The UK government has given the Competition and Markets Authority (CMA) further powers to review mergers in strategically important sectors. These steps include making changes to the Enterprise Act 2002 (Enterprise Act) to provide the government with extended powers to scrutinise foreign takeovers to ensure they do not impact upon the UK’s ability to tackle COVID-19 or other related public health emergencies.
In 2018, the government amended the turnover test and the share of supply test under the Enterprise Act to allow the CMA to review mergers that would otherwise have fallen outside the previous merger test, in the areas of dual and military-use technology, quantum technology and computer hardware. Where the target falls within one of these sectors, the relevant thresholds were lowered as follows:
If either test is met, the "relevant merger situation" is capable of being reviewed by the CMA.
The revised thresholds, which came into force on 21 July 2020, amended the Enterprise Act 2002 still further, to add three additional sectors central to national security to the lower-threshold regime:
The existing turnover threshold and share of supply test from the 2018 orders will continue to apply and the government will be able to intervene in the transaction if at least one of these tests is met and it believes that the merger may raise national security concerns. The government explains that these revisions were made to protect companies and technologies which are key to national security.
The BEIS has published guidance to reflect the terms of the 2020 orders.
The legislation does not require merging parties to notify the CMA of a merger; merging parties should carry out a self-assessment of whether to make a voluntary notification.