The UK merger regime has emerged unscathed from the Government’s review of industrial strategy
The Prime Minister today unveiled a new, more interventionist industrial strategy – intended to boost the UK economy after Brexit. Last year it appeared that part of that strategy would involve extending the Government’s powers to block mergers on non-competition grounds, but that aspect of the plan appears to have been scaled back.
In July, Theresa May said that it would have amounted to ‘asset stripping’ if the US drugs company Pfizer had been allowed to take over the British company AstraZeneca, opining that a “proper industrial strategy … should be capable of stepping in to defend a sector that is as important as pharmaceuticals is to Britain”.
This would have required changes to the UK merger regime, under which takeovers are generally assessed solely by reference to competition considerations – save where they could undermine defence, media plurality or financial stability.
Various concerns were raised. Among others, the CMA noted that allowing proposed takeovers to be blocked on the basis of additional non-competition criteria would make the merger regime less clear and less certain, which might reduce investment into the UK.
It seems that the Government has listened. No such proposal was contained in today’s Green Paper on industrial strategy, which instead acknowledges that the “UK has benefitted greatly from its open economy”. In an interview with the Financial Times on Friday, the Prime Minister indicated that any changes were likely to be limited to mergers affecting critical national infrastructure, such as UK nuclear power plants.
This is likely to come as a relief to most competition lawyers, who will have plenty of other changes to get to grips with over the coming years as a result of Brexit (as discussed here).