National security reviews 2018: United Kingdom

by White & Case LLP

White & Case LLP

National security interventions have, with one exception, involved defense considerations

Over the past year, there have been a number of important changes (actual and proposed) to legislation permitting intervention by the UK Government in transactions that may raise national security concerns. Unlike many other jurisdictions, acquisitions in the UK in potentially sensitive industries do not, as a matter of course, require parties to seek approval from a regulator or the Government.

The changes introduced in June 2018 were designed to fill a gap and cover those cases with the greatest potential to raise national security concerns but which were not caught by existing legislation.

Following a Government consultation designed to "strengthen powers for scrutinizing the national security implications of particular types of investment" the notification regime remains voluntary. However, a number of changes have been implemented to strengthen the Government's powers and allow for intervention in a wider range of cases.


The Government adopted some changes in June 2018, and is also proposing more wide-reaching changes that will require a new Act of Parliament. The changes introduced in June 2018 were designed to fill a gap and cover those cases with the greatest potential to raise national security concerns but which were not caught by existing legislation.

These short-term changes amended the Enterprise Act 2002 to reduce the thresholds at which interventions could be made in cases involving a target active in one of three areas: the development or production of military or dual-use goods; the design and maintenance of computing hardware; and the development or production of quantum technology.

The Government can now intervene in an acquisition in any of these areas if the annual UK turnover of the target is £1 million or more (reduced from £70 million, which remains the threshold for all other cases), or if the target alone accounts for 25 percent or more of purchases or sales of any goods or services in the UK. Previously, the parties had to overlap such that there was an increment leading to a combined share of supply of 25 percent or more. This requirement no longer exists for cases in the three identified sectors, and a deal can be caught even if there is no overlap with the purchaser.

The Government anticipates between five and 29 additional cases per year will be caught by the amendments that came into force in June 2018.


The Government's long-term objective is to more comprehensively reform its powers of scrutiny over investments that may pose a risk to national security. The intention is to implement this regime with a new piece of primary legislation.

Under the proposed changes, notification will remain voluntary but parties will be encouraged to notify their transaction. As with the UK's general merger regime, transactions that are not notified may be subsequently investigated and remedies imposed if found to be problematic. The Government expects approximately 200 notifications a year under the new national security regime and that approximately half of these will progress to a full assessment. Of those, the Government estimates that 50 will result in a remedy of some sort, which could vary from implementing some ring-fencing (e.g., of individuals and/or information) to outright prohibition.

Where parties choose not to notify, the Government may still decide to "call in" transactions that result in a "trigger event." It is proposed that these trigger events will include the acquisition of more than 25 percent of an entity's shares or votes, significant influence or control over an entity, or further acquisitions of significant influence or control over an entity beyond these thresholds. Acquisitions of assets will also be covered, which is not always the case under the existing rules. The timescale for post-closing intervention in national security cases will be increased to six months after the details of the transaction are in the public domain (the current time limit is four months).

The Government has indicated that it will consider three factors when determining whether a trigger event could lead to a national security risk: "target risk," whereby the entity or asset in question could be used to undermine national security (i.e., where the nature of the target's business could pose a potential risk); "trigger event risk," whereby the acquisition itself gives someone the means to undermine national security (e.g., by affording greater opportunity for disruptive actions or espionage); and "acquirer risk," where the acquirer itself has the potential to use its control over the target to undermine national security (e.g., where acquisitions are carried out by entities controlled by hostile states or other hostile parties).

The new legislation will provide that all national security considerations be assessed by the Government. Therefore the existing role of the Competition & Markets Authority (CMA) —the UK's main antitrust agency—to investigate and report to the Government when an intervention is made will be removed. The proposed legislation will also introduce civil and criminal sanctions to deal with non-compliance with any remedies that might ultimately be imposed.

The Government is expected to publish draft legislation in 2019, following its assessment of comments received as part of the current consultation process. As a degree of uncertainty still surrounds details of the proposed new regime and the fact that any new legislation is unlikely to take effect until 2020 at the earliest, the remainder of this article focuses on the existing law.


As there are currently no specific requirements relating to deals that may raise potential national security issues, strictly speaking no person needs to file an application. Rather, if the UK Government considers that a deal raises national security issues, the Secretary of State (SoS) may issue an "intervention notice."

The procedures for the SoS to issue an intervention notice, and—if considered appropriate—ultimately block a deal, are set out in the Enterprise Act. If an intervention notice is served, then the acquirer (and others as appropriate) will be required to provide information.


The Enterprise Act currently allows the SoS to intervene when specified public interest considerations arise. In addition to national security, the other specified public interest considerations relate to media plurality, quality and standards, and the stability of the UK's financial system. These powers have been bolstered by the June 2018 amendments mentioned above if the target is active in military or dual use goods, computing hardware or quantum technologies.

Prior to the June 2018 amendments, there was no guidance as to what industries were relevant to national security, although in all but one case national security intervention notices involved defense considerations. The lowering of thresholds for transactions involving targets active in computing hardware and quantum technology in June 2018 indicates that there is potential going forward for a greater number of non-defense-related transactions to be scrutinized on national security grounds.

The first Government intervention under the new thresholds was in the aerospace sector, with a target active in the manufacture of dual-use goods. That case—the proposed acquisition of Northern Aerospace Limited by Gardner Aerospace Holdings Limited, a Chinese company—was ultimately cleared by the Government (although the intervention caused the deal to be abandoned).

In cases to date, the Ministry of Defence on several occasions raised concerns about the maintenance of strategic UK capabilities and the protection of classified information, including when the acquirers have been from the US or other NATO allies. In these cases, the deals have been approved following undertakings provided by the acquirer to address the concerns, often involving the ring-fencing of sensitive information.


When an intervention notice on national security grounds is issued, the CMA must investigate and report to the SoS—but, as noted above, the legislative proposal is to remove the CMA from all national security reviews. Under the current system the CMA will consult on the national security issues and its report will summarize any representations received on the matters specified in the SoS's intervention notice and, where relevant, will also deal with any competition issues.

The SoS will consider the CMA's report and decide whether the transaction should be subject to a more in-depth "Phase 2" review by the CMA, or whether to accept any undertakings the acquirer may have offered to address public interest concerns, or indeed—which has never happened to date—whether the public interest concerns are not warranted or do not require any remedial action.

If there is an in-depth review by the CMA, it is required to report whether the transaction operates or may be expected to operate against the public interest, and make recommendations as to the action the SoS or others should take to remedy any adverse effects. The SoS will make the final decision on the public interest issues and any remedial steps to address the public interest issues.


The specific focus in the recent reforms on military and dual-use technology, quantum technology and computing hardware reflects the fact that national security risks are increasingly likely to arise in the technological and cyber spheres. As general concerns about cybersecurity and control of critical infrastructure networks become more commonplace, it would not be surprising to see more SoS interventions on national security grounds.


Potential issues should be considered as early in the planning process as possible, and increasingly in any case—not just defense-related deals—that might be considered to touch on national security. State-owned acquirers, or those with material links to (or financing by) state-owned enterprises, should be particularly well prepared, and consider what undertakings they might be prepared to give, if concerns are raised.

To date, such undertakings have tended to relate to ensuring the protection of classified information and ensuring UK capabilities. Early engagement with the relevant Government departments would also be sensible, especially if an auction process is likely, because the target will want to ensure that the acquirer is able to complete any proposed deal. The collapse of the Gardner/Northern deal may have been due, in part, to inadequate planning and preparation on the potential national security issues.


Under the current regime, the CMA typically reports to the SoS within four to six weeks of the intervention notice, with the SoS's decision following shortly thereafter. If the SoS decides the CMA should conduct a Phase 2 investigation, it will take up to a further 24 weeks (followed by the time for the SoS to reach a final decision).


  • The thresholds at which Government interventions can be made have been lowered in cases involving targets active in one of three areas: the development or production of military or dual-use goods; the design and maintenance of computing hardware; and the development or production of quantum technology
  • The Government can now intervene in an acquisition in any of these areas if the annual UK turnover of the target is £1 million or more (reduced from £70 million, which remains the threshold for all other cases), or if the target alone accounts for 25 percent or more of purchases or sales of any goods or services in the UK. Previously, the parties had to overlap such that there was an increment in their combined share of supply resulting in a share of 25 percent or more. This requirement no longer exists for cases in the three identified sectors
  • Under the lower thresholds in these three specific sectors, the UK Government anticipates an additional 5 to 29 mergers will be captured annually by the new rules
  • More wide-reaching changes to the national security landscape are planned. New legislation is proposed, which will cover a wider range of transactions that may pose a risk to national security (including acquisitions of assets). The revised regime will remain voluntary, meaning that there will be no obligation to notify deals that may affect national security. However, non-notified deals will be susceptible to review for up to six months after details become public


- No deal has been blocked by the SoS on national security grounds

- All national security cases to date have resulted in behavioral remedies (e.g., ring-fencing information and ensuring strict controls are in place) in lieu of a detailed Phase 2 investigation. No divestments have been required

- Intervention on national security grounds is no longer limited only to defense-related transactions

- The radical changes proposed by the Government to the rules for reviewing deals potentially affecting national security are likely to have a material impact on M&A in the future

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© White & Case LLP | Attorney Advertising

Written by:

White & Case LLP

White & Case LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.