The UK government has announced two amendments to the UK merger control regime, which will enhance its powers to scrutinise certain foreign direct investment (FDI) into the UK, against the backdrop of the Covid-19 pandemic and wider national security concerns.
These amendments come ahead of the National Security and Investment Bill, which is expected to be brought before Parliament in the coming weeks to create a new distinct FDI regime in the UK.
Under the changes:
- Businesses involved in the response to a pandemic – The grounds on which the government can intervene in a transaction on public interest grounds under the Enterprise Act 2002 have been expanded to include “to combat and mitigate the effects of a public health emergency”. This change was introduced by The Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order which took effect on 23 June 2020. The reforms cover not only companies directly involved in the response to a pandemic (e.g. pharmaceutical or medical equipment suppliers), but also companies which mitigate its effects (examples given include internet service providers and food supply companies); and
- Artificial intelligence, cryptographic authentication technology and advanced materials – The jurisdictional thresholds for transactions in these sectors will be lowered so that the government will be able to intervene in more transactions. These changes will be implemented by way of two statutory instruments: the Enterprise Act 2002 (Share of Supply Test) (Amendment) Order and the Enterprise Act 2002 (Turnover Test) (Amendment) Order 2020, which is yet to be published. The orders will come into force once they have been debated.
Our competition, regulation and trade team has published a more detailed ebulletin on the changes which is available here.