The EU Foreign Subsidies Regulation (FSR) adopted in December 2022 creates a new instrument to prevent foreign subsidies from distorting the European Union (EU) internal market. It aims to fill a perceived regulatory gap left by EU State aid rules applying to subsidies granted by EU countries but not by foreign states. It started to
UK FDI: Decision-making practice emerging under the National Security and Investment Act
Over the summer, the UK Secretary of State for Business, Energy and Industrial Strategy (“BEIS”) delivered the first decisions, in the form of final orders, under the National Security and Investment Act 2021 (“NSIA”). We consider these decisions and other cases in the context of the first nine months of the UK’s new (quasi) Foreign Direct Investment (“FDI”) regime.
Key takeaways:
- The NSIA has broad reach, and BEIS has shown willingness to exercise the powers to review transactions that can stretch beyond mergers and acquisitions, for example, to licensing agreements.
- NSIA review involves the weighing of a number of factors relating to the target, the acquirer and the level of control being obtained. Early decisions suggest that target’s products/services and activities are just as important a factor as the acquirer’s identity, among the cases that have engaged the attention of the Investment Security Unit (“ISU”).
- “Behavioural” undertakings, e.g. involving implementation of security controls or granting of audit rights to regulators appear to be a continuation of trends seen in the predecessor UK ‘public interest’ regime, and similar to other EU FDI procedures.
UK National Security and Investment Regime Working Well
The UK government has reported a successful start to the implementation of the National Security and Investment Act 2021 (the “NSIA” or “Act”). During the first three months (Jan-March 2022) in which the new NSIA regime has been active, the Investment Screening Unit (“ISU”) received 222 filings and reviewed 17 transactions in depth. Of those 17 transactions, three have been cleared unconditionally, with the other 14 transactions still under review at the end of the reporting period.
Mandatory NSIA filings, which represented 196 of the total flings, were most commonly made in six sectors: defence, military and dual-use, critical suppliers to government, artificial intelligence, data infrastructure and advanced materials. There were significantly fewer filings in other sectors, with fewer than five filings per sector in areas such as synthetic biology, civil nuclear, advanced robotics and transport.
Collectively, these figures and other data suggest that the NSIA regime is operating, so far, broadly in line with expectations. While there are fewer filings than expected overall, this may reflect a broader global slowdown in M&A and investment activity. The ISU further reports that it is meeting, and often working well within, the maximum statutory time periods for the assessment of filings. The ISU indicates its willingness to complete reviews expeditiously where possible, including for in-depth assessments.
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UK Subsidy Control Bill granted Royal Assent
On 28 April 2022, the Subsidy Control Bill (the “Bill”) received Royal Assent, becoming the Subsidy Control Act 2022 (the “Act”). The Act lays the basic framework for the new UK-wide subsidy control regime, which is now expected to come into force in Autumn 2022. Although the Act primarily addresses UK public authorities and their legal obligations relating to the awarding of domestic subsidies, the new regime will be of particular interest to companies wishing to benefit from the more flexible post-Brexit subsidy regime moving forward.
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Trends, developments and divergence from EU law? The CMA’s first year as a global competition authority
When the UK left the EU on 31 December 2020, the Competition and Markets Authority (“CMA”) gained new powers, functions and responsibilities previously exclusively reserved to the European Commission (the “Commission”).
This blog explores how the CMA has tackled its increased workload in the first year post-Brexit, under the shadow of the global pandemic, and the extent to which the CMA’s practice has diverged from EU law.
UK National Security & Investment Act is now in force
The UK’s new National Security and Investment Act (“NSIA”) entered into force on January 4, 2022. The NSIA marks a considerable change in the UK’s investment screening powers and adds to an increasingly complex European and global landscape of investment regulation (or FDI) filings necessary for the execution of M&A and other transactions.
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The UK’s National Security and Investment Act Audiocast Series: Episode 3 – Technology
The UK’s NSI Act comes into force on January 4th, 2022. In these brief audio recordings, our team sets out what companies in the energy, life sciences and technology sectors need to know about the UK’s newly expanded investment control regime. For further details contact any member of our London team.
In this episode, our
The UK’s National Security and Investment Act Audiocast Series: Episode 2 – Life Sciences
The UK’s NSI Act comes into force on January 4th, 2022. In these brief audio recordings, our team sets out what companies in the energy, life sciences and technology sectors need to know about the UK’s newly expanded investment control regime. For further details contact any member of our London team.
In this episode, our
The UK CMA publishes its recommendation for replacing the retained Vertical Agreements Block Exemption Regulation
On 3 November, the UK’s Competition and Markets Authority (“CMA”) issued a recommendation to the Secretary of State for Business, Energy and Industrial Strategy to replace the EU Vertical Agreements Block Exemption Regulation or ” VABER” with a UK Vertical Agreements Block Exemption Order (“UK Order”) when the VABER expires on 31 May 2022. The VABER (which provides a safe harbour from the prohibition against anti-competitive agreements for vertical agreements that meet the applicable requirements) formed part of retained EU law following Brexit, but its upcoming expiry triggers the need for a UK Order to be issued in its place.
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The UK’s National Security and Investment Act Audiocast Series: Episode 1 – Energy
The UK’s NSI Act comes into force on January 4th, 2022. In these brief audio recordings, our team sets out what companies in the energy, life sciences and technology sectors need to know about the UK’s newly expanded investment control regime. For further details contact any member of our London team.
In this episode, our