The UK government is proposing to expand its power to intervene in mergers on 'national security' grounds

The UK government is proposing to expand its ability to intervene in mergers and takeovers when it believes they threaten national security.

On Tuesday the government published a Green Paper, “National Security and Investment and Infrastructure Review,” and launched a public consultation into the plans.

The consultation is seeking views on how the government can “best ensure that investments and takeovers do not raise national security concerns,” and notes that openness to trade in the UK needs to come with “safeguards.”

Under the Enterprise Act 2002, the government can intervene in takeovers on “exceptional public interest” grounds, which include national security concerns and taking action to ensure the stability of the UK financial system.

The government is now seeking views on a short-term proposal to amend the Enterprise Act, to allow it to examine and potentially intervene in mergers that fall outside the current threshold in two sectors: the dual use and military use sector, and in parts of the advanced technology sector.

For these areas, the government is proposing to lower the supplier turnover threshold from £70 million to £1 million, and remove the current requirement for the merger to increase the share of supply to over 25%.

This part of the consultation will last four weeks, closing on 14th November.

“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,” Business, Energy and Industrial Strategy Secretary Greg Clark said in a statement after the plans were announced.

Chinese firm Canyon Bridge’s planned acquisition of Imagination Technologies has caused some concern in government, since the firm was blocked from carrying out a takeover in the US after defence officials raised concerns.

The second part of the consultation will focus on potential long-term reforms to ensure that investments and takeovers do not raise national security concerns.

This part of the consultation will last for 12 weeks, closing on January 9 2018.

On Monday European aerospace firm Airbus announced it will acquire a 50.01% stake in Bombardier’s C-Series jet project, in order to boost sales.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.