Xella

Key takeaways

Hungary had blocked the purchase of a Hungarian gravel and sand producer by a Hungarian company that was itself owned, through a chain of European companies, by a non-European shareholder. The stated reason: security of supply of construction materials.

The Court of Justice held that the buyer, a company established in the Union, could rely on freedom of establishment. A State may restrict it on grounds of public policy or public security, but only in the face of a genuine and sufficiently serious threat to a fundamental interest of society. Local supply of gravel did not meet that standard.

The lesson goes beyond construction materials: a State cannot declare any sector strategic in order to screen takeovers. It must show a real threat.

The 2019 EU regulation on the screening of foreign investments did not apply, since it targets third-country investors and the buyer was an EU company. The Court therefore reasoned on freedom of establishment, and recalled that purely economic grounds cannot justify a restriction. The new Regulation (EU) 2026/1386 extends screening to transactions carried out by EU subsidiaries of foreign investors, without removing this requirement of justification.

For video games, the ruling sets the framework for any debate on adding them to the screened sectors. Invoking the cultural or economic importance of a studio would not be enough. The measure would have to be tied to a fundamental interest, for example control of sensitive technologies or data protection.