UK Law and Practice Contributed by: Carly Gulliver, Giles Distin, David Anderson, James Dawson, George Danczak and Elvan Hussein, Addleshaw Goddard
The UK Competition and Markets Authority (CMA) also regulates M&A, whether of listed or unlisted busi- nesses, from a competition perspective. The FCA and/or PRA have oversight of UK financial services businesses, and of certain other businesses involved in certain financial services-related activities, including regarding M&A activity involving those busi- nesses. Acquisitions of companies with business in certain stipulated national security-related sectors and sub- sectors, or of stakes in such companies, are regulated by the UK’s Investment Security Unit. 7.3 Restrictions on Foreign Investments Foreign investment in the UK is not subject to a spe- cific, overarching review regime. However, the NSIA establishes a mandatory and suspensory review process for acquisitions in 17 key sectors, including Advanced Robotics, Artificial Intelligence, Computing Hardware and Data Infrastructure. Under the NSIA, clearance is required for acquisitions of shares or voting rights crossing 25%, 50% or 75% thresholds, or where material influence is acquired. The regime also allows for a broader “call-in” power for acquisitions of assets, IP or ideas. In addition, the government retains powers to intervene in transac- tions on public interest grounds, such as media plu- rality or financial stability, although these are used infrequently and are not limited to foreign investments. 7.4 National Security Review/Export Control The UK operates a national security review regime for acquisitions under the NSIA, which applies to both domestic and foreign investors. There are no specific rules that favour or restrict particular nationalities or types of investors; reviews are primarily driven by the target’s activities rather than the investor’s origin. However, in practice, investors from all backgrounds have faced scrutiny, including those from “friendly” nations and the UK, with some high-profile reviews involving investors linked to countries such as China. In addition to the NSIA, the UK has export control legislation that may apply to certain transactions. Investors should assess whether export controls are
relevant to their proposed acquisition, as compliance is mandatory where applicable. 7.5 Antitrust Regulations The CMA has jurisdiction to review a transaction where two enterprises cease to be distinct and any of the following thresholds are met: • the target has UK turnover of GBP100 million or more (the turnover test); • the parties to the transaction have a share of sup- ply of any goods or services within the UK (or a substantial part of it) of 25% or more (the share of supply test); or • one party has UK turnover of at least GBP350 million and has a share of supply of any goods or services of at least 33% and one other party has a UK nexus (the hybrid test). Whether enterprises have ceased to be distinct is technical and complex but can arise in the context of a merger or acquisition, including the acquisition of a minority share or certain rights over a target that amount to “material influence”. It can also apply to joint ventures. Merger control filings are neither mandatory nor sus- pensory in the UK. However, the CMA has the abil- ity to “call-in” a transaction for review for up to four months post-closing (although it can and has exer- cised this power significantly after this point where the transaction was not made reasonably public). Where the CMA intervenes in a transaction post-closing, it will almost always impose an initial enforcement order that places onerous obligations on the parties to hold the target separately and to maintain their businesses. 7.6 Labour Law Regulations The Transfer of Undertakings (Protection of Employ- ment) Regulations 2006 are likely to apply to a busi- ness and asset acquisition. They are unlikely to apply to share acquisitions. • Employees automatically transfer to the buyer on their existing terms and conditions of employment (which are protected). Most liabilities regarding their employment also transfer. • A seller must:
305 CHAMBERS.COM
Powered by FlippingBook