Key Facts

• Amendment 1 seeks to make it obligatory for the Secretary of State to include certain matters in a statement about exercising the call-in power.
• Amendment 2 would allow the inclusion of the Secretary of State’s definition of national security in statements about call-ins.
• Amendment 9 aims to provide details on resources allocated annually for reviews, including specific headcount and review caseload figures.
• The Bill gives major powers to the Secretary of State and marks a significant shift in UK’s merger control process.
• There is expected to be an increase from 12 interventions to 1,830 under the new measures.
• Experts like Sir Richard Dearlove and David Offenbach support defining national security for clearer guidance.
• Amendment 9 mandates Business, Energy and Industrial Strategy unit resourcing updates.
• The amendment aims to ensure proper scrutiny of resource allocation for national security reviews.
• The CMA had historical experience with merger control processes compared to BEIS's lack thereof.
• The US looks in detail at around 240 cases annually.
• The UK is planning to investigate up to 1,800 cases under the new Bill.
• There are concerns about a sudden influx of cases overwhelming resources.
• The word 'may' appears in clause 3, allowing discretion for the Secretary of State.
• Amendment 1 aims to change 'may' to 'shall' to ensure mandatory publication.
• Amendment 9 seeks to include detailed resource allocation information annually.
• Amendment 1 seeks to require the Secretary of State to publish the statement.
• Amendment 2 would allow for including a definition of national security in the statement.
• National security is defined as strictly about the security of our nation, based on legal precedent.
• Graham Brady addresses amendments 2 and 9.
• Amendment 2 proposes adding the Secretary of State’s definition of national security to clause 3, page 3, line 9.
• The amendment is pressed to a Division but negatived with Ayes 5 and Noes 9.
• The amendment would require clear guidance for potential acquirers and other interested parties.
• Guidance must be published within six months of Royal Assent.
• The guidance should cover best practices, enforcement, and circumstances where requirements do not apply.
• Amendment 11 would require the Secretary of State to publish guidance within six months of Royal Assent.
• The Government have published factsheets on the digital platform .gov that explain what measures are in place and who they apply to.
• An email address, investment.screening@beis.gov.uk, has been set up for advice on what may be in scope of the NSI regime.
• Clause 3 sets out a statement of policy intent prior to use of the call-in power which must be reviewed at least every five years.
• Clause 3 sets out how the Secretary of State expects to exercise call-in powers.
• The Secretary of State is required to review the statement at least every five years.
• Clause 4 requires consultation with external parties before the final statement is published.
• If either House does not approve the statement within 40 sitting days, it must be withdrawn.
• Clause 5 defines 'trigger event' and 'acquirer'.
• Clause 10, in combination with schedule 1, sets out various ways rights or interests are to be treated as held or acquired.
• Paragraphs of schedule 1 define concepts such as joint interests, joint arrangements, indirect holdings, connected persons, and common purposes.
• Graham Brady raises concerns about the clarity of rights under insolvency law as related to national security.
• The provisions in schedule 1, particularly paragraph 6(2), are unclear regarding who holds the rights when a company goes bankrupt and is administered by another party.
• Nadhim Zahawi suggests that if an acquirer engages in notifiable activities within the specified sectors, the transaction will be voided.
• The UK has the highest number of hostile foreign takeovers in the OECD.
• The UK runs a £19 billion trade deficit with China.
• The Chinese Communist Party (CCP) has a membership of 90 million people.
• The amendment focuses on the protection of critical national infrastructure in the National Security and Investment Bill.
• Five sectors listed by the Centre for the Protection of National Infrastructure are not included in the Government’s consultation list of 17 sectors.
• China is highlighted as a significant investor in UK critical national infrastructure.
• The Intelligence and Security Committee defines critical national infrastructure as elements whose loss or compromise would have severe economic or social consequences.
• The United States and Canada include critical national infrastructure in their national security assessments.
• Expert witness Sir Richard Dearlove supports including a definition of critical national infrastructure in the Bill.
• The Bill allows the Secretary of State to specify sectors for mandatory notifiable acquisition through regulations.
• The government has published a consultation on defining entities within 17 key sensitive economic sectors.
• Regulations will be reviewed annually after their initial implementation, with subsequent reviews every five years.
• The Secretary of State needs flexibility to re-assess regulations as needed.
• It is important to maintain stability for business and investors while updating regulations.
• The amendment proposed by another MP has been withdrawn.
• Clause 6 covers acquisitions of certain shares or voting rights in specified entities engaged in UK activities.
• Regulations by the Secretary of State will define the specific sectors covered by mandatory notification.
• The consultation includes input from sector specialists, business communities, and legal professionals to ensure targeted and proportionate coverage.
• Amendment 8 addresses Clause 8.
• The amendment focuses on changes in material influence in industries critical to national security.
• This would count as a person gaining control of a qualifying entity.
• Amendment focuses on characteristics of acquirer.
• Prioritizes understanding risks related to both assets and acquirers.
• Includes state-owned enterprises explicitly in the Bill regardless of shareholding levels.
• Example given: Imagination Technologies takeover attempt by Chinese state-backed entity.
• Mentions China’s belt and road initiative as a strategic agenda.
• Amendment 7 aims to ensure acquisitions involving state-owned entities or investors from high-risk countries count as gaining control of a qualifying entity under the Bill.
• The Government maintains that each acquisition will be considered on a case-by-case basis without special treatment for state-owned entities.
• Amendment 8 seeks to capture changes in material influence over industries critical to UK national security, including economic security.
• Amendment 12 proposes including major debt holders in the definition of those who can gain control of a qualifying entity.
• Amendment 14 further proposes including top three suppliers as well as major debt holders in gaining influence over an entity's operations and policy decisions.
• A major debt holder is defined as someone holding at least 25% of an entity’s total debt.
• Amendments aim to include major debt holders with at least 25% of an entity’s total debt.
• The amendments also propose including top three suppliers as trigger events.
• The government believes such amendments would disproportionately impact routine business activities.
• Clause 8 sets out four ways control can be gained over a qualifying entity.
• Thresholds for control are set at 25%, 50%, 75% and more based on UK company law significance.
• The concept of material influence is used to capture acquisitions of smaller stakes or other rights enabling material policy influence.
• Clause 9 sets out circumstances for controlling a qualifying asset.
• The Secretary of State can intervene when an individual acquires a right or interest in a sensitive site.
• Clause 11 provides an exception for control of assets acquired for purposes outside the individual's trade, business, or craft.