The UK government is looking to roll back powers to intervene in company takeovers less than two years after they were introduced, in an attempt to be “more business friendly”.
Oliver Dowden said the government will review measures “narrowing and refining” the National Security and Investment Act, which only entered into force in January 2022, and allowed much greater scrutiny of foreign investments in British companies.
A reversal of the changes would represent the latest change of tack by a government that has wavered between wanting to be open to business and a desire to block takeovers of businesses in strategically important sectors.
Dowden said he wanted to ensure “government regulation keeps up with the dynamism of the private sector” and that the state applies “as little regulatory burden as necessary”, in an interview with the Financial Times published on Monday.
“We can’t have yesterday’s regulation for tomorrow’s world,” said Dowden.
The rules cover 17 important sectors that could have national security implications, ranging from military technology and cryptography to energy, computing, quantum technology and even some transport. The government has intervened to block the takeover of Nexperia, a semiconductor manufacturer, by a Chinese-owned company, and the purchase of electronic design company Pulsic by a Hong Kong rival. The merger of the UK telecoms businesses of Vodafone and Hong Kong-owned CK Hutchison will also be scrutinised.
Dowden mooted changes to reduce the number of firms that must notify authorities of an intention to merge. One way to do that would be to remove internal company restructuring from the scope of the act, if the ultimate beneficial owner remained the same.
Another important change would be on lowering the threshold for artificial intelligence companies, which are all covered by the act, Dowden said. The AI sector is growing rapidly around the world, and Rishi Sunak’s government is hoping to take a lead in global regulation.
Dowden said the government should focus on “high-end” AI that may have military uses, or that could be used to “enhance an adversary’s capabilities or diminish ours”.
“AI is becoming ubiquitous across the entire economy. An awful lot of that is going to have very little national security implications,” he said.
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The government will launch a nine-week consultation on Monday to invite the views of companies and other interested parties, the FT reported.
Dowden said he expected the government’s role in reviewing takeovers to be “net smaller” after the review. He said: “I always want to adhere to this principle of a small yard or garden and a high fence. So if I can get things outside the scope of the legislation, I will do.”
