The Government has announced proposals that would allow it to intervene in mergers and takeovers that raise national security concerns.
Measures set out by Business and Energy Secretary Greg Clark will allow the state to take action when deals involve companies that “design or manufacture military and dual use products, and parts of the advanced technology sector”.
Ahead of a consultation on the plans, Mr Clark said: “It is right that every so often the Government reviews its mergers regime to close loopholes where they arise and this is what these proposals do in the area of national security.
“No part of the economy is off-limits to foreign investment and the UK will continue to be a vociferous advocate for free trade and a magnet for global talent.”
Currently, the Government can only intervene in mergers involving companies with a UK turnover of more than £70 million, or where the share of UK supply increases to 25% or over.
The proposals aim to “close these loopholes” to enable “greater scrutiny of foreign investment in a changing market”.
If enacted, the rule change will see the Government lower the threshold whereby ministers can scrutinise investment to businesses with a UK turnover of more than £1 million, and remove the 25% requirement.
The changes will widen the scope of current powers to include smaller businesses.
The Government is also consulting on longer-term proposals that will allow for better scrutiny of transactions that may raise national security concerns – this could include increasing risks of espionage, sabotage or the ability to exert inappropriate leverage.