Jasper Helder is a senior partner at Akin Gump, and one of the most experienced and well named professionals advising on national security, trade policy and export controls issues in the country.
In light of a number of recent controversies around the takeover of British companies, Jasper joined Kiran to discuss the 2002 Enterprise Act, and the forthcoming National Security and Investment Act, which is coming into force in January 2022.
What the Enterprise Act 2002 was meant to do
In 2018, merger controls were put in place to try and clarify the Enterprise Act 2002, because it was felt that the government didn't have any intervening powers in such transactions that might be relevant for national security.
“Now, the biggest debate around all of this is going to be, well, what actually is national security?”
For Jasper, this is fairly intuitive - key suppliers to the MOD, technology, energy etc, however the nuance now is because national security is starting to move away from just these things, as geopolitics shift.
The problem with the merging control thresholds
The problem with the introduction of these merging control thresholds is that people are concerned that by giving so much discretionary authority to the government, it might discourage investors from investing in the UK.
You’ve also got to really understand the industry sectors you’re trying to define, says Jasper. For example, in July 2020, artificial intelligence, cryptographic authentication technology and advanced materials were three areas the government has said they want to focus their attention on.
“But it's not industry sectors in their entirety, it's actually very well defined concise portions of specific technology that the government is zooming in on.”
National pride versus national security
“I don't think it's necessarily about national pride, I think it's more about wanting to have our own sovereign capability to manufacture things, or develop technologies without being reliant on anyone else.”
Just look at the relationship between the UK and the EU, it’s never been so fraught. And if we were dependent on products or services exclusively generated in another country, that creates a dependency which could be a national security risk.
National Security and Investment Act
The key difference, says Jasper, between the Enterprise Act and the National Security Investment Act is the catchment area under the latter is much broader.
But, he continues, we will see examples in future deals where it's not necessarily dependency on key technology for the UK Government, or key sectors of the economy, that becomes relevant from a national security consideration, more it’s about retaining that technology in the UK.
“The National Security Investment Act allows a much broader range of national security topics to be brought in. I think we're going to see some interesting political debate.”
How to mitigate national security concerns
If there’s one thing English lawmakers are good at, says Jasper, it’s being creative with the law.
“There's lots of things you can do to mitigate national security concerns. You can ring fence certain technology… when it comes to personal data of UK citizens, you could ring fence that… it's not a black or white zero sum game.”
And for outside investors wanting to invest in a UK company, Jasper advises they first identify potential national security concerns up front. Then they need to be able to communicate their intentions with the deal, with their investment, effectively to the government to address those concerns.
“You need to have lawyers who understand the regulations, the process. You also need people with a background in administration who understand how decision making in this area works. And you need to have communication experts that can help you to get the right message across to the right people at the right time.”
Make your plan upfront, says Jasper, don’t plan as you’re going through the process.
Jasper’s Montfort Maxim
What would Jasper’s advice be for a client who may be about to become involved in a transaction that would involve the Enterprise Act, or the National Security Investment Act?
“I would say step outside yourself, your own ideas, conceptions about your deal, and put yourself in the government's shoes. And then try to look at your contemplated deal objectively… and consider whether you think this transaction would warrant a calling or not.”
Discussed in this podcast episode: