 30, 2026).
9: Ibid.
10: Ibid.
11: European Commission, supra note vi.
12: Council of the European Union, supra note ii.
相关服务
发布于
2026年10月05日
主要联络人