Romania’s strategic energy independence: a turning point in FDI Screening

"Energy blackmail must remain a sad memory of the past." With this statement, Romania’s Ministry of Energy underscored its resolve to safeguard national and European energy security in flagging MVM Group’s proposed acquisition of E.ON Energie Romania’s gas and electricity supply division before the Commission for the Examination of Foreign Direct Investments (CEISD). The intervention represents a pivotal moment in Romania’s FDI screening framework, transitioning it from a largely procedural review to a strategic policy tool deeply entwined with national security and political considerations.

Romania has historically been one of the few EU Member States to screen transactions even before the EU FDI Screening Regulation, though such efforts were limited primarily to economic concentrations. Today, the FDI screening regime applies uniformly to both non-EU and EU investors, including domestic ones, for direct or greenfield investments. It requires mandatory notifications for investments exceeding € 2 million in 13 broadly defined sensitive domains, which include the catch-all category of citizens’ and communities’ security.

This public disclosure of concerns, an uncommon move within Romania’s FDI framework, signals a paradigm shift. Since the transposition of the EU FDI Screening Regulation nearly three years ago, Romania’s process has remained largely technical and procedural, with no formal prohibitions to date. Until now, investments raising substantial concerns were typically discouraged behind closed doors, often prompting parties to withdraw their proposals.

The Ministry’s actions, however, signal a clear shift towards leveraging FDI screening to align with broader strategic and security priorities. By publicly outlining potential risks, the Ministry not only underscored the alleged gravity of the transaction, but also delineated the key areas likely to face formal scrutiny, setting a precedent for other ministries and economic sectors – whether for better or worse.

Background

On December 16, 2024, Hungary’s state-owned MVM Group and E.ON announced a transaction involving the acquisition of E.ON Energie Romania’s gas and electricity supply division. While the deal does not include critical infrastructure, the Ministry of Energy quickly acknowledged the announcement and emphasized that all legal mechanisms would be employed to ensure a thorough review.

At the heart of the Ministry’s concerns are MVM’s intricate commercial relationships and funding sources, particularly those tied to non-EU entities. These concerns are amplified by broader implications for Romania’s national security, setting the stage for what is likely to be one of the most rigorous FDI evaluations in recent years. On January 15, 2025, the Ministry formally flagged the transaction to the CEISD and took the unprecedented step of publicly sharing its own findings, further underscoring the significance of the case.

Key concerns identified by the Ministry of Energy

Extensive ties to Russian-controlled entities

The Ministry suggests that MVM Group’s commercial relationships with Gazprom and Rosatom, both subject to international sanctions, form the backbone of Hungary’s continued reliance on Russian natural gas and nuclear technology. The Ministry flagged evidence of "decisive influence, shadow control, and economic dependence" within MVM Group and the subsidiary pursuing the acquisition. These ties raise concerns about potential indirect Russian influence over Romania’s energy infrastructure, exacerbating vulnerabilities Europe has sought to eliminate in the wake of the Ukraine crisis.

These concerns are rooted in the historical use of energy dependency as a tool of geopolitical leverage by Russia. Romania’s firm stance reflects a proactive policy to ensure such vulnerabilities do not re-emerge. Given these factors, the transaction is quite likely to be viewed as a potential risk to Romania’s national security and its broader strategy of achieving energy independence as part of the formal review.

Risk of subsequent ownership transfers

The Ministry of Energy’s analysis of the transaction documentation submitted by MVM revealed a significant contractual vulnerability: the terms of the agreement allow for the potential subsequent transfer of shares acquired from E.ON Energie Romania to entities outside the European Union or to other parties not originally involved in the transaction. This raises the risk of indirect control over the acquired assets being passed to economic or political actors that may not adhere to EU energy compliance standards or transparency requirements. This concern adds a critical layer to the scrutiny of the deal, as it underscores the potential for the transaction to facilitate unintended and non-compliant influence over Romania’s energy sector.

This approach may initially seem heavy-handed. It is at least arguable that any such concerns could be dealt with at the time of any subsequent transaction, which would likely come – either through mandatory notification or ex officio review – under the scrutiny of CEISD. Airing this concern now suggests that the Ministry of Energy sees a subsequent transfer as highly probable, and signals that it wishes to deal with it as soon as possible, potentially through the imposition of a commitment in the form of a non-divestiture agreement or a preferential right in favour of the Romanian State. It is worth noting that the Ministry of Energy is itself a member of CEISD, positioning it to take an active role in promoting such measures during the review process.

Data privacy and security risks

The Ministry also flagged the issue of personal data, since E.ON Energie Romania serves over 3 million Romanian customers. The Ministry expressed concerns over the lack of guarantees preventing this data from being accessed by MVM’s commercial partners, including entities tied to Russian interests. Given the sensitive nature of this data, any compromise in its protection could lead to severe security and privacy risks for both individuals and the company.

Transparency and compliance Issues

The Ministry also questioned the transparency of MVM’s funding sources and its compliance with EU anti-money laundering and competition laws. Reports indicate that MVM offered up to €200 million for the majority stake in E.ON Energie Romania—four times the €50 million valuation estimated by Romanian Energy Minister Sebastian Burduja. This bid also far exceeded offers from competing bidders, including two state-owned Romanian energy companies. The unusually high offer raises questions about MVM’s motivations and funding mechanisms, particularly considering its ties to non-EU financial sources.

Contradiction with Romania’s Energy Strategy

According to the Ministry, MVM’s stated intent to reduce natural gas consumption conflicts with Romania’s Energy Strategy and the 2024–2028 Government Program, which prioritize expanding gas access for citizens and capitalizing on domestic resources. While this misalignment may be less relevant to national security, it introduces additional strategic concerns that could influence the formal review process.

A broader European context

The Ministry also invoked the precedent of Spain’s veto of a proposed Talgo takeover due to national security concerns to justify its position in this case. By citing this example, the Ministry highlighted what it described as a ‘documented practice of using strategic acquisitions to advance Russia's geopolitical interests in various EU Member States’. This underscores the growing recognition that FDI in strategic sectors can have profound geopolitical ramifications and set precedents across EU Member States.

This transaction could easily become a landmark (or test) case for Romania and the EU, showcasing how FDI screening can intersect with strategic and geopolitical priorities. By raising these concerns publicly, the Ministry has demonstrated its readiness to challenge potentially risky investments, even when they involve EU-based entities. As a reminder, Romania’s FDI screening mechanism scrutinizes both EU and domestic investments.

Implications for the future

The CEISD’s decision to escalate this matter to the Supreme Council for National Defense (CSAT) now seems likely, given the weight of the Ministry’s concerns and significant public attention. If referred to CSAT, the transaction will undergo an in-depth review. Procedurally, this escalation mechanism can be triggered by either CEISD or CSAT, whenever the investment is particularly complex or could impact national security, public order, or EU programs.

This case marks a turning point in Romania’s FDI screening framework, with the ability to set a precedent for how strategic priorities are integrated into the decision-making process. However, it also highlights the increasing potential for the politicization of FDI screening mechanisms. Given Romania’s recent political developments, concerns about potential misuse or overreach within the framework are increasingly relevant as national security and (geo)political considerations become more intertwined. The broader implications of this shift will only become clear over time, and judicial review may yet play a critical role in shaping the process.