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New national security rules on takeovers come into force



New rules that will make it easier for the government to block takeovers or mergers on national security grounds have come into force.

The changes, coming into effect on Monday, relate to businesses developing technology or hardware that is or may be used by the military.

They will mean that ministers can intervene on certain grounds when the target business’s UK turnover is more than £1m – down from £70m under previous rules.

The new changes also scrap a requirement that a deal would have to increase the market share of the combined firms before the Government can intervene.

Business minister Richard Harrington said: “These new rules ensure mergers and takeovers in key areas of the economy cannot risk our national security, while maintaining the openness to trade and investment that is underpinned by our modern industrial strategy.”

The Government said the new rules recognised the growing importance of small British firms in developing “cutting edge technology products with national security applications”.

They also change the thresholds for the independent Competition and Markets Authority (CMA) to scrutinise mergers over competition concerns though neither the Government nor the CMA expect this to result in “material change” in the watchdog’s approach.

The reforms follow a consultation launched last October and will be followed by broader changes to be announced later this year.



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