Mergers involving technology firms which make microchips, quantum computers or other items with potential military use could face greater government scrutiny.
Published yesterday, the consultation is seeking opinions on how the government could widen its ability to intervene in investments and takeovers on national security grounds.
The Enterprise Act 2002 enables the government to intervene in deals if grounds of “exceptional public interest” are met.
According to the proposals, the government now wants to see whether it would be able to intervene in transactions that fall outside the currently established threshold across two sectors: the advanced technology industry and firms which design or manufacture military and dual use products.
For now, the government is only able to intervene in mergers involving companies in the UK with a turnover of more than £70m or where the share of UK supply rises to 25% or more.
The new proposals seek to lower the threshold to firms with a UK turnover of £1m and eradicate the second requirement.
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Business and energy secretary Greg Clark said: “Britain has and always has had a proud record of being open to the world as the foremost advocate of free trade. It is right that every so often the government reviews its mergers regime to close loopholes where they arise and this is what these proposals do in the area of national security.
“No part of the economy is off-limits to foreign investment and the UK will continue to be a vociferous advocate for free trade and a magnet for global talent.”
The government is also consulting on longer-term proposals which would allow for greater scrutiny of transactions that may raise national security concerns – potentially including increasing risks of espionage, sabotage, or the ability to exert inappropriate leverage.