in Defence / Security

Government updates mergers regime to protect national security

Posted 17 October 2017 · Add Comment

Measures to update the merger system and better protect national security have been set out today by Business and Energy Secretary Greg Clark, which include enabling the government to intervene in mergers that raise national security concerns, even when they involve smaller businesses.

These changes are targeted at key areas, specifically companies that design or manufacture military and dual use products and parts of the advanced technology sector.

In these areas, currently the government can only intervene in mergers involving companies with a UK turnover of more than £70 million or where the share of UK supply increases to 25% or over. Today’s proposals will close these loopholes to enable greater scrutiny of foreign investment in a changing market.

In these areas, the government will lower the threshold whereby ministers can scrutinise investment to businesses with a UK turnover of over £1 million, and remove the requirement for a merger to increase a business’s share of supply of, or over, 25%.

Government is also consulting on longer-term proposals that will allow for better scrutiny of transactions that may raise national security concerns – this could include increasing risks of espionage, sabotage, or the ability to exert inappropriate leverage. The government welcomes views on the changes it could make, including:

  • introducing a ‘call-in’ power modelled on that in the Enterprise Act 2002 to allow government to scrutinise a broader range of transactions for national security concerns within a voluntary notification regime; and/or
  • introducing a mandatory notification regime for foreign investment in certain parts of the economy which are critical for national security, such as the civil nuclear or the defence sector. Mandatory notification could also be required for foreign investment in key new projects or specific businesses or assets.

Business and Energy Secretary Greg Clark (right) said: "Britain has and always has had a proud record of being open to the world as the foremost advocate of free trade. It is right that every so often the government reviews its mergers regime to close loopholes where they arise and this is what these proposals do in the area of national security.

"No part of the economy is off-limits to foreign investment and the UK will continue to be a vociferous advocate for free trade and a magnet for global talent."

The green paper delivers on the commitment made in the Queen’s Speech to bring forward proposals to consolidate and strengthen government’s powers to protect national security.

Today’s consultation will be split into two parts.

The consultation on amending the Enterprise Act through secondary legislation will last four weeks. The proposals are to lower the turnover threshold from £70 million to £1 million and remove the current requirement for the merger to increase the share of supply to or over 25%. These changes will apply to the following sectors:

  • the dual use and military sector – this relates to businesses who manufacture or design items that are subject to export controls; and
  • companies that are involved in the design of computer chips and quantum technology.

The government will report back in due course on the proposed secondary legislative changes.

The consultation on longer-term reforms including the expanded version of the ‘call in’ power and mandatory notification regime will last 12 weeks.

A final package of reforms could include some or all of these options.

Have your say on these proposals: National security and infrastructure investment review

 

* required field

Post a comment

Other Stories
Advertisement
Latest News

TEK appointed to manufacture the M777 commanders seat

TEK Military Seating has been appointed as designer, manufacturer and supplier of the M777 Howitzer commander seats for the BAE Systems contract with the Indian MOD, which starts in 2019.

Autonomy for tomorrow's world

In a new cross-government collaboration, the Ministry of Defence (MoD), the Department for International Development (DFID) and UK Research and Innovation (UKRI) are working together on turning cutting-edge designs for drones and

UK engineering skills enhanced by Cranfield and BAE Systems

Cranfield University and BAE Systems have announced at the Farnborough International Airshow today the extension of an educational partnership that will further enhance the UK’s engineering skills.

Tonbridge School fly the flag in international rocketry final

Four students from Tonbridge School, Kent, were named as runners-up after they competed in an international fly-off in the Youth Rocketry Challenge against teams representing the USA, Japan and France at Farnborough International

Farnborough International Airshow sees orders surge worth $28bn to UK

- More than 1400 aircraft orders and commitments at Farnborough International Airshow 2018, as the global industry sees continuing high demand. - Aircraft and engine orders and commitments worth around $190bn to the global

Nasmyth Group to open training centre for its Academy apprentices

Nasmyth Group is delighted to announce the opening of its new Academy training centre for apprentices. The new facility will be based at Nasmyth Bulwell in Pinxton, Nottinghamshire, one of the Group’s 13 individual precision

RUBB_SK_1906190119
See us at
AdvancedEngin BT1406011118SMI GMSCBT3005081118FIL18 BT111017220718SMIFAVSBT151118Aviation Africa 2019DVD18BT3105200918