Steel. The Trump administration is expected to take a tough approach to national security, especially concerning Iran and China. Tensions with China are likely to continue heating up, with the threat of significant new tariffs on Chinese goods and both countries imposing export controls directed at semiconductors and other important technologies. Europe ▪ EU Foreign Subsidies Regulation (“FSR”). The FSR covers M&A deals where target companies have EU-wide revenues of at least EUR 500 million and the parties were granted at least EUR 50 million in combined foreign subsidies. In 2024, the EU Commission issued its first final decision under the FSR, conditionally approving an acquisition by Emirates Telecommunications Group.29 The EU Commission is expected to keep investigating potential distortions of competition due to foreign subsidies under this new tool. ▪ Expanding FDI Control. The January 2024 European Economic Security Package’s30 proposed revision of the EU foreign direct investment (“FDI”) regime is designed to further harmonize national screening rules, such as by setting out criteria for activities 29 See “European Commission, Commission conditionally approves the acquisition of parts of PPF Telecom by e&, under the Foreign Subsidies Regulation,” Sept. 23, 2024. 30 See MoFo’s client alert, “The European Economic Security Package – EU FDI “Upgrade,” Outbound Investment Control and More to Come,” Feb. 6, 2024. that trigger a mandatory notification. Meanwhile, additional EU member states have implemented new or amended FDI regimes, with Ireland’s regime having become effective on January 6, 2025, and Croatia, Cyprus, and Greece are expected to close the gap as well, so that in the near future all EU member states will have a national FDI regime. ▪ Export Controls, Outbound Investment, Research Security. The European Economic Security Package includes initiatives to enhance EU export controls and controls of R&D cooperations to protect EU technology. Following the steps taken by the United States, the EU is considering rules on outbound investment restrictions. ▪ United Kingdom. The UK is considering further refining the screening of transactions under the UK’s National Security and Investment Act, aiming to balance between controlling and attracting investments. ▪ EU and UK financial and trade sanctions. The EU and UK have adopted additional sanctions against Russia to weaken its access to technology and financial resources that would support its war against Ukraine. With the new Trump administration and the uncertainties around the U.S. sanctions on Russia following a potential negotiated settlement to the war, the EU is considering ways to strengthen its own Russia sanctions regime. For 2025, the geopolitical environment remains uncertain with the ongoing war in Ukraine, the Trump administration taking office in January, and key EU member state governments in a currently weak state due to internal political reasons (e.g., France and Germany), among other things. There is reason to believe that the EU may not act as quickly as the United States under the new Trump administration on sanctions, trade controls, and investment screening, and some EU member states may decide to push ahead separately in aligning with the United States within the limits of their regulatory powers. The Trump administration is expected to take a tough approach to national security, especially concerning Iran and China. Client Alert Up and Running: Treasury Publishes Final Rules for Outbound Investment Security Program 2024 M&A Annual Review 15
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