On 8 November 2017 the CMA published its response to the UK Government’s National Security and Infrastructure Investment Review Green Paper, which proposed short-term and long-term changes to the Government’s powers to review transactions on grounds of national security.1 The key themes of the CMA’s response are:
(i) The UK should maintain a competition-focused merger control regime and only allow intervention on national security (or other) grounds in limited, clearly defined circumstances. The CMA notes that a regime that “generally assesses mergers only on competition grounds” would ultimately “foster inward investment and enable the UK to advocate for similar predictable rules to be applied to UK businesses investing and doing business abroad”.
(ii) The short-term proposals will not materially change the substance and frequency of the CMA’s merger reviews. The identified sectors (military, dual use and parts of the advanced technology sectors) should not be treated differently in terms of competitive assessment, so businesses are not required to change their approach when self-assessing whether a notification would be advisable on competition grounds. The CMA considers it “very unlikely” post-reforms that it will call in mergers that are not currently within its jurisdiction.
(iii) In order to avoid unnecessarily burdening the CMA with notifications or queries, the Government should clearly delineate the activities that are likely to give rise to national security concerns within the identified sectors and publish guidance to assure businesses that the reforms are not intended to result in competitive scrutiny of mergers that currently fall outside the CMA’s jurisdiction. The Government should also provide a clear point of contact to engage directly with investors on questions of national security and jurisdiction.
(iv) The CMA commits to work closely with the Government to ensure that longer-term changes to the national security regulatory regime should result in separate thresholds, processes and substantive assessment rules that are tailored to the national security objective; the existing merger control regime should not be adversely impacted by the reforms.