Britain moves to protect its defense industry from foreign influence

By: Andrew Chuter

LONDON – Defense and space industries are among nearly twenty sectors named by the British government in the introduction of new legislation Nov. 11 aimed at tightening regulations allowing it to block potentially hostile direct foreign investment.

The government said the National Security and Investment Bill will strengthen its ability to investigate and intervene in mergers, acquisitions and other types of deals potentially posing a threat to British national security.

Artificial intelligence, robotics, military or dual-use technologies, satellite and space technologies, defense and critical suppliers to the government were among 17 industry sectors included in the new legislation.

The new powers allow the government to act against investors from any country, including the United States.

“Under the National Security and Investment Bill, the government will be taking a targeted, proportionate approach to ensure it can scrutinize, impose conditions on or, as a last resort, block a deal in any sector where there is an unacceptable risk to national security,” said the Department for Business, Energy and Industrial strategy in a statement.

The acquisition of sensitive assets and intellectual property, as well as the acquisition of companies is covered by the legislation.

The government said the move brings British legislation into the 21st century.

Reporting of deals in the sectors covered by the legislation will be mandatory and companies could face heavy fines and the transactions made void if they fail to get approval from the Business department.

Britain's effort to shut the door on unwelcome investors like the Chinese is part of a growing trend among Western nations.

Earlier this year the United States introduced mandatory notification requirements for transactions concerning specified types of businesses as part of a broader program of reform.

The Australian government have also introduced legislation requiring foreign investors to seek approval to acquire a direct interest in sensitive national security businesses.

The powers pending before parliament are similar to those already in place with allies like France, Germany and Italy, said the government.

Paul Everitt , the chief executive of the defense, aerospace and security lobby group ADS, welcomed the move but said it was important the government didn't deter overseas investors.

“The government's plans must strike an appropriate balance between putting protections in place and continuing to ensure the UK remains an attractive environment for international investment,” said Everitt.

Consultant Howard Wheeldon, of Wheeldon Strategic Advisory, also supported the government action, but he cautioned: “Does it [the legislation] have sufficient teeth? We certainly need to protect our specialist industry but we must also ensure and expect the playing field to be kept level.”

https://www.defensenews.com/global/europe/2020/11/12/britain-moves-to-protect-its-defense-industry-from-foreign-influence/