National defence stands at the core of foreign investment controls. These controls allow to shield domestic defence businesses from foreign acquisitions that may affect national sovereignty. Such controls also ensure that any foreign investment in the country aligns with national defence and other relevant interests. Under most FDI regimes, defence activities — particularly those tied to weapons, sensitive dual-use technologies and military programs or involving access to classified information — are subject to FDI control on a per se basis (i.e., without any minimum sensitivity threshold). This approach allows for a rigorous application of FDI controls in an area where economic security and national defence matters are increasingly intertwined.

French defence policy is based on the key concept of Defence Technological and Industrial Base (so-called “BITD” in French). The BITD brings together domestic actors ranging from large industrial groups acting as prime contractors for military programs to specialised SMEs and startups acting as suppliers and subcontractors. The mission of the French Defense Procurement Agency (the Directorate General of Armaments or DGA) within the French Ministry of Defence is to ensure that the French BITD remains robust and reliant. FDI control is an essential instrument of protection against the risk of loss of sovereignty because of a foreign acquisition of a strategic BITD actor. In the context of implementing FDI control, French authorities are very focused on preserving the industrial capabilities and technological know-how of the BITD and prevent any dependance on foreign export control regimes or similar foreign regulations.

This workshop will explore the complex ecosystem of FDI control in France and certain other European countries in the defence sector. We will discuss how fundamental strategic, industrial and technological trends impact foreign investment control in the defense sector. We will also address the specificities of such control as regards the review process and the mitigation measures that are typically implemented by the authorities in this sector. Through case studies like Photonis/Teledyne and Segault/Flowserve, the panelists of this workshop will examine both rejected and approved deals, and share insight into how authorities balance open investment policies with national sovereignty. The session will also address how the need to expand capabilities, foster consolidation and mobilize funding within the European defence industry may affect the application of FDI control in this sector.