How to deal with the sensitive sector definition in M&A

Author: Olly Jackson | Published: 6 Aug 2018

Increasing public desire to protect national interests is encouraging US and EU governments to respond with greater M&A intervention powers. But a definition of what is considered a sensitive sector is proving challenging.

The US has increased its merger oversight enforcement capabilities by overhauling the Committee on Foreign Investment in the United States (Cfius) regime, and plans to extend its powers to investigate and block foreign transactions. In the EU, things are moving in a similar direction.

In January 2016, ChemChina acquired German plastic processor KraussMaffei for $1 billion, a record for a Chinese company’s acquisition of a German company. Two and a half years on, Germany has blocked two Chinese-backed takeovers in the space of a month: a takeover of network operator 50Hertz and engineering company Leifeld, both on the basis of national security.

In this time, Brexit and the Trump election victory are two huge...