Q4 2025 Update – UK Merger Control and National Security/Investment Screening

UK Merger Control & The Growth Agenda

The UK Competition and Markets Authority (CMA) continues to attach considerable weight to the strategic steer that it received from the Labour government earlier this year to prioritise and contribute to the government’s economic growth agenda. The previous has had a material impact on CMA policy and practice and has resulted in a number of reforms that are focused on reducing the perceived regulatory uncertainty and accompanying burden on merging parties that had long been associated with the UK merger control regime.

Notably, earlier in the year, in addition to the defenestration of Marcus Bokkerink and the appointment of Doug Gurr (ex-Amazon UK Country Manager) as interim Chair, the CMA ushered in an updated Mergers Charter which has at its core a new ‘4Ps’ framework: pace, predictability, proportionality and process. As more time passes, it is becoming increasingly clear that this framework is having a meaningful impact on the CMA’s approach to reviewing deals. For example, the CMA has already become increasingly comfortable with the use of the informal briefing paper route, allowing it to quickly filter out deals which do not require review and provide welcome comfort to parties at an early stage.¹

As a result, we currently find ourselves in a period of less interventionist and muscular, and more targeted, enforcement on the part of the CMA. For example, in today’s enforcement climate it seems unlikely that we would see a repeat of Microsoft/Activision Blizzard (a global deal that the CMA was, at least initially, willing to stand alone and block in 2023) or see the CMA seek to stretch the broad jurisdictional discretion afforded to it by the “share of supply” test to quite the same extent as it did in Roche/Spark Therapeutics (2019) or Sabre/Farelogix (2020) (not least also because the CMA has the newfound benefit of an additional jurisdictional threshold in the Digital Markets, Competition and Consumers Act 2024 (the DMCCA 2024), thereby enabling it to capture transactions involving large investors and parties with low or no UK revenues).²

In particular, the CMA currently appears minded to take a backseat when it comes to reviewing global transactions that are under review by competition authorities in the United States (US) and European Union (EU)—a marked departure from the post-Brexit interventionist efforts that earned the CMA a reputation for being one of the most aggressive antitrust enforcers in the world. Draft CMA jurisdictional and procedural guidance that is currently out for consultation codifies this approach, noting that it is “less likely that the CMA will prioritise for investigation a merger that concerns exclusively global (or broader than national) markets” and that the CMA will consider how any remedies imposed or agreed in other merger control proceedings neutralise potential UK-centric competition concerns.³ As a result, we are seeing an increasing number of global transactions where the CMA permits the EU and US regulators to lead the way, with the CMA adopting a watching brief absent evidence of UK-centric concerns or complainants (see, for example, KKR/Spectris and Salesforce/Informatica).

Not only is the CMA likely to investigate fewer transactions moving forward, but also those that it does investigate should be subject to a more streamlined review timeline. The CMA has indicated that it is aiming to accelerate the pre-notification process (targeting a 40 working day timeline, down from the current average of in excess of 65 working days) and clear straightforward cases at Phase I within 25 working days (down from its current target of 35 working days).⁴ In addition, evidence thus far suggests that we may also see fewer cases referred to Phase II for in-depth review (with there having been only two cases, Aramark Limited/Entier Limited and Constellation/ABVR, referred to Phase II thus far in 2025).

Furthermore, even though the CMA’s review of its approach to merger remedies remains ongoing, we are already seeing in practice the CMA demonstrate a greater willingness to accept remedies even in very complex and problematic cases and, where there is a compelling procompetitive or growth narrative driving the transaction, to depart from its traditional preference for structural remedies. In Vodafone/Three, the CMA accepted remedies which would have been unthinkable within the last decade,⁵ including a legally binding network investment commitment worth £11 billion over the next eight years. The CMA reasoned that the investment remedy would ‘lock in’ the efficiencies promised by the merger and promote competition in the long term. Other key aspects of the remedy package included a three-year price cap for retail consumers, and a three-year commitment to pre-agreed pricing and contract terms for mobile virtual network operators (MVNOs). During the Phase II investigation, the parties also agreed to a one-off divestment of a portion of spectrum to VMO2, boosting VMO2’s own network capacity. The CMA also accepted a relatively complex mixed remedy package in Schlumberger/ChampionX at Phase I, including a behavioural remedy and asset carve-out. The CMA closely coordinated its analysis and remedies with the US Department of Justice and Norwegian Competition Authority in Schlumberger, demonstrating a new willingness to seek to align with other authorities and avoid being an outlier, where possible.

While the above reforms and broader focus on promoting economic growth are to be welcomed, and present an opportunity for merging parties to potentially attempt more challenging, strategic deals, it should be emphasised that the CMA is keen to stress that its revised approach to merger reviews should not be interpreted as “open season” for approval of truly problematic deals. UK-centric deals and those that give rise to substantive issues in the UK in markets that are national (or narrower) in scope are still likely to attract close scrutiny from the CMA, especially if accompanied by complaints from UK-based consumers and businesses.

UK National Security and Investment Act Developments

Almost four years after coming into force, the National Security and Investment Act 2021 (NSIA)—the UK’s primary tool for investment screening—is maturing into a well-oiled machine for the vast majority of cases, which are approved by the Investment Security Unit (ISU) within the 30 working day initial screening period.

Of the 10 Final Orders issued so far this year, only one involved a veto. The government effectively blocked a proposed joint venture between UK-based Versarien Plc and a Chinese company, Anhui Boundary Innovative Materials Technology, by prohibiting the transfer of Versarien’s graphene-related assets to the joint venture.⁶ The government identified national security risks concerning the security of know-how and intellectual property relating to the production and use of graphene with dual-use applications. Given the important applications of graphene across defence and energy, the decision is not entirely surprising. While vetoes are rare under NSIA, the vast majority of vetoes have applied to Chinese acquirers.⁷ Interestingly though, under the Labour government, call-ins of Chinese-led transactions have declined,⁸ which might reflect the government’s more nuanced approach to China to date.⁹

The government has also not previously shied away from using the NSIA to protect UK intellectual property, technology, hardware and know-how, particularly where there are sensitive dual-use applications.¹⁰ Indeed, the most recent NSIA Final Order¹¹ obliges IonQ Inc. to host current and future generations of target Oxford Ionics’ trapped-ion quantum computing hardware in the UK, as well as maintaining Oxford Ionics’ UK science, engineering and infrastructure functions, notwithstanding that the acquirer is listed and headquartered in one of the UK’s key allies.

At the time of writing at least two NSIA prohibitions are in the process of judicial review, with one on a further appeal to the Court of Appeal (Akin is representing acquirers in two out of three of these precedent-setting cases).

Following a Cabinet reshuffle, last month saw the appointment of a new Secretary of State responsible for investment screening, Darren Jones.¹² His predecessor, Pat McFadden,¹³ was generally viewed as a detail-oriented and pragmatic decision-maker.

Given the dynamic nature of geopolitics and national security, and the Labour government’s focus on target risk (in the majority of cases), the government launched a long-awaited consultation in July on proposed amendments to the NSIA, including:

• Bringing certain investments in water infrastructure and services within the scope of mandatory notifications under the NSIA—reflecting a growing concern over the national security implications of the expected £100 billion of investment between 2025 and 2030 in UK water infrastructure and services, with much of this coming from foreign investors.
• Creating a separate Critical Minerals Schedule under the NSIA—moving critical minerals out of Advanced Materials and into their own Schedule to reflect the importance of such minerals to the UK economy and national resilience. The government also plans expand the scope to cover the extraction, processing, and recycling of critical minerals.
• Creating a bespoke Semiconductors Schedule under the NSIA, combining semiconductors with the Computing Hardware Schedule to reflect the foundational importance of semiconductors across the economy. The government also wants to add advanced packaging techniques and research and development involving the wider design of processing units and memory chips within the Semiconductors Schedule to reflect the vital importance of chip security and sovereignty and a concomitant increased risk profile.
• Streamlining the definition of artificial intelligence (AI) to exclude the rapidly expanding number of businesses using AI for low-risk activities. Entities that test the safety of AI systems, evaluate the risk of disinformation or misinformation, or conduct research into the capabilities of AI systems that could potentially create a risk to the health, safety or security of persons, will be kept in scope though.

The government has also announced plans to exempt all insolvency practitioners from the NSIA regime, along with certain types of internal reorganisations. This reflects the government’s growing focus on cutting red tape and ensuring that it can focus on those cases which may present complex national security concerns.

We would recommend that legal and compliance teams should begin reviewing their transaction pipelines and internal processes to ensure readiness for the proposed changes. Further information on the proposed amendments to the NSIA regime can be found here.

^{1 In 2024/2025, the CMA received 187 briefing papers compared to just 64 in 2019/2020 (although much of this may be attributed to parties engaging separately with the CMA post-Brexit). We expect the upward trend of informal briefing papers being used in deals, particularly those that are not UK-centric, to continue.}

^{2 The DMCCA 2024 introduced an additional jurisdictional threshold to target so-called ‘killer’ and ‘reverse killer’ acquisitions. The threshold is met where (i) one party has a share of supply of at least 33% of any goods or services in the UK; (ii) that same party has an annual UK turnover exceeding £350 million; and (iii) the other party has a (broadly defined) UK nexus. See section 23 of the Enterprise Act 2002, as amended by the DMCCA 2024.}

^{3 See paragraph 8.3 of the CMA’s draft revised guidance on jurisdiction and procedure (here).}

^{4 See table 2 in the CMA’s draft revised guidance on jurisdiction and procedure (here), and the CMA’s statement on its ‘4Ps’ framework from February 2025 (here).}

^{5 For example, in Hutchison/O2 (2016)—another proposed four-three telecoms deal in the UK—the CMA discouraged the European Commission (who was responsible for reviewing the transaction) from accepting behavioural remedies, given they would supposedly be insufficient and ineffective, leading to material price rises. Rather, the CMA asserted that only structural remedies or a prohibition would be appropriate. See our previous Akin alert on Vodafone/Three here.}

^{6 See the Final Order here.}

^{7 Of the seven NSIA vetoes to date, six have applied to Chinese, or China-adjacent, acquirers.}

^{8 In the most recent NSIA Report (2024/25), UK investors were subject to the most call-ins (48%) with Chinese investors second (32%) (see here), showing a decline in called-in acquisitions involving acquirers associated with China. By contrast, Chinese investors were subject to the most call-ins (41%) during the 2023/24 reporting period (see here).}

^{9 Encapsulated in Prime Minister Starmer’s “three Cs” framework, which lays out the strategic approach to the UK’s relationship with China: “cooperate where we can, compete where we need to, and challenge where we must.”}

^{10 For example, the first deal vetoed under the NSIA in 2022 related to a licence agreement between the University of Manchester and a Chinese technology company, relating to vision-sensing technology with dual-use applications. See the Final Order here.}

^{11 See the Final Order here.}

^{12 See Darren Jones’s profile here.}

^{13 Pat McFadden served as Chancellor of the Duchy of Lancaster from July 2024 to September 2025, see his profile here.}