Government given more power to scrutinise mergers

Updated rules to strengthen the government’s powers to inspect mergers and takeovers that may raise national security concerns have come into force, which lower the threshold for intervention from £70m to £1m in certain cases

The changes to the UK’s merger regime apply to businesses developing military and dual-use technology, computing hardware and quantum technology and are designed to cover cutting edge technology products with national security applications.

They allow ministers to intervene on certain grounds when the target business’s UK turnover is more than £1m, down from £70m under the previous rules.

They also remove the requirement that a merger or takeover in these sectors lead to an increase in the parties’ combined share of supply of relevant goods or services before the government is able to intervene.

Business Minister Richard Harrington said: ‘These new rules ensure mergers and takeovers in key areas of the economy cannot risk our national security, while maintaining the openness to trade and investment that is underpinned by our modern Industrial Strategy.’

The changes follow a consultation launched last year to amend the Enterprise Act to reform and strengthen the government’s powers. The new rules are the first step, with broader changes to be announced in a white paper later this year.

The government has published guidance for businesses to support them in adapting to the new merger rules.

BEIS Enterprise Act 2002: guidance on changes to the turnover and share of supply test for mergers is here.

Competition and Markets Authority (CMA) Mergers jurisdictional thresholds from June 2018 is here.

Report by Pat Sweet

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