On 4 March 2026 the European Commission (“EC”) published a proposal for the Industrial Accelerator Act (the “Act”). As part of a growing trend, the Act proposes to establish a framework of measures to strengthen industrial capacity and decarbonisation in strategic sectors across Europe. The main objectives of the Act include boosting manufacturing capacities, growing businesses and creating jobs in the EU, whilst also supporting the adoption of cleaner, future-ready technologies. The proposal identifies three main issues: supply chain vulnerabilities in strategic sectors and technologies, limited demand / no lead markets for European low-carbon industrial products, and industrial technologies not being deployed at scale.
Of particular note is the Act’s proposed introduction of a targeted foreign direct investment (“FDI”) mechanism that would coincide with the existing EU and Irish FDI screening mechanism and introduce additional regulatory approvals for in-scope investments.
Overview of the Industrial Accelerator Act
Supply Chain Vulnerabilities
The Act addresses the potential lack of technology know-how and manufacturing expertise in the EU with respect to certain key net-zero and digital technologies, which can be exacerbated by a fragmented approach in the EU towards foreign investment. The Act proposes to mitigate supply-chain vulnerabilities arising from global competition and excessive dependence on third countries, which undermine Europe’s ability to increase or retain production in strategic sectors and technologies.
Demand for Clean Industrial Products
The Act proposes measures to increase demand for low-carbon products produced in the EU. The Act aims to boost demand for low-carbon products of “Union origin” by leveraging access to the EU single market and tightening public procurement rules.
Deployment of Industrial Technologies at Scale
The Act highlights that delays in deployment and scale-up of new technologies are often caused by long, fragmented and uncertain procedures for industrial decarbonisation projects. The Act aims to deploy manufacturing projects at scale by increasing the speed and simplification of permits for manufacturing projects and facilitating development of industrial clusters in industrial manufacturing acceleration areas.
Consistency with Other EU Policies
The Act is consistent with and complements the Net Zero Industry Act, the European Climate Law and more recent initiatives to streamline permitting procedures and enhancing competitiveness, as well as other EU legislation aimed at supporting the transformation of the European industry to a clean, circular and climate-neutral economy. While the Act establishes a framework for what ‘Made in Europe’ procurement entails, forthcoming revision of public procurement legal frameworks will clarify how such procurement is to be carried out. The Act will integrate and implement sector-specific requirements within a common procurement framework and provide contracting authorities with clear tools to give preference to tenders composed mainly of European products.
Impact on Foreign Direct Investment
One of the most consequential elements of the Act is the introduction of a novel, sector-specific FDI review regime that would operate separately from, and in addition to, the existing EU and Irish FDI screening regimes.
The Act proposes tighter controls with respect to FDI in “emerging strategic manufacturing sectors”, namely battery technologies, electric vehicles, solar PV technologies, and the extraction, processing, and recycling of critical raw materials. While the Act would complement the EU’s existing FDI screening mechanism, which focuses primarily on security and public order concerns, it proposes a new and separate review process, including different notification procedures and enforcement systems.
Investments exceeding EUR 100 million in emerging strategic sectors will require approval from designated national investment authorities, where more than 40% of the global manufacturing capacity is controlled by a third country of which the investor is a national or undertaking.
For approval to be granted, investments must fulfil at least four of the following six conditions:
- The foreign investor may not hold more than 49% of ownership interests or control in the EU target or asset.
- The foreign investor may not hold more than 49% of ownership interests or control over a joint venture with EU entities. This aims to guarantee effective involvement of the EU in management, technology transfer and capacity building.
- Foreign investors must share their intellectual property and know-how for the benefit of the EU target or asset. The EU target or asset must retain ownership over IP developed prior to the investment. All IP rights jointly developed with the foreign investor after the investment should remain jointly owned.
- The foreign investor must commit to R&D spending in the EU of at least 1% of the EU target or asset’s gross annual revenue, in proportion to the foreign investor’s share of control.
- At least 50% of the workforce employed in the context of the investment should be made up of EU workers across all categories of the workforce, including operational, technical, supervisory, and managerial positions.
- The foreign investor must publish a strategy to enhance EU value chains and endeavour to source at least 30% of inputs from the EU for its products sold on the EU market.
Failure to comply with the notification obligation triggers minimum penalties of:
- 5% of the average daily aggregate turnover of the foreign investor; or
- 5% of the investment value where the foreign investor is a private individual.
The European Commission may decide to review certain cases of FDI on the request of a national investment authority or on its own initiative, where the FDI is capable of significantly impacting added value creation in the EU or where the FDI has value exceeding EUR 1 billion. This is a departure from the European Commission’s primarily advisory role under EU’s FDI Screening Regulation.
The Act excludes three categories of FDI from review, namely (i) investments by foreign investors covered by economic partnership and free trade agreements, to the extent relevant commitments have been made; (ii) investments targeted at providing services; and (iii) portfolio investments, defined as acquisitions of company securities intended purely for financial investment without any intention to influence management or control.
What will this mean for dealmakers?
The Act proposes to introduce an additional layer of regulatory screening that certain in-scope M&A transactions will have to consider before they can be completed. This will likely extend the timelines to completion in relation to these transactions, particularly in circumstances where the European Commission takes an active role in the screening process. Proposed transactions captured by the screening mechanism are also likely to face significant difficulty in obtaining clearance in comparison to the standard FDI screening and merger control regimes. Due to the targeted nature of the procedure and the requirement to satisfy four of six criteria to obtain clearance, filings are only required where transactions are likely to be problematic.
Further, as only transactions involving investors originating from a country that accounts for at least 40% of global production of the relevant technology or input are in-scope, we anticipate that the Act will overwhelmingly affect investment from certain countries only (unless free trade agreements have certain commitments / conditions within them).
Next Steps
The Act will now go through the EU legislative process and will be presented to the European Parliament and Council of the EU for debate and potential amendment before its formal adoption. This will be front and centre during Ireland’s Presidency of the Council of the EU, with security and defence one of the key focus areas for the Irish government during its term.
Please contact Simon Shinkwin or your usual Competition & Regulation contact with any questions.