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Updated rules to strengthen the government’s powers to scrutinise takeovers that may raise national security concerns in specific areas of the economy will be introduced to Parliament today (15 March 2018).
Under current rules, the government can only intervene in mergers when they meet certain tests related to the target company’s turnover or where the merger causes an increase in the parties’ overall share of supply of goods or services.
However, these rules do not properly recognise the growing importance of small British businesses in developing cutting edge technology products which can have national security applications.
In order to address this change in the market, the government will amend the tests for businesses in the military, dual-use, computing hardware and quantum technology sectors that are most likely to have implications for our security.
Today’s rule change will remove the requirement for a merger to lead to an increase in the share of supply. In the coming weeks the government will introduce complementary measures to lower the test for ministerial intervention in relation to the target business’s turnover to over £1 million, down from £70 million under current rules. Both are subject to Parliament’s approval.
Business Minister Richard Harrington said:
Around 75,000 new jobs were created in the UK last year thanks to foreign investment. However, our economy can only thrive if our national security is protected, so it is right that we keep our powers of intervention under review to ensure the rules keep pace with innovation.
These new measures will allow us to ensure that takeovers in key areas of the economy cannot risk the UK’s national security whilst maintaining our position as one of the most open and modern economies in the world.
The changes follow a consultation launched last year to amend the Enterprise Act to reform and strengthen the government’s powers. Today’s rule changes are the first step in its plans – broader changes will be announced in a white paper later this year.
The government has also published draft guidance for businesses so they can easily identify and adapt to the changes to legislation.
The consultation on longer term proposals closed on 9 January. The government will publish a response to this consultation in due course.
Under the current Enterprise Act 2002 ministers can intervene in mergers (foreign or domestic) that give rise to specific public interest concerns of national security, financial stability or media plurality. However, for ministers to be able to intervene, the transaction has to meet certain thresholds. These are that the target company has a UK turnover of over £70 million, or that the merger takes the merging parties’ combined share of supply to 25% or more (or increases an existing share of supply of 25% or more). There are limited exceptions to this related to some defence and media transactions.
The affirmative statutory instrument introduced today amends the share of supply test to allow the scrutiny of more mergers in three areas: (a) the military and dual-use sector, (b) 2 parts of the advanced technology sector, encompassing computing hardware and quantum technologies. For these areas alone, this instrument amends the share of supply test so that it is met where a merger or takeover involves a target with 25% or more share of supply in the UK, as well as where the deal leads to an increase in the share of supply to, or above, this threshold, which is the current requirement.
Subject to Parliamentary approval being obtained for this affirmative instrument, a second, negative statutory instrument will be laid to amend the turnover test to allow the scrutiny of more mergers in the same 3 areas of the economy. The second instrument will lower the threshold over which the target business’s UK turnover must be, from over £70 million to £1 million. We intend that both instruments would come into force at the same time, subject to scrutiny of the House.
We have a tradition in Britain that any town with a cathedral becomes a city. Salisbury won that title nearly 800 years ago, thanks to the magnificent cathedral that still dominates its streets.
So you can imagine Britain’s sense of revulsion – indeed of violation – over the fact that a tranquil medieval city has witnessed the first offensive use of a nerve agent in Europe since World War II.
As I write, the principal target, Sergei Skripal, and his daughter, Yulia, are both in critical condition. A police officer who went to their aid is also in the hospital. About three dozen others required medical treatment simply because they were nearby when the substance was released.
It was only down to chance that more people are not lying stricken today; the perpetrators clearly did not care how many innocents were endangered. What sticks in my mind is the cavalier indifference – and sheer brazenness – of this attack.
Our experts have identified the weapon used in Salisbury on March 4 as a fourth-generation nerve agent known as Novichok, designed to play havoc with the central nervous system and inflict a lingering death.
Russian scientists developed Novichok starting in the 1970s. Today, only Russia combines a record of state-sponsored assassinations with a publicly avowed motive for trying to kill Sergei Skripal and stockpiles of Novichok agents.
On Monday, I summoned the Russian ambassador and gave his government 36 hours to inform us if any of these stocks had somehow gone missing.
I regret to say that the deadline passed without a response from the Kremlin. The British government has drawn the only plausible conclusion: that the Russian state attempted murder in a British city, employing a lethal nerve agent banned under the Chemical Weapons Convention.
On Wednesday, Theresa May, the Prime Minister, announced the biggest expulsion of Russian diplomats from Britain for more than 30 years, evicting 23 undeclared intelligence officers. The government will now take a range of measures to protect Britain from hostile states and dismantle the Russian espionage network in our country.
But this matter goes far beyond a bilateral dispute. If the Russian state is prepared to deploy a banned weapon in a British city – amounting to the unlawful use of force against the United Kingdom – then the Kremlin is clearly willing to act without restraint. The bleak truth is that what happened in Salisbury could have happened anywhere.
I interpret this incident as part of a pattern of reckless behavior by President Vladimir Putin. The common thread that joins the poisonings in Salisbury with the annexation of Crimea, the cyberattacks in Ukraine, the hacking of Germany’s Parliament and Russian interference in foreign elections is the Kremlin’s reckless defiance of essential international rules.
Most tellingly of all, Russia has made immense efforts to conceal the use of chemical weapons by the Assad regime in Syria. In October, an international investigation concluded that Bashar al-Assad’s forces had used the nerve agent sarin against the town of Khan Sheikhoun in April 2017.
Yet instead of condemning Assad, Russia covered up for him by vetoing the renewal of the international inquiry and, in effect, forcing it to shut down.
How much easier does it become for a state to deploy chemical weapons when its government has already tolerated and sought to hide their use by others? I would draw a connection between Putin’s indulgence of Assad’s atrocities in Syria and the Russian state’s evident willingness to employ a chemical weapon on British soil.
There is a reason for choosing Novichok. In its blatant Russian-ness, the nerve agent sends a signal to all who may be thinking of dissent in the intensifying repression of Putin’s Russia. The message is clear: We will find you, we will catch you, we will kill you – and though we will deny it with lip-curling scorn, the world will know beyond doubt that Russia did it.
As a permanent member of the UN Security Council, Russia has a special obligation to uphold the rules of good international conduct. When it does the opposite and tramples upon these rules, the Kremlin threatens the very architecture of global security.
All responsible nations share an obligation to take a principled stance against this behavior. The countermeasures announced by the Prime Minister are not solely about the attack in Salisbury. Britain is striving to uphold the rules on which the safety of every country depends. I hope and believe that our friends will stand alongside us.
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This introductory video explains how the jHub model works to successfully deliver capability into the hands of the military user at pace.
We look for market ready or near market technology. We don’t conduct scientific and technical research. We are specifically interested in building ‘MilTech’, this is cutting edge digital technology that can be adapted for military use.
Our 5 focus areas are:
If there is a good balance between user need, technological feasibility and business viability, then our target time to pilot is 30 working days.
The length of the pilot is determined by the user and supplier; the critical component is that the partnership is agile.
We have privileged access to the JFC Innovation Board, chaired by Commander JFC. For successful pilots, we ask the board to make significant delivery and funding decisions
The board meets every 3 months but can be activated out of session as required. Ultimately, an innovation will be judged a success when it delivers capability into the hands of users.
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