The UK government announced on 17 October 2017 proposals that would allow it to intervene in mergers that raise national security concerns, even when the mergers involve small businesses. These changes target key areas, specifically, companies that design or manufacture military and dual-use products, and parts of the advanced technology sector (computer chips and quantum technology).

In these areas, the government can intervene only in mergers involving companies with a UK turnover of more than £70 million or where the share of UK supply increases to 25 percent or more. The proposal would lower the threshold whereby ministers can scrutinise investment to businesses with a UK turnover of over £1 million, and remove the requirement for a merger to increase a business’s share of supply to 25 percent or more. (There will be no need for an overlap.)

The government is also consulting on longer-term proposals to allow increased scrutiny of transactions that may raise national security concerns — which could include increasing risks of espionage, sabotage or the ability to exert inappropriate leverage.

Comments are invited from interested parties. Any company active in this area should give serious consideration to making its views known, since this will be a dramatic change to the UK rules on foreign investment.