National interest screening: a growing challenge for international transactions?
31 January 2019
The proliferation of merger control regimes around the world – and the resulting need to consider potential notification requirements in multiple jurisdictions – poses an increasing burden for businesses seeking to make international mergers and acquisitions. A further regulatory dimension is now coming into play when planning cross-border transactions: screening by relevant authorities for compatibility with the national interest.
Scrutiny of foreign investments to assess their compatibility with the national interest is by no means new: countries such as Australia and the U.S. have had well-established screening mechanisms for many years. However, in recent years, governments around the world, while continuing to welcome the benefits brought by such investment in terms of jobs and economic growth, have shown a growing sensitivity towards its potential risks. These risks are commonly framed in terms of national security, though wider economic policy issues may also be at play (and the distinction between the two is not always clear-cut). At the same time, many governments are taking an increasingly broad view of the sectors which should be regarded as strategically important and in which new investment may give rise to national interest concerns. In doing so, they are going well beyond the traditional focus of intervention in the defence sector, with high-tech industries and critical infrastructure now frequently coming under the spotlight.
As a result, businesses will need to navigate increased complexity, uncertainty and risk in executing transactions, in an increasingly broad range of economic sectors and jurisdictions.
Our antitrust and regulatory team has published a report discussing these issues and developments.
See here for the full publication.