USA Law and Practice Contributed by: Bradley Justus, Lisl Dunlop, Josh Jowdy and Sandhya Taneja, Axinn, Veltrop & Harkrider LLP
bling legislation and regulations apply equally to acquirers of all nationalities, acquirers with ties to China have tended to receive greater scrutiny. If CFIUS determines it has national security con - cerns about a given transaction, it can negotiate with the parties to put in place measures that mitigate those concerns (eg, limiting access to sensitive systems or facilities to US personnel) or it may recommend that the President block the transaction altogether. A Presidential block is rare – fewer than ten transactions have been blocked in the 40-plus years CFIUS has been in existence. However, in May 2024, President Biden issued a presiden - tial order to require the divestiture of real estate related to a cryptocurrency mining facility near a Wyoming Air Force base, which had previously been acquired by Chinese nationals without CFIUS review. In January 2025, President Biden issued another presidential block to prohibit the acquisition of US Steel by Japanese steelmaker Nippon Steel. The parties brought an action in federal court to challenge the block on procedural grounds, which remains pending as of May 2025. Before taking office, both in his campaign and after the election, President Trump publicly opposed the acquisition of US Steel by a non-US buyer, and committed to blocking the transaction. But since taking office, President Trump directed CFIUS to conduct a further, de novo review to deter - mine whether further presidential action would be appropriate – including, for example, abroga - tion of President Biden’s block order. As of May 2025, the transaction remains pending.
President Trump’s announcement of an America First Investment Policy by executive order on 21 February 2025 suggests a continued aggressive CFIUS policy, particularly with respect to invest - ments by Chinese entities. CFIUS has historically focused on inbound investment. In January 2025, pursuant to Presi - dent Biden’s August 2023 Executive Order, a new Outbound Investment Program (OIP) took effect to regulate outbound investments, focusing on investments into China in the areas of semicon - ductors and microelectronics, quantum informa - tion technologies, and artificial intelligence. The OIP that has taken effect is significantly scaled back from the broad programme announced in President Biden’s 2023 executive order. As of May 2025, the OIP remains in effect under Presi - dent Trump. Parties should continue to monitor OIP implementation to ensure their transactions comply with all operative requirements. Foreign Merger Subsidy Disclosure Act Under the Foreign Merger Subsidy Disclosure Act (FMSDA), signed into law in December 2022, parties filing pre-merger notifications under the HSR Act will be required to disclose informa - tion about subsidies they receive from “foreign entities of concern”, such as entities controlled by China, Iran, North Korea, Russia, and other entities included on the Specially Designated Nationals and Blocked Persons List (SDN).
727 CHAMBERS.COM
Powered by FlippingBook