New competition guidance and foreign investment rules for the critical raw materials industry

Introduction: EU focus on critical raw materials in 2025

This spring, critical raw materials have proven to play a significant role in the drafting of EU guidance and legislation. While April marked the beginning of a European Commission (“Commission”) consultation on industry collaboration regarding critical raw materials, May saw the adoption by the European Parliament (“Parliament”) of updated foreign investment rules that pay specific attention to critical raw materials.

EU consultation on critical raw materials and competition law

On the 1st of April 2025, the Commission launched a consultation on industry collaboration for the procurement and recycling of critical raw materials. The consultation invites stakeholders to identify instances where such cooperation projects may present specific challenges and opportunities in the light of EU competition law. It ultimately aims to gather input for the development of industry guidance on the compatibility of such cooperation with EU competition rules. This should encourage companies to confidently engage in the procurement and production of critical raw materials.

Strategic importance of critical raw materials in the EU

The consultation focuses on 14 raw materials, namely aluminium, beryllium, cobalt, copper, gallium, germanium, graphite, lithium, manganese, nickel, platinum, rare earth elements, titanium, and tungsten. These materials are listed in the 2024 Critical Raw Materials Act (“CRMA”), which aims to ensure EU access to critical raw materials through cooperation between EU and non-EU governments. The specified raw materials are deemed critical due to their importance for a green and digital economy, and for strategic sectors such as aerospace and defence. Furthermore, the supply chains of these materials tend to carry high risks, because their extraction and processing are controlled by a small number of non-EU countries.

Lack of existing competition law guidance for the raw materials sector

There is currently no EU competition law guidance for companies involved in the procurement and recycling of critical raw materials. Industry may sometimes be able to refer to the Commission’s Vertical and (especially) Horizontal Guidelines in so far as they address sustainability objectives. However, these guidelines fail to give directions on the incorporation of specific EU policy objectives in competition law, such as the secure supply of critical raw materials. The recent consultation is meant to address this lack of guidance. The initiative was previously announced in the Commission’s communication on the Clean Industrial Deal and responds to Mario Draghi’s recent call for guidance and templates for companies cooperating in “the Critical Raw Materials Space”.

Introduction of new EU foreign investment screening rules

The Commission’s consultation coincides with a legislative procedure to revise EU foreign investment rules. This procedure was initiated by the Commission in January 2024, when it proposed to update the existing foreign direct investments regime which entered into force in 2020. Under these rules, member states have the option, but not the obligation to review foreign investments in their territory. The Commission’s proposal introduces new investment screening mechanisms with the aim of further protecting EU security and public order in the wake of threats posed by developments such as the COVID-19 pandemic and the war between Russia and Ukraine. Specifically, the new law will harmonise national screening procedures and enable the Commission to intervene on its own initiative or when member states disagree about the risks of a specific foreign investment.

Mandatory investment screening for the critical raw materials sector

On the 8th of May, the Parliament adopted an amended version of the Commission’s proposal for new screening rules. In its latest form, the legislation introduces mandatory national screening of investments in specific sectors, such as artificial intelligence, media services, transport infrastructure and, notably, critical raw materials. By including the critical raw materials sector, the proposal addresses the threats identified by Draghi in his report on European competitiveness. That report describes the coordination of EU foreign direct investment decisions as a key principle of a new European industrial strategy aimed at increasing security and reducing dependencies.

Scope of the foreign investment rules compared to the CRMA consultation

The new screening obligations for critical raw materials cover investments in a wide range of activities, including extraction, recycling, stockpiling, distribution and research. They also apply to an extensive list of materials, namely all those mentioned in the CRMA. Therefore, the proposal covers more materials than the recent Commission consultation, which only considers the strategic materials listed in the CMRA.

Outlook: Next steps for EU competition and investment policy

As spring turns to summer, the Commission will proactively approach stakeholders for input on the consultation. Market participants can approach the Commission’s Directorate-General for Competition (“DG COMP”) on a confidential basis to discuss specific cooperation mechanisms, or to provide contributions to the consultation until the 31st of May 2025. Depending on the input received, DG COMP will subsequently refine the collected insights with an industry survey or workshop. If appropriate, this will by the end of 2025 result in guidance clarifying the compatibility of specific critical raw materials cooperation projects with EU competition law.

In contrast, there is no clear timeframe for the new foreign investment rules. The next step in the legislative process involves negotiations between member states in the Council of the EU to agree on a final version of the proposal. The new regulation will only enter into force if the national ministers accept the current version adopted by the Parliament. If they do not, the proposal will undergo a second reading by the Parliament and the Council of the EU.

Looking forward, it remains to be seen to what extent the EU will succeed in managing the risks and opportunities associated with the Critical Raw Materials Space. In any case, it is clear from the recent consultation and legislative proposal that this topic is high on the agendas of European policy- and lawmakers this spring.

Is your organization involved in critical raw materials or foreign investments?

 Recent EU developments in competition law and foreign investment screening present both opportunities and legal challenges. Our experts in EU competition law, FDI screening, and strategic collaboration are here to support you with:

• Legal assessment of your business model in light of new EU rules;

• Structuring compliant and effective industry collaborations;

• Identifying and mitigating risks linked to foreign investment in strategic sectors;

• Navigating the complexities of the Critical Raw Materials Act (CRMA) and related EU frameworks.

Get in touch with our team for a strategic consultation.