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Government releases Proposals for Merger Control over Tech Sector

March 19, 2018By Timothy Cowen

Merger control over tech sector critical national infrastructure:

Government releases its Proposals

Last week the UK announced its next phase of reforms to merger control,  this was in the week that the Economist called for the “ Updating of national security safeguards” and the expansion of the remit of the Committee on Foreign Investment in the United States to cover minority investments in Artificial Intelligence. It was also the week that the US blocked Broadcom’s proposed acquisition of Qualcomm around Wild West on national security grounds not to mention being the week in which it was revealed that Cambridge Analytica may have misused personal data on Facebook users to influence the US election. In response governments are increasing their controls Headlines today suggest that the Wild West era for internet players is coming to an end. Against this background the government has published its position on merger control reform and indicated that it will continue to increase its scrutiny of the sector.

We were closely involved in the government consultation which took place between 17 October and 14 November 2017 and provided input on the detail of its action in the short-term to amend specific components of the current merger regime.

A formal response to the consultation has now been published and can be viewed here.

An Order has now also been laid in draft in Parliament, amending the threshold jurisdiction test for merger control: the share of supply test within the Enterprise Act 2002. The Order makes amendments to section 23 (relevant merger situations) including by introducing new subsections (2A), (2B), (4A) and (4B) and inserts a new section 23A (“the new provisions”). The statutory instrument can be viewed online here.

The intention is to lay a further Order to amend the turnover threshold. Subject to Parliament’s consideration and approval, both Orders will come into force at the same time.

We have provided comments to the authorities on the definitions, process and methodology and the body that would be suitably qualified for undertaking a review of mergers on national security grounds.

We understand that many different technology sector businesses may be subject to this legislation. The government’s working assumption being something in the region of 200 transactions per annum with be subject to review.

With our focus on technology media and telecoms we understand the sector and can advise on how businesses may be affected by these changes. We have extensive experience of similar regimes (such as the process adopted before the Committee on Foreign Investment in the United States.

 

Competition LawTim Cowen
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