The UK government can intervene in five categories of transaction on public interest grounds, which are outlined below.
UK public interest mergers
These are deals within the UK merger control regime that raise public interest considerations (section 42(1) and (2) EA02).
The secretary of state can intervene in public Interest mergers, where he or she has reasonable grounds to suspect that (i) the UK merger control regime is applicable, (ii) the jurisdictional thresholds are met, and (iii) one or more ‘public interest considerations’ are relevant and need to be considered with relation to the deal (section 42(1) and (2) EA02).
What constitutes a public interest consideration may be varied from time to time by the secretary of state or by amending, removing or adding to the considerations listed by way of an order (section 58(2) EA02). Currently, the considerations include:
- defence: the interests of national security, including public security (section 58(1) and (2) EA02);
- accurate news and free expression: the need for accurate presentation of news and free expression of opinion in newspapers (section 58(2A) EA02);
- plurality of the media - in relation to every different audience in the UK, or in a particular area or locality of the UK, for there to be a sufficient plurality of persons with control of the media enterprises serving that audience (section 58(2C)(a) EA02). Media plurality is defined in section 58(2B) EA02;
- broadcasting: for the availability throughout the UK of a wide range of broadcasting that (taken as a whole) is both of high quality and calculated to appeal to a wide variety of tastes and interests (section 58(2C)(b) EA02);
- media standards: for persons carrying on media enterprises, and for those with control of such enterprises, to have a genuine commitment to the attainment in relation to broadcasting of the standards objectives set out in section 319 of the Communications Act 2003 (section 58(2C)(c) EA02); and
- prudential regulation in the interest of maintaining the stability of the UK financial system (section 58(2D) EA02).
UK special public interest mergers
These are deals within the UK merger control regime (though not necessarily meeting the same jurisdictional thresholds, and raise public interest considerations (section 59 EA02).
These interventions can happen where the jurisdictional thresholds are not met, provided that
- the structure is of a type to which the UK merger rules apply (section 59(1) EA02);
- immediately before implementation, at least one of the enterprises concerned was carried on in the UK or by or under the control of a body corporate incorporated in the UK and a person carrying on one or more of the enterprises concerned was a relevant government contractor (section 59(3B EA02), or the person or persons by whom one of the enterprises was carried on supplied at least 25 per cent of all newspapers of any description, or all broadcasting of any description in the UK, or a substantial part of the UK (section 59(3C) and (3D) EA02); and
- one or more public interest considerations is relevant to a consideration of the transaction (section 59(2) EA02).
UK critical national infrastructure mergers
These are deals that are caught by recent reforms to the Enterprise Act pursuant to the Enterprise Act 2002 (Turnover Test)(Amendment) Order 2018 and the Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2018.
Though not listed as a public interest consideration in section 58 EA02, in 2018 reforms were introduced to the turnover and share of supply threshold tests for particular industries, in essence addressing public interest concerns, but via a different mechanism. The turnover test share of supply test amendment orders amend the thresholds set out in section 23 EA02, resulting in many more mergers being caught by the UK regulation in particular sectors. The relevant sectors are set out in section 23A EA02, and include certain activities relating to the military, dual use and quantum computing sectors.
The effect of these reforms is to reduce the turnover threshold to £1 million, and to remove the requirement that there be an increase in share of supply, where the share is 25 per cent or more. The result is that more transactions will be subject to UK merger review in these particular sectors, which are viewed as crucial from a national security or critical national infrastructure point of view.
UK legitimate interest mergers
These are deals that qualify for notification to the Commission under EUMR but affect a legitimate interest of the UK (article 21(4) EUMR mergers).
Pursuant to section 67(1) and (2) EA02, the transaction must satisfy the jurisdictional thresholds of both UK and EU merger control for intervention in this type of merger. The secretary of state must also:
- have reasonable grounds for suspecting that it is or may be the case that the transaction structure would fall within both UK and EU merger control;
- be considering whether to take appropriate measures in relation to the transaction to protect a legitimate interest of the UK under article 21(4) EUMR (section 67(1)(c) EA02); and
- believe that it is or may be the case that one or more public interest considerations are relevant to a consideration of the transaction (section 67(2) EA02).
The legitimate interests under article 21(4) EUMR include public security, plurality of the media and prudential rules
These are deals that qualify for notification to the Commission under the EUMR but affect the essential interests of the UK’s security (article 346 TFEU mergers).
Pursuant to article 346 TFEU, where a transaction is caught by the EU merger regime, the UK government can:
- instruct a company not to supply information to the Commission under the EUMR where it considers that disclosure of such information is contrary to the essential interests of the UK’s security; and
- take measures it considers necessary for the protection of the essential interests of the UK’s security that are concerned with the production of or trade in arms, munitions or war material.
Further reforms are expected in this area, which may subject many more investments by foreign nationals and investors to regulatory scrutiny.
Back to top