Highlights from CFIUS’s 2019 annual report to Congress

‘Foreign’ (i.e., non-US) governments are ‘extremely likely’ to attempt to obtain critical US technologies. So warns the Committee on Foreign Investment in the United States (‘CFIUS’) in its 2019 annual report to Congress, which identifies foreign intelligence agencies as the most ‘persistent and pervasive cyber intelligence threat tied to economic espionage and the potential theft of U.S. trade secrets and proprietary information.’

Amongst the less controversial highlights of the unclassified report are:

• Transaction notices were filed from 35 different countries in 2019, with Japan by far largest filer. China was next with 25 filings and Canada with 23. France, Germany and the United Kingdom each filed 13 notices.
• Notices filed by acquirers in Singapore doubled to 10 compared to the previous year, while notices by South Korea rose to 10, from four in 2018. 
• There was a significant decrease in the number of notices filed by acquirers from France (13 in 2019, down from 21 in 2018), Canada (23 in 2019, down from 29 in 2018 and Russia (one in 2019, down from six in 2018.
• 113 of the 231 notices – or 49% of those filed – went into the 45-day investigation phase.
• Of the 231 notices filed in 2019, 30 total notices were withdrawn, less than half the amount in 2018.
• 33 (14%) of the covered transactions were approved by CFIUS, subject to the acceptance of mitigation arrangements.
• The largest number of transactions was in the manufacturing, finance, information and services sectors. Manufacturing accounted for 44% of the filings, while finance, information and services totalled 39%.
• There was a marked decrease in filings in the mining, utilities and construction sectors, falling from 21% in 2018 to 9% in 2019

In 2019, CFIUS found that 92 cases involved acquisitions of US critical technology companies, with acquirers from 27 countries and territories. The countries with the highest number of notices regarding critical technology were Japan (20), Germany (11), France (7), Canada (7) and South Korea (6).

https://home.treasury.gov/system/files/206/CFIUS-Public-Annual-Report-CY-2019.pdf