The Department for Business, Energy and Industrial Strategy has stated that the updated rules will actively strengthen the Government’s powers to scrutinise certain takeovers in specific areas of the economy in order to protect national security.
Updated rules designed to strengthen the Government’s powers to scrutinise takeovers that may raise national security concerns in specific areas of the economy were introduced to Parliament on Thursday 15 March.
Under the current rules, the Government can only intervene in mergers when they meet certain tests related to the target company’s turnover or where the merger causes an increase in the parties’ overall share of supply of goods or services.
However, these rules do not properly recognise the growing importance of British businesses in developing cutting-edge technology products which can have national security applications.
In order to address this change in the market, the Government will amend the tests for businesses in the military, dual-use, computing hardware and quantum technology sectors that are most likely to have implications for national security.
The rule change will remove the requirement for a merger to lead to an increase in the share of supply. In the coming weeks, the Government will introduce complementary measures to lower the test for ministerial intervention in relation to the target business’ turnover to over £1 million, which is down from £70 million under current rules. Both are subject to Parliamentary approval.