The Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025
These regulations amend the Enterprise Act 2002 to create exceptions within the merger control regime for newspaper enterprises involving foreign powers.
They introduce specific circumstances under which a foreign power's holding of shares or voting rights in a newspaper owner does not constitute control or influence, primarily focusing on situations involving state-owned investors with limited holdings and associated persons with minimal ownership stakes.
The changes aim to streamline the merger review process while addressing concerns around foreign influence.
Arguments For
Intended benefits: The regulations aim to clarify and streamline the merger control process for newspaper enterprises, reducing regulatory burdens on businesses while safeguarding national interests.
Evidence cited: The regulations are based on the provisions of the Enterprise Act 2002 and the Digital Markets, Competition and Consumers Act 2024, demonstrating a legal basis and adherence to existing legislation.
Implementation methods: The regulations are implemented by amending Schedule 6B to the Enterprise Act 2002 and Section 120 of the same Act. A clear implementation path is provided.
Legal/historical basis: The legislation builds on existing merger control frameworks, adding specific exceptions for newspaper enterprises and foreign state involvement, aiming to balance national security with economic considerations.
Arguments Against
Potential impacts: The exceptions introduced could potentially lead to unintended consequences concerning media ownership concentration and foreign influence on UK journalism.
Implementation challenges: Defining and applying the criteria for “state-owned investor” and “genuine diversity of ownership” may prove challenging requiring ongoing clarification and interpretation.
Alternative approaches: Alternative approaches could involve stricter enforcement of existing legislation or different thresholds for triggering merger reviews.
Unintended effects: The regulations might inadvertently facilitate undue foreign influence over the UK publishing landscape or weaken the oversight of mergers in the sector.
- Citation, commencement and extent (1) These Regulations may be cited as the Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025. (2) These Regulations come into force on the day after the day on which they are made. (3) The amendments made by regulations 2 and 3 are to be treated as having come into force on 13 March 2024. (4) These Regulations extend to England and Wales, Scotland and Northern Ireland.
This section details the regulations' title, effective date, and geographical reach.
The regulations are titled "Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025" and take effect the day after their creation.
Amendments made by regulations 2 and 3 are considered effective March 13, 2024.
The regulations apply across England, Wales, Scotland, and Northern Ireland.
- Permitted mergers (1) Schedule 6B to the Enterprise Act 2002 (control or influence of a person by a foreign power) is amended as follows. (2) In Part 1 (conditions for control or influence), after paragraph 1(6) insert— “(7) This paragraph is subject to Part 1A.”. (3) After paragraph 2 insert— Part 1A Exceptions Introduction 2A. This Part applies where a foreign power would (apart from this Part of this Schedule) be able to control or influence the policy of a person (a “newspaper owner”) carrying on a newspaper enterprise for the purposes of section 70A by virtue of condition 1 or condition 2 in paragraph 1 (respectively, “the shares condition” and “the voting rights condition). State owned investors 2B. (1) A foreign power is not able to control or influence the policy of a newspaper owner by virtue of the shares condition or the voting rights condition where— (a) all of the shares or voting rights that the foreign power holds in the newspaper owner are held by the foreign power indirectly via a state owned investor acting on behalf of the foreign power (see paragraph 2C), and (b) the state owned investor holds, directly or indirectly, no more than 15% of the shares or voting rights in the newspaper owner. (2) Where shares or voting rights are held by different state owned investors acting on behalf of one or more foreign powers of the same country or territory, those state owned investors are to be treated as if they were a single state owned investor (and, accordingly, their holdings of shares or voting rights are to be treated as if they were a single holding of shares or voting rights). 2C. (1) For the purposes of paragraph 2B, a person is a state owned investor acting on behalf of a foreign power where— (a) condition 1 or 2 is met, and (b) conditions 3 to 5 are met. (2) Condition 1 is that the foreign power holds, directly or indirectly— (a) 100% of the shares in the person, (b) 100% of the voting rights in the person, or (c) the right to appoint or remove a majority of the officers of the person. (3) Condition 2 is that— (a) the trustees of a trust, or the members of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed meet one or more of the requirements set out in sub-paragraph (4), in their capacity as such, in relation to the person, and (b) the foreign power directs or controls the activities of that trust or entity (in whole or in part). (4) The requirements are that the trustees or members— (a) have the right to direct or control, or actually direct or control, the person’s activities (in whole or in part); (b) hold, directly or indirectly, 100% of the shares in the person; (c) hold, directly or indirectly, 100% of the voting rights in the person; (d) hold the right, directly or indirectly, to appoint or remove a majority of the officers of the person. (5) Condition 3 is that— (a) the principal activity of the person is to make or manage investments, and (b) the activities of the person include making or managing investments in countries or territories other than the country or territory of the foreign power (“the overseas investments”). (6) Condition 4 is that the principal source of the funds for the overseas investments is the foreign power or another foreign power of the same country or territory as the foreign power. (7) Condition 5 is that the sole purpose of the overseas investments is to benefit— (a) the foreign power or the public or a section of the public of the country or territory of the foreign power, or (b) where the overseas investments are made or managed for the purposes of a public pension fund of the country or territory of the foreign power, the beneficiaries of that fund. Associated persons 2D. (1) A foreign power is not able to control or influence the policy of a newspaper owner by virtue of the shares condition or the voting rights condition where— (a) the foreign power holds shares or, as the case may be, voting rights in the newspaper owner as a result of those shares or voting rights being held by a person who is associated with the foreign power by virtue of being within section 127(4)(a), (b) or (c) (relatives, trustees etc), and (b) the person within section 127(4)(a), (b) or (c) holds no more than 0.1% of the shares or, as the case may be, the voting rights in the newspaper owner. (2) A foreign power is not able to control or influence the policy of a newspaper owner by virtue of the shares condition where— (a) the foreign power holds shares in the newspaper owner as a result of those shares being held by a person who is associated with the foreign power by virtue of being within section 127(4)(a), (b) or (c), and (b) the person within section 127(4)(a), (b) or (c) holds those shares via an investment fund which meets the genuine diversity of ownership condition. (3) For the purposes of sub-paragraph (2)(b)— (a) “investment fund” means— (i) an investment fund within the meaning given by section 236(1) of the Finance (No. 2) Act 2023 (investment funds and investment entities), (ii) arrangements that amount to a collective investment scheme (see section 235 of the Financial Services and Markets Act 2000), or (iii) a collective investment undertaking within the meaning of regulation 3 of the Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773), and (b) an investment fund meets the genuine diversity of ownership condition where— (i) it meets conditions A to C in regulation 75 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001) (read with regulation 76 of those Regulations), or (ii) paragraph (5) of that regulation applies to it.”
This section amends the Enterprise Act 2002 to define permitted mergers involving newspapers and foreign powers.
It adds Part 1A to Schedule 6B, creating exceptions regarding foreign power control or influence on newspaper policy.
Key exceptions include situations where a state-owned investor holds under 15% of the shares/voting rights indirectly on behalf of a foreign power, or specified associated persons hold very small stakes (≤0.1%) Detailed conditions are established to define 'state-owned investor' and 'genuine diversity of ownership', outlining specific ownership structures and investment fund criteria.
- Miscellaneous In section 120 of the Enterprise Act 2002 (review of decisions under Part 3), in subsection (2), in paragraph (b), after sub-paragraph (i), insert— “(ia) Chapter 3A of this Part;”.
This section makes a consequential amendment to Section 120 of the Enterprise Act 2002.
The amendment updates Section 120(2)(b) to include a reference to Chapter 3A, reflecting the addition of the new Chapter 3A as introduced by these regulations.
This ensures consistency in the act's review processes.