On 4 March 2026, the European Commission (EC) published its proposal for an Industrial Accelerator Act (IAA), a cornerstone of the EU’s evolving industrial policy framework. The initiative seeks to integrate industrial competitiveness, security of supply, and strategic autonomy. 

The IAA’s focus on economic security and competitiveness must be viewed alongside the EU’s existing review regimes: foreign direct investment (FDI) screening (security-based review), the Foreign Subsidies Regulation (FSR) (competition-based subsidy review), and EU merger control (market structure review). For businesses operating in strategic sectors, the message is clear: transactions and investments will need to be structured from the outset with all four frameworks in mind. 

The proposal will now go through the legislative process in the European Parliament and the Council, where it is expected to prompt intense debate.

Key takeaways for companies and investors

• Structure deals in emerging strategic sectors (battery technologies, electric vehicles, solar PV and critical raw materials) so that they fulfil the IAA conditions for large scale investments.
• Map and certify supply chains at a far more granular level because of low-carbon and origin requirements in public procurement and public support schemes (steel, cement, aluminium, electric vehicles and net-zero technologies).
• Benefit from advantages in “industrial acceleration areas” for investments in strategic sectors.
• Anticipate multi‑regime reviews with different timelines, disclosure requirements and substantive review criteria as the norm.

Investors will have to comply with an additional layer of FDI requirements

The IAA introduces new conditions on major investments in emerging strategic sectors exceeding €100 million, where the third country the investor comes from controls more than 40 percent of global manufacturing capacity in that sector. A mandatory notification will be required for investments resulting in the foreign investor obtaining at least 30 percent ownership of shares or assets. Exemptions apply for investors covered by an economic partnership (that is, a structured trade and economic cooperation framework between countries) or a free trade agreement (FTA), investments targeted at providing services or portfolio investments. The emerging strategic sectors include battery technologies, electric vehicles, solar PV technologies and critical raw materials. The EC can extend the list of emerging strategic sectors to include net-zero technologies, nuclear fuel cycle technologies and electric propulsion technologies. Importantly, this expansion power does not extend to digital technologies, artificial intelligence, quantum technologies and semiconductors, which are explicitly excluded. 

For approval, the large-scale investments caught by the provision must fulfil four of six conditions: 

• 49 percent ownership cap in EU target;
• Investment through joint venture with one or more EU entities, 49 percent shareholding cap for foreign investor and participation of EU partners in technology transfer;
• IP licensing agreements with foreign investor to the target’s benefit with EU entities exclusively holding pre-existing IP;
• Foreign investor directs 1 percent of target’s gross annual revenue to R&D spending in the EU;
• Foreign investor aims to source at least 30 percent of inputs used for the products placed on the EU market from the EU; and
• Minimum 50 percent European employment is guaranteed throughout the investment’s implementation and operation. This criterion is mandatory in all cases.

The EC would have the authority to take over the assessment from the relevant Member State where the FDI could significantly impact added-value creation in the EU market, at the National Investment Authority’s request or where the investment value exceeds EUR 1 billion. This represents a significant extension of the EC’s powers compared to both the current EU FDI Screening Regulation and the revised version recently agreed by the EU institutions (see Council press release). 

The IAA does not replace the FDI Screening Regulation; rather, it overlays a parallel, sector‑specific set of conditions for large‑scale investments. The EC appears to be positioning the IAA as a tool to ensure genuine value creation from foreign investment, moving beyond the traditional security-focused rationale of FDI screening. The 40 percent global‑capacity criterion effectively introduces a quasi‑market‑dominance‑based trigger, which is highly unusual in FDI law. Likewise, the 50 percent EU‑employment requirement and mandatory technology‑transfer obligations add industrial‑policy conditionalities that go well beyond public‑security considerations typical of FDI regimes. 

For investors operating in these sectors transaction-planning complexity greatly increases. Earlier stakeholder concerns such as risks to EU investment attractiveness remain relevant, but the EC’s proposal shows no retreat on conditionality despite some negative feedback.

EU tightens the rules on eligibility for EU public procurement and public subsidies

In certain energy-intensive industries, the electric vehicle sector and net-zero technologies, tenders submitted by entities established in a third country without an agreement guaranteeing reciprocal access to EU public procurement, will be excluded. 

The IAA introduces ‘Made in EU’ and low‑carbon requirements for both public procurement and public support schemes to channel public purchasing power towards EU‑manufactured clean-technology products. These apply to selected strategic sectors – initially steel, cement, aluminium, electric vehicles and net‑zero technologies. The EC is empowered to extend this framework to additional energy‑intensive sectors (for example, chemicals). Union-origin treatment will also apply to countries covered by an EU FTA or a customs union. However, the EC can withdraw this status if the partner country infringes its agreement or if concerns arise regarding dependency or security of supply. 

The IAA proposal reinforces the broader EU strategy of shielding the EU Internal Market from external distortive influences through subsidies, aligning tightly with the FSR’s logic (see our briefing here). Companies receiving non‑EU financial contributions will therefore need to comply with FSR disclosure obligations and meet the IAA’s low-carbon and Union-origin conditions. Given the FSR’s far‑greater‑than‑expected case volume (nearly 300 M&A notifications by the end of December 2025) and separate procedural clock, coordinating the IAA and FSR processes becomes increasingly important. Rather than duplicating existing tools, the IAA strengthens the EU’s wider economic‑security architecture, adding a new layer of conditionality that investors will need to factor into transaction planning.

New Industrial acceleration areas offer benefits – but with strings attached

EU Member States will be required to designate at least one “industrial manufacturing acceleration area” on their territory to cluster projects in energy-intensive industries, the automotive industry or net-zero technologies. Manufacturers located within these zones will benefit from financial support consistent with EU State aid rules. However, investors will still need to ensure full compliance with the IAA’s FDI obligations. 

EU Member States will also be required to facilitate permit-granting procedures in acceleration areas to speed up and simplify industrial manufacturing and decarbonisation projects. This approach mirrors and expands mechanisms introduced under the Net‑Zero Industry Act but applies to a broader range of manufacturing activities. 

EU merger control assessment is increasingly influenced by industrial policy objectives

The IAA proposal does not amend merger‑control rules, but it aligns with the broader shift toward integrating EU strategic objectives such as competitiveness, innovation and resilience into merger policy. In the strategic sectors designated under the IAA, DG COMP is likely to assess mergers within a wider political and economic context, even though it will continue to apply the formal SIEC test to determine whether an M&A transaction harms competition. 

In practice, this means that consolidation in IAA‑covered sectors may increasingly be evaluated through a broader policy lens, placing greater emphasis on resilience and European industrial capacity. This trend is consistent with the direction already emphasised by policymakers: Mario Draghi highlighted the importance of security and resilience in his report, and EVP Ribera has promised that the revised EU Merger Guidelines will focus more explicitly on competitiveness, innovation and resilience.