The UK government has announced two significant amendments to the UK merger control regime, intended to 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 (“NS&I Bill”), which is expected to be brought before Parliament in the coming weeks to create a new distinct FDI regime in the UK, introducing standalone powers enabling the government to review a broad range of transactions on the grounds of national security (following on from a White Paper published in July 2018, although the detail of the regime has not yet been confirmed – see our previous briefing).

The headline changes are:

  • the addition of “to combat and mitigate the effects of a public health emergency” as a criterion for intervention in a transaction by the government on public interest grounds, under the existing public interest merger regime contained in the Enterprise Act 2002 (“EA02”) – to be implemented by way of a statutory instrument The Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2020 tabled today, which will take effect from tomorrow (23 June 2020); and
  • the introduction of lower jurisdictional thresholds for review of transactions in three specific sectors: artificial intelligence, cryptographic authentication technology and advanced materials – also to be implemented by way of two statutory instruments (the Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2020 and the Enterprise Act 2002 (Turnover Test) (Amendment) Order 2020) tabled today, but to be debated before they enter into force.

The intention behind these reforms is to enable the government to review proposed acquisitions of businesses directly involved in the response to a pandemic (including any future pandemic, other than Covid-19), whilst also expanding the government’s powers to intervene in mergers in sectors which are deemed to be central to national security. 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) as well as, potentially, usually stable UK businesses suffering a short-term impact to their  share price or profitability as a result of the economic uncertainty caused by a pandemic. Further guidance from the department of Business, Energy and Industrial Strategy is expected shortly and should provide additional clarity on the circumstances in which the government would exercise its powers.

These amendments are significant for investors in the identified sectors, particularly non-UK investors, although notification of affected mergers to the Competition and Markets Authority (“CMA”) will remain voluntary. However, it is also important to note that – as expressly flagged in the government’s press release – these changes are primarily intended to “mitigate risks in the short term”, ahead of the introduction of “more comprehensive powers” in the NS&I Bill. We expect that Bill to be brought before Parliament in the coming weeks, and will provide a further update as soon as it is published.

For further detail on the amendments set out in the statutory instruments tabled today, please see our full briefing.


Veronica Roberts

Veronica Roberts
Partner, London
+44 20 7466 2009

Ruth Allen

Ruth Allen
Professional Support Lawyer, London
+44 20 7466 2556

Max Kaufman

Max Kaufman
Senior Associate, London
+44 20 7466 2898