New protections will be introduced to further safeguard the
national security and resilience of the UK.
Changes to the Enterprise Act 2002, being laid before Parliament
on Monday, will allow the government to scrutinise certain
foreign takeovers to ensure they do not threaten the UK’s ability
to combat a public health emergency such as Covid-19.
The economic disruption caused by the pandemic may mean that some
businesses with critical capabilities are more susceptible to
takeovers – either from outwardly hostile approaches, or
financially distressed companies being sold to malicious parties.
These new powers will enable the government to intervene if a
business that is directly involved in a pandemic response, for
example, a vaccine research company or personal protective
equipment manufacturer – finds itself the target of a takeover.
In addition, these changes will expand powers to scrutinise and
intervene in mergers in three sectors of the economy central to
national security - artificial intelligence, cryptographic
authentication technology and advanced materials - by lowering
the thresholds that must be met before such scrutiny can take
place.
This follows the introduction of powers in 2018 allowing the
government to intervene in military / products and technologies
normally used for civilian purposes but which may have military
applications, computing hardware, and quantum technology.
Secretary of State for Business, commented:
“To better protect the country’s resilience to Covid-19 we are
taking steps now to mitigate against public health emergencies.
“These measures will strike the right balance between the UK’s
national security and resilience while maintaining our
world-leading position as an attractive place to invest - the UK
is open for investment, but not for exploitation.
“These powers will send an important signal to those seeking to
take advantage of those struggling as a result of the pandemic
that the UK government is prepared to act where necessary to
protect our national security.”
These latest changes to the Enterprise Act are intended to
mitigate risks in the short term ahead of more comprehensive
powers in the forthcoming National Security and Investment
(NS&I) Bill.
Notes to Editors
- The Enterprise Act 2002 allows the UK government to intervene
in mergers and takeovers on four specified public interest
considerations; national security, media plurality, financial
stability, and now to combat a public health emergency.
- The government has intervened on public interest grounds
under the EA02 on 20 occasions: 12 on national security grounds,
7 on media plurality and once on financial stability.
- No transaction has ever been blocked in public interest
grounds.
- The public health emergency SI will be laid on Monday and
will come into force on Tuesday 23 June.
- The SI to lower the thresholds for artificial intelligence,
advanced materials and cryptographic authentication will be laid
on Monday but will not come into force until both Houses of
Parliament have debated and approved it.
