UK government to strengthen strategic investment powers

Following the introduction of the National Security and Investment Bill on 11 November, the latest analysis from Guy Anderson, associate director and head of the Janes Industry desk follows on the strengthening of strategic investment powers by the UK government.

• The National Security and Investment Bill was introduced by the UK's Department for Business, Energy and Industrial Strategy on 11 November to extend its powers to block inward investment on national security grounds in areas from defence and civil nuclear technologies to robotics and transport. 
• The bill removes existing obstacles to government intervention and places an obligation on investors entering strategic sectors to alert authorities to the intended transaction. The bill also includes a five-year retrospective power to call in acquisitions that were not announced to the government, but which might raise national security concerns. 
• Domains covered by the bill are in 17 areas. The Enterprise Act of 2002 permitted the government to intervene in most cases if an entity has a UK turnover of GBP70 million (USD92.5 million) or more, or when the combined entities would have a market share of 25% or more. 
• Reforms in 2018 lowered the threshold for three sectors – defence and dual-use goods producers subject to export controls, quantum technologies, and computer processing – to a turnover of GBP1 million. 

Analysis

The UK government stated in its announcement of the bill that the measures follow comparable steps by countries including Australia and the US. France, Germany, and Italy have also strengthened inward investment safeguards.

The risk of losing strategically important enterprises – or their intellectual property – to state-backed operators in China in particular has been a significant driver.