(Secretary of State for
Business, Energy and Industrial Strategy): Today, the
Government will lay two separate pieces of secondary legislation
to amend the Enterprise Act 2002. The first will allow the
Government to intervene in qualifying mergers, including
acquisitions, to maintain UK capability to combat and mitigate
the impact of public health emergencies.
The second will lower the thresholds for intervention in mergers
on public interest grounds for three sensitive sectors of the
economy, intended to address any national security risks that may
arise related to these sectors.
The Enterprise Act 2002 (Specification of Additional
Section 58 Consideration) Order 2020
The Enterprise Act 2002 (Specification of Additional Section 58
Consideration) Order 2020 introduces a new public interest
consideration for Government intervention in mergers and
acquisitions. This new public interest consideration allows the
Government to intervene in mergers involving businesses with a
role in combatting or mitigating the impacts of public health
emergencies, such as the current COVID-19 pandemic.
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.
As this instrument is subject to the made affirmative procedure
it has been made today and will come into effect tomorrow.
The draft Enterprise Act 2002 (Share of Supply Test)
(Amendment) Order 2020
The draft Enterprise Act 2002 (Share of Supply Test) (Amendment)
Order 2020 will amend the Secretary of State’s powers to
scrutinise mergers in three sensitive sectors of the economy on
public interest grounds: artificial intelligence, cryptographic
authentication technology and advanced materials. These changes
are intended to address any national security risks that may
arise relating to these sectors. The Government made similar
changes in 2018 for three other critical sectors:
military/dual-use technologies, computing hardware and quantum
technology.
Separately, the Government will lay an accompanying instrument,
the Enterprise Act 2002 (Turnover Test) (Amendment) Order 2020,
which will be subject to the negative resolution procedure.
Together, these two instruments will add the enterprise
categories to a list of ‘relevant enterprises’ which are subject
to lower intervention thresholds. The turnover test for
intervention in these sectors will be lowered to £1 million; and
the ‘share of supply’ will be met where an enterprise supplies at
least one quarter of all goods of a particular description and
there is no longer a requirement for a merger to increase the
share of supply.
These Orders will therefore allow the Government to intervene on
public interest grounds when smaller companies in these critical
sectors might be vulnerable as a consequence of a merger or
takeover. They 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.
I will also be placing copies of the non-statutory guidance
relating to these amendments in the House libraries.
