In the second half of 2025 Bulgaria introduced a mandatory FDI screening regime and new call-in powers for its competition authority. For international investors and their counsel, both regimes are now live may affect transactions that would previously have closed without regulatory angle.
Until mid-2025, Bulgaria stood out among EU member states for the absence of a foreign direct investment screening mechanism. This is not longer the case, with Bulgaria’s FDI screening regime becaming fully operational on 22 July 2025. Separately, significant new powers for the Commission for Protection of Competition (CPC), including a call-in mechanism for below-threshold mergers, entered into force in late 2025. Taken together, these two developments could materially change the regulatory landscape for M&A transactions involving Bulgarian targets.
I. The Bulgarian FDI Screening Regime
Who and what is covered
The Bulgarian FDI screening regime is based on the EU FDI Screening Regulation (Regulation (EU) 2019/452) and was transposed through amendments to the Investment Promotion Act (IPA), which entered into force in March 2024. The regime became fully operational on 22 July 2025.
Mandatory prior screening applies to investments by non-EU/EEA investors where the investment targets any of the following sectors:
• Critical infrastructure like energy, water, transport, health, communications
• Critical technologies and dual-use items, including AI, semiconductors, cybersecurity and robotics
• Supply of critical inputs
• Access to sensitive information, including personal data
• Freedom and pluralism of the media
• Food and raw material security
The relevant thresholds are low: an acquisition of a 10% shareholding, or investments exceeding EUR 2 million, in a Bulgarian entity active in the above sectors triggers the requirement. Increasing an existing investment may be also covered.
Who is a ‘non-EU/EEA investor’
This is where PE funds and strategic acquirers need to pay particular attention. Under the Bulgarian regime, an investor controlled by a third-country (non-EU/EEA) entity is treated as a non-EU/EEA investor, even if the acquiring vehicle itself is incorporated in an EU member state. PE fund structures established in EU jurisdictions, but ultimately controlled by US, UK, or Asian entities may fall within scope. The transitional period that previously exempted certain deals has now expired and all transactions within scope must be notified and authorised before implementation.
The review process
Applications are reviewed by the Inter-Departmental Council for FDI Screening (the Screening Council), chaired by a Deputy Prime Minister. The Council has 45 calendar days to conduct its review and issue a decision, extendable by a further 30 days. The Council may also conduct ex officio screening of transactions for which no application has been submitted.
The application must be submitted prior to closing and only upon its acceptance as complete does the statutory review period begin to run. The Screening Council may impose conditions or prohibit the investment where it determines a threat to security or public order. Failure to notify a notifiable transaction can result in unwinding of a completed transaction.
One procedural issue that remains partially unresolved in practice concerns the interaction between the Bulgarian Investment Agency and the Screening Council Secretariat in processing applications, one reviewing completeness, the other acting on substance, yet both retaining the ability to raise incompleteness objections. Although these authorities have been generally acting expediously so far, Parties to sensitive transactions should anticipate potential delays and build additional pre-closing time into their deal timetables.
II. The New Merger Control Call-In Powers
What changed
On 23 October 2025, the Bulgarian parliament adopted significant amendments to the Competition Protection Act (CPA), introducing, among other changes, a call-in mechanism for below-threshold concentrations. The amendments entered into force in November 2025 and represent the most significant change in Bulgarian merger control since 2019.
Under the standard Bulgarian merger control regime, mandatory notification is triggered where the combined worldwide turnover of the parties exceeds approx. EUR 12.5 million and either (i) the target, or (ii) at least two of the participating parties each have Bulgarian turnover exceeding approx. EUR 1.5 million. These thresholds remain unchanged for the past 20+ years.
The new call-in power operates alongside the standard regime, as follows: where the combined Bulgarian turnover of the parties exceeds approx. EUR 12.5 million for the preceding financial year, and where the CPC raises concerns that the transaction will significantly impede effective competition in Bulgaria (in particular through the creation or strengthening of a dominant position) the CPC may require the parties to submit a merger filing within six months of the completion of the transaction.
The voluntary filing option
The amendments also introduce a voluntary prior notification procedure, allowing parties to notify the CPC of a concentration even where mandatory notification thresholds are not met. The CPC has indicated it views this as an opportunity for parties to proactively seek regulatory certainty on transactions that may be competitively sensitive. For deals in concentrated markets or involving rare innovative technologies, this might be worth considering.
Three additional Phase II triggers
Separately from the call-in power, the amendments introduce three new grounds on which the CPC can open a Phase II (in-depth) investigation in an otherwise notifiable merger:
• The opinion of a specialised sectoral regulator (telecoms, energy, financial services, pharmaceuticals) is required.
• Concerns arise regarding the ultimate beneficial owner or the source of financing of the acquiring entity, which seems to introduce considerations associated with FDI review into the merger control analysis.
• The commitments offered in Phase I to address competition concerns are deemed inadequate.
The second of these three triggers is particularly significant and heavily criticized: it means that ownership structures or complex fund hierarchies may now become a basis for an in-depth merger review, even in transactions that would otherwise easily pass through Phase I.
The Interaction: When Both Apply
The most complex scenario is a transaction that triggers both FDI screening and merger control review simultaneously.
Both processes are pre-closing and run in parallel, there is no one-stop shop. FDI screening runs through the Screening Council, while merger control falls within the competence of the CPC. Each has its own timeline and while supporting documentation for both applications partly overlap, each has its own specifics that a skilled counsel should plan, organize and coordinate effectively in advance to avoid additional delays to deal closing.
In essence, the practical implications for counsel are:
• Condition precedent drafting in SPAs may now need to include both FDI clearance and merger control clearance. The debate on ‘best efforts vs commercially reasonable efforts’ for ensuring satisfaction of these CPs will remain and intensify, as parties will weigh the uncertainty of two parallel and still unfamiliar regulatory processes.
• Long-stop dates could be extended compared to pre-2025 practice, 90-120 days post-signing may be more realistic for specific deals than the 45-60 days standard for simple Bulgarian competition filings.
• The new Phase II trigger for UBO concerns creates a strategic dilemma for certain investors, including PE funds, that needs to be assessed carefully: proactively disclose detailed ownership chain documentation to avoid scrutiny, or withhold it and risk triggering an in-depth investigation.
This material is for general informational purposes only and does not constitute legal advice.