The government is to pass legislation offering new protections for UK businesses critical to combating coronavirus and future public health emergencies, which will prevent hostile takeovers
Changes to the Enterprise Act 2002, being laid before Parliament today, 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 coronavirus.
The Department for Business, Energy and Industrial Strategy (BEIS) said 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. The new legislation will lower the thresholds that must be met before such scrutiny can take place.
This move 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.
Alok Sharma, secretary of state for business, said: ‘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.’
BEIS said 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.
The Enterprise Act 2002 allows the UK government to intervene in mergers and takeovers on four specified public interest consideration: national security, media plurality, financial stability, and now to combat a public health emergency.
So far it the government has used its powers on 20 occasions: 12 on national security grounds, seven on media plurality and once on financial stability. No transaction has ever been blocked in public interest grounds.
The public health emergency statutory instrument will be laid on 22 June and will come into force on 23 June.
The statutory instrument to lower the thresholds for artificial intelligence, advanced materials and cryptographic authentication will be laid on 22 June but will not come into force until both Houses of Parliament have debated and approved it.