THE UK ‘CFIUS’ BILL: TECHNOLOGY-FOCUSED NATIONAL SECURITY REVIEWS TO SUPPLEMENT EXPORT CONTROLS
After at least a year of Brexit-related delays, the UK government has finally published the National Security and Investment Bill. The bill creates a new process by which a broad range of inbound investments will be reviewed and, where they pose risks to UK national security, can be blocked. For dealmakers engaged in US inbound investment, this will feel very familiar. The new UK national security regime looks a lot like the foreign investment review process overseen by the Committee on Foreign Investment in the United States (CFIUS).
In addition to process similarities, however, the focus of the two regimes is also closely aligned. Both are driven by concerns over access to sensitive technologies through investment. Such an acquisition is arguably a gap in traditional export control measures, and the bill appears designed in part to fill that gap.
For businesses dealing in UK enterprises and assets, the new process will mean building into deal timelines an assessment of the potential national security implications of the transaction, as well as early engagement with UK government stakeholders where appropriate.
The UK bill
Currently, the UK government’s authority to review the potential national security implications of inbound investment is exercised by the Competition and Markets Authority (CMA). By most measures, this regime lags behind those of other Western countries, both in terms of being an adjunct to the merger control process and of effectiveness (only 12 transactions have been reviewed on national security grounds since the national security review process was introduced in 2003). The new bill effectively decouples national security review from the CMA process, creating a standalone regime that places national security, export controls and foreign policy centre stage.
Jan-Mar 2021 Issue
Mayer Brown