On 14 October 2019 the Government’s legislative agenda for the next parliamentary session was set out in the Queen’s Speech, accompanied by detailed background briefing notes. We have summarised below the key takeaways in terms of implications for the UK competition law regime and the plans for a new standalone foreign direct investment regime.
From a competition law perspective, what is most notable is the absence of any proposals (legislative or non-legislative) in either the Queen’s Speech itself or the background briefing notes to amend the existing UK competition regime to reflect either:
- the recommendations made in the March 2019 Furman Report in the context of the challenges posed by the digital economy; or
- the wider recommendations made by Lord Tyrie (Chairman of the Competition and Markets Authority) in his February 2019 letter to Greg Clark (Secretary of State for Business, Energy and Industrial Strategy (BEIS)).
However, on 15 October 2019 Andrea Leadsom (now Secretary of State for BEIS) confirmed to a Parliamentary Committee that the Government plans to publish a Competition Green Paper setting out reforms to the competition and consumer framework in the first quarter of 2020. This will include the Government’s response to the Furman Report, alongside consideration of the conclusions of the Smart Data Review and the related June 2019 consultation. So it seems as if amendments are on their way, but likely on a slightly more extended timescale than originally anticipated.
Foreign Direct Investment
By contrast, the background briefing notes accompanying the Queen’s Speech do include a specific section on proposals to implement a new standalone foreign direct investment regime in the UK (pages 71 and 72 of the briefing notes).
The briefing notes largely confirm the proposals set out in the June 2018 White Paper (see our previous e-bulletin), and do not include any further significant detail on how the new regime will operate. However, it is made clear that the Government remains keen to strike an appropriate balance between strengthening its powers to intervene in mergers on national security grounds and ensuring that the UK remains open for innovative and dynamic foreign investment. In particular, the briefing notes confirm that:
- the new regime will involve a notification system allowing companies to flag transactions potentially raising national security concerns (in any sector, and of any size);
- a “quick and efficient” screening process is expected to rule out national security risks in most cases, but the Government will have powers to impose conditions or – as a “last resort” – block transactions on national security grounds; and
- the new regime will be designed to ensure that hostile parties or groups cannot circumvent the rules by acquiring assets rather than the target business itself.
The briefing notes do not give any indication as to the likely timing of draft legislation being laid before Parliament to take forward the proposals. However, subject to any early General Election and possible change in Government, it is anticipated that draft legislation is likely to be forthcoming in the near future.