Proposed law to screen investment flows into Ireland far too stringent, warns expert

New law could disproportionately affect Ireland, which relies on FDI more than almost any other country in Europe

Ronan Dunne, partner and head of competition, regulated markets and EU Law at Philip Lee, warns the bill could affect foreign direct investment. File picture

Planned legislation that will for the first time screen almost all major investment projects flowing from the US and Britain into Ireland could be “a double-edged sword” because Ireland relies on foreign direct investments more than almost any other country in Europe, a leading expert has warned.

Ronan Dunne, head of regulated markets and EU law at Philip Lee, said the domestic legislation could mean a large number of investments will unnecessarily face uncertainty.

Tánaiste and Enterprise Minister Leo Varadkar unveiled plans this summer and the Screening of Third Country Transactions Bill was published earlier this month which is designed to protect Ireland’s critical technology and infrastructure from potentially hostile investments.

The proposed law would allow the Government, by way of a screening unit in the Department of Business, to assess or screen investments in Ireland from outside the EU for the first time.

The commission provided a screening framework, but there was no obligation on the Government to bring in any particular screening regime for Ireland.

However, Mr Dunne told the Irish Examiner that the proposed Irish regime was relatively stringent “and mirrors in many ways” the competition law for mergers in imposing criminal sanctions and deadlines to notify foreign direct investments into the State.

With a threshold set at a transaction size of €2m, he said the scope of the bill could catch a large number of investments from the US and Britain, that “relates, directly or indirectly, to a change in control of an Irish asset, or the acquisition of a significant interest in an Irish business”.

Any deal involving investment from a business or national of a third country, any country that it is not a member of the EU or EEA, or Switzerland, would be included in the proposed law, he said.

“The bill casts a wide net, and the definition of third countries will capture investment in Ireland from the likes of the UK and the US.

“This will arguably disproportionality affect Ireland when compared to our EU neighbours,” Mr Dunne said.

“Crucially for deal-makers, the bill states that the review timeline for the minister can be up to 135 working days after the notification is received,” he said.

“Clearly this may be a significant issue for notifiable transactions.”