Merger control and the public interest: European spotlight on foreign direct investment and national security

December 2017

CPI Europe Column edited by Anna Tzanaki (Competition Policy International) & Juan Delgado (Global Economics Group) presents:

Merger control and the public interest: European spotlight on foreign direct investment and national security By Kyriakos Fountoukakos & Molly Herron (Herbert Smith Freehills LLP)[1]

Introduction

Against a backdrop of increasingly protectionist political rhetoric, there has been renewed interest in recent years in the ability of governments to intervene in the M&A process to protect national interests. Depending on the applicable legal framework, this has concerned both the ability of merger control regimes to take into account wider public interests, and the establishment and use of separate foreign direct investment (“FDI”) screening mechanisms. This interest flared in 2014, in light of General Electric’s bid for Alstom (which lead to a significant overhaul of France’s FDI review regime) and Pfizer’s attempt to acquire AstraZeneca (which led to calls in the UK for a stronger public interest test in the merger control process to protect wider national interests).[2] It has been reignited in the last year or so, prompted in part by the Brexit vote in the UK and the election of President Trump in the US, and by the large increase in Chinese outbound investment, in particular by State-owned or subsidised entities.

This is a global trend. For example, in the US the regularity and intensity of