New investment screening law to protect Ireland’s critical technologies

27 Jun 2022

Leo Varadkar at Inspirefest 2017. Image: Conor McCabe Photography

Tánaiste Leo Varadkar said the bill aims to protect Ireland’s critical technologies from foreign investors with ‘sinister intentions’.

Ireland may soon be able to screen investments from non-EU sources for potential threats to national security.

Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar, TD, received Government approval yesterday (26 June) to publish a new law that will introduce an investment screening mechanism.

The aim is to protect Ireland’s critical technology and infrastructure from potentially harmful foreign investment.

The mechanism will allow the minister to evaluate whether an investment poses a threat to Ireland’s security or public order, and provide the powers to put a halt to such investment if they deem it necessary. It will also lead to better information sharing and cooperation with other EU states.

“We are a small, open economy. We work hard to create an environment which is welcoming to foreign direct investment. This will be even more important now as we recover from the pandemic and as we face increased competition for investment globally,” Varadkar said.

“However, it would be naive to think that Ireland is immune to those with more sinister intentions.”

Based on ownership and transaction value criteria, investments in technologies identified in law as ‘sensitive’ or ‘critical’ infrastructure – relating to areas such as health services, the electricity grid, military infrastructure, ports and airports – will be screened.

The current transaction value threshold is set at €2m, but this will be reviewed and can be revised by the minister if required.

Growing concern

The bill has been developed partly in response to the EU Investment Screening Regulation, which itself is a response to growing concern among member states regarding the purchase of strategic European companies by foreign-owned, and even state-owned, firms.

Screening of investments can only be conducted by member states at their own discretion, with individual member states deciding exclusively whether any action is called for.

Currently, 18 out of the 27 EU countries operate domestic investment screening mechanisms, and most of those that don’t have been indicating their intention to move towards implementing an investment screening mechanism.

The bill looks to ensure that Ireland remains aligned with both EU and global best practice in the area of national security and investment.

“Other EU countries are introducing similar legislation, so we will be able to better act in cooperation with them,” Varadkar added. “I think it’s an important safeguard, which I hope we never have to use.”

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Vish Gain is a journalist with Silicon Republic