John Fingleton, Ying Wu and Jayanthi Ezekiel have recently written for Global Competition Review, setting out practical advice for navigating increased risk under the UK National Security and Investment Act (NSI Act). The UK NSI Act came into force on the 4th January 2022.
The full chapter is available here.
- The UK government’s new powers to intervene in transactions are coming into force against a backdrop of increasing concerns about national control, and without any formal definition of the term ‘national security’. Together, these factors increase uncertainty for businesses and investors, creating greater process, outcome, reputation and financial risk for transactions with a UK nexus.
- As part of early risk assessment, business and investors need to understand not just the legal thresholds and process under the NSI Act, but also the political and broader industry context for their deal. Understanding the nature of any potential concerns will help parties evaluate the likelihood of being ‘called in’ a full national security review, the extent to which concerns may be assuaged without remedies, and if necessary, whether the parties are capable of offering remedies to resolve any remaining concerns.
- Constructive engagement will be crucial to minimising the potential risks. This includes:
- considering which government departments are likely to be consulted as part of the review process;
- adopting a proactive and open approach so that
- the Investment Security Unit and government departments feel that they have been properly informed of key facts and issues from the outset;
- focusing on supporting the objectives of the NSI Act regime and the formal review process, minimising distractions beyond the national security remit; and
- providing a consistent view across their interactions with various government and industry stakeholders. This also applies to any parallel regulatory (e.g. Competition and Markets Authority) processes in relation to the same market(s) or transaction.