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Coronavirus – New emergency powers allow government intervention in mergers - UK

  • United Kingdom
  • Competition, EU and Trade - Foreign investment regimes
  • Coronavirus - Competition issues
  • Coronavirus - M and A issues
  • Mergers and acquisitions


On Monday 22 June 2020, the UK government introduced legislation which will increase its powers to intervene in foreign investment transactions in the fight against coronavirus, and which give rise to national security concerns. 

Response to COVID-19 and future public health emergencies

Prior to the introduction of this legislation, the Enterprise Act 2002 (the “EA02”) allowed the UK government to intervene in mergers and takeovers on three specified public interest considerations – national security, media plurality and financial stability. The amendments to the EA02, which were laid before Parliament on Monday 22 June 2020 and which came into force on Tuesday 23 June 2020, introduce a new public interest consideration allowing the UK government to intervene in mergers where there is a need to maintain in the United Kingdom the capability to combat, and to mitigate the effects of, public health emergencies. 

The changes are targeted at protecting companies which might be struggling in the COVID-19 crisis, and which could be critical in the UK’s response to future public health emergencies. Whilst this includes firms such as pharmaceutical and biotechnology companies in particular, the new powers are potentially much broader than this. In the explanatory memorandum to the revised legislation, the government makes clear that the new powers may enable it to intervene if an internet service provider or food supply chain company becomes the subject of a takeover, given the potential for increased demand for internet services in a lockdown situation or disruption to food supply. As such, this is a potentially far-reaching power which could apply across a number of different sectors including food and drink and information technology, as well as to the more obvious contenders. 

Lower thresholds for additional sectors

In addition, the UK government introduced draft legislation which will enable it to scrutinise and intervene in mergers in three sectors of the economy which are central to national security – artificial intelligence, cryptographic authentication technology and advanced materials. This will be achieved by bringing these sectors of the economy within the list of “relevant enterprises” which are subject to lower intervention thresholds (i.e., the turnover test for intervention in these sectors will be lowered to £1 million, and the share of supply test will be met even if share of supply does not increase as a result of the merger, so long as the relevant enterprise has 25%). These changes will be brought about through a separate amendment to the EA02 which was also placed before Parliament on Monday 22 June 2020, but which will not come into force until both Houses of Parliament have debated and approved it.


These changes will bring the UK in line with the approach strongly advocated by the European Commission when it issued guidelines in March of this year urging Member States to make full use of their foreign investment regimes to protect against opportunistic takeovers by third countries in key sectors (including healthcare and related sectors) during the current crisis. The changes also follow the pattern seen in countries such as France, Germany, Italy and Spain which have ramped up their foreign investment regimes in recent times. Whilst these latest changes are significant and are expected to be far-reaching, the UK government has indicated that they are only intended to mitigate risks in the short term, ahead of more comprehensive powers which will be introduced by way of the forthcoming National Security and Investment (NS&I) Bill. As such, we can expect to see even more fundamental changes to the UK’s foreign investment regime in the coming months and years.

Further resources

View our webinar "How the pandemic is accelerating controls over foreign investment and M&A" >

Find out more about foreign investment regimes >