CMA updates mergers guidance to reflect the National Security and Investment Act 2021

 

CMA updates mergers guidance to reflect the National Security and Investment Act 2021

The Competition and Markets Authority (CMA) has issued an updated version of its mergers guidance (CMA2) to take into account the coming into force of the National Security and Investment Act 2021 (NSIA 2021) on 4 January 2022.

The NSIA 2021 introduces a new national security and investment regime within the Department for Business, Energy and Industrial Strategy (BEIS).  This replaces the powers of the Secretary of State to intervene in mergers on national security grounds under the Enterprise Act 2002.

The following changes, reflected in CMA2, are of note:

•                  The scope of public interest interventions, under section 42 of the Enterprise Act, no longer refers to "national security" as one of the public interest considerations that the Secretary of State may take into account when issuing a public interest intervention notice (PIIN).

•                  Defence mergers can no longer give rise to a special merger situations, allowing intervention under section 59 of the Enterprise Act.

•                  The CMA may share confidential information with the Secretary of State and the Investment Security Unit (ISU) in BEIS to facilitate coordination, as may be appropriate, in cases being investigated in parallel under the Enterprise Act and NSIA 2022.

•                  The CMA and the ISU expect to coordinate to manage interactions between these different regimes.

The previous statutory framework continues to apply in all cases where a formal Phase 1 or Phase 2 investigation has started and cases where the Secretary of State has issued a PIIN.  It will also apply in cases where a trigger event occurs prior to 4 January 2022 and in relation to which the Secretary of State issues a PIIN after 4 January 2022.  The revised guidance will be applied to all other mergers from 4 January 2022 onwards.

Although the substantive provisions of the NSIA 2021 come into force on 4 January 2022 it contains retroactive powers to call in for review as of that date (or potentially up to five years thereafter) any qualifying transaction completed between 12 November 2020 and the commencement date.  

The new NSIA 2021 means that it is essential for investors to review its potential application and the interface with mainstream merger control for all transactions completed from 12 November 2020 which could potentially raise national security concerns.