CELIS Country Note Germany

by Dr. Frank Schöning und Julius Gertz, CELIS Country Reporter for Germany.

Germany introduced a general foreign direct investment (FDI) screening system in 2009. The practical relevance of this system for transactions remained limited until around 2017, when Chinese investments in companies active in critical sectors and technologies attracted more regulatory attention. Since then, the German FDI regulations have been continuously tightened and the German FDI regime has become an important factor for global M&A transactions. Nowadays the Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz, BMWK) may screen FDIs from non-EU/EFTA investors regardless the sector, as long as certain voting-right thresholds are met. In this context, the responsible BMWK screened 306 national cases and 264 cases in the EU cooperation mechanism in 2022, up from only 78 national cases in 2018. However, out of the 306 cases, only 26 underwent an in-depth review, and only 13 were ultimately completely restricted.The gradual development of an FDI practice in Germany is also evident in the first court decisions. Recently, the BMWK experienced setbacks for the first time in front of court (though for formal reasons). Further changes are expected in 2024/2025 with the incorporation of the existing regulations into a new and revised planned Investment Screening Act (Investitionsprüfungsgesetz, IPG).