Explaining the capabilities relevant to the government’s new public interest consideration

The news in June 2020 that the UK government had amended section 58 of the Enterprise Act to add an additional public interest consideration – “the need to maintain in the UK the capability to combat, and to mitigate the effects, of public health emergencies” – captured much interest.

It also prompted the Department for Business, Energy and Industrial Strategy (BEIS) to publish guidance as to what motivated this amendment, what practical impact it would have, and what moves businesses might wish to make in response to the changes.

These changes to the Enterprise Act have been prompted by the government’s concern that some mergers and acquisitions may imperil the ability of the UK to respond to and recover from public health emergencies.

This, however, has brought forth certain questions in terms of exactly what is meant by the aforementioned “capability”.

What is meant by “the need to maintain… capability”?

BEIS has explained that the new consideration is centred on preserving the UK’s existing capability to combat and mitigate the effects of public health emergencies.

One such relevant capability that already exists in the UK would be the capability of a UK company that produces personal protective equipment to manufacture a certain number of facemasks each day.

Also falling within the scope of the new consideration, as far as the government is concerned, are repurposable capabilities. An example of this would be an engineering company that designs and makes car parts, but which might also possess the engineering expertise and machinery that could be repurposed for the design and manufacture of ventilators during a public health emergency.

However, the government would have to act reasonably in making a link like this, and intervention on such grounds is not expected to be frequent.

What about the capability to combat public health emergencies?

The government anticipates that the new public interest consideration will most often be used in order to help maintain the UK’s capability to combat public health emergencies.

Firms active in the public health sector, such as vaccine researchers, medical supply firms and drug manufacturers, are examples of organisations that possess relevant capability.

Other companies might also have relevant capability, such as those that may assist in modelling the spread of a public health emergency.

The amendment’s role in mitigating the effects of public health emergencies

The government recognises that concerns do not arise for the vast majority of investment, which is usually overwhelmingly positive for the UK in terms of the jobs created and the allowance for greater innovation and productivity by UK firms.

However, the government has signalled that it may need to intervene in the takeover of a company that provides, or could provide, the UK with the ability to mitigate a present or future public health emergency’s effects.

Such firms could include the likes of internet service providers or food supply chain companies, given the scope for heightened demand for internet services in a lock-down situation, or disruption to food supply.

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September 2020