UK issues Notice to Exporters on new national security-related M&A rules

The UK’s Department for International Trade (‘DIT’) and Export Control Joint Unit have issued a notice to alert exporters to new rules strengthening the government’s powers to scrutinise mergers and takeovers that may raise national security concerns. The rules amending the Enterprise Act 2002 came into force on 11 June 2018.

The new legislation amends the threshold tests for businesses in the military, dual-use, computing hardware and quantum technology sectors, including those that develop or produce goods on some of the Strategic Export Control Lists.

The government is now able to intervene ‘for public interest reasons’ when the target business’s UK turnover is over £1m, rather than £70m under the previous rules. The requirement that a merger or takeover must lead to an increase in the parties’ combined share of supply of relevant goods or services before the government is able to intervene has been removed.

Exporters are advised to ensure that they are up to date with the legislation amending the ‘share of supply’ test and turnover threshold, as well as the guidance.

Notice to Exporters 2018/13 can be found here:
https://www.gov.uk/government/publications/notice-to-exporters-201813-new-merger-and-takeover-rules-potentially-affecting-uk-exporters-in-force-from-11-june-2018?utm_source=deb24e7a-3364-4da8-a7fe-1866cb5cc661&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

The Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2018 can be found here:
http://www.legislation.gov.uk/ukdsi/2018/9780111167441/contents

The Enterprise Act 2002 (Turnover Test)) (Amendment) Order 2018 can be found here:
http://www.legislation.gov.uk/uksi/2018/593/contents/made

The guidance can be found here:
https://www.gov.uk/government/publications/enterprise-act-2002-guidance-on-changes-to-the-turnover-and-share-of-supply-tests-for-mergers