mitigation measures
Foreign investment in Spanish firms has long been treated as strategically important. The government stepped up oversight to protect national interests, especially when deals touch essential sectors. A recent case involves Saudi Telecom’s 9.9% stake in Telefónica, examined under a tightened framework Madrid adopted in March 2020 in response to the pandemic’s economic impact.
The regime introduced a so‑called “golden action” to shield Spanish companies in critical sectors. Under this system, any foreign operation that would exceed 10% of a Spanish company’s capital requires prior government authorization. A lower 5% threshold still applies to defense‑related firms, a boundary that remains meaningful for the Saudi Telecom case. Since 2020, the Council of Ministers has cleared 123 foreign investment operations, with another 25 approved through streamlined procedures by the General Directorate of International Trade and Investment by late 2022.
mitigation measures
Most requests during this period were approved by the government. A subset—fifteen cases in total—were granted after being presented as mitigation measures. Records show few denials in the data reviewed by EL PERIÓDICO from the Prensa Ibérica group across these three years.
Typically, mitigation measures impose conditions on foreign buyers, such as restricting access to sensitive information critical to Telefónica’s operations in relation to Saudi Telecom. Other measures aim to secure the supply of certain goods or services, preserve strategic capacities, prevent loss of sovereignty, or require periodic updates from the investor. A 2022 Ministry of Industry report notes that conditions depend on the unique features of each operation and the risks identified.
In 2022, there was a notable case where approval was not granted because effective mitigation measures could not be established. It involved a potential increase to a 29.9% stake in a target. A French investor sought greater influence within a group in 2021, and after resigning a stake in March 2022, another plan to raise capital to 10.9%–15% was reported as approved. While government releases on such operations diminished in 2021 and 2022, the broader pattern shows a steady stream of filings and approvals under the evolving control framework.
Half from the USA
The share of transactions requiring authorization has risen markedly. The count rose to 28 in 2020, then 48 in 2021, and 73 in 2022, with most actions funneled through the Council of Ministers or through simplified procedures by the Ministry of Commerce. The upward trend aligns with a post‑pandemic rebound in international investment. Spain’s foreign direct investment rose 13.9% in 2022 versus 2021, surpassing 34.18 billion euros.
Investments involving the United States accounted for roughly half of the transactions over the observed period. About 15% involved the United Kingdom and other overseas territories, with roughly 10% tied to China and a smaller share from the United Arab Emirates. A notable example was the IFM fund from Australia, approved in August 2021, which later influenced Naturgy following a publicized partial takeover offer as the gas company pursued around 22.7% of capital.
especially in energy and telecommunications
The portfolio of permitted operations spans diverse sectors, from energy to telecommunications. Notable deals include the purchase of 13 photovoltaic plants by a Chinese state entity, Three Gorges, and financing moves surrounding MásMóvil by British funds such as KKR, Civen, and Providence. Other significant activities include EQT’s backing of Solar Pack projects valued near 881.2 million euros in 2021, and a capital investment by a British fund group into a company providing telecom infrastructure services. In 2022, high‑transaction sectors included information and communications technologies, manufacturing, finance, wholesale and retail, and construction.
background of defense
Defense industry operations have appeared in the approved slate, including investments by Luxembourg’s Pril Holdings in a Spanish arms company and Belgian buyers in defense equipment and related Spanish subsidiaries. A parallel case involved a major defense supplier that maintained tight controls on sensitive information, with the government demanding robust safeguards for confidential data related to defense interests.
One notable parallel is the acquisition by a French telecom supplier of a company connected to defense, which received council authorization with explicit protections for confidential information. The authorization highlighted the need for strong data security in defense sectors and underscored the government’s commitment to safeguarding sensitive information across critical industries.
a global trend
The trend toward stronger foreign investment screening has become a lasting feature across the European Union and other developed economies after the pandemic, the Ukraine crisis, and evolving geopolitical risks. UNCTAD data show 36 countries maintain FDI restrictions for national security reasons, together accounting for about 63% of global FDI inflows. The European Commission encourages member states to enhance their screening regimes, with many recent updates expanding sector coverage and extending regimes’ validity. In Spain, the latest regulation update took effect after a new royal decree and coincides with the 9.9% Telefónica by STC case, signaling a broader push to tighten national control over strategic assets.