This sixth edition of The Foreign Investment Regulation Review provides a comprehensive guide to laws, regulations, policies and practices governing foreign investment in key international jurisdictions. It includes contributions from leading experts around the world from some of the most widely recognised law firms in their respective jurisdictions.
Foreign investment continues to garner a great deal of attention. This trend is expected to continue as the global economy further integrates, the number of cross-border and international transactions keeps increasing, and national governments continue to regulate foreign investment in their jurisdictions to an unprecedented degree. Foreign investment reviews have, in some instances, been characterised recently by a rising tension between normative competition and antitrust considerations on the one hand, and national and public-interest considerations on the other; the latter sometimes weighing heavily against the former. As a result, more large, cross-border mergers are being scrutinised, delayed or thwarted on the basis of criteria that may not be readily discernible and reviews that are progressively broad in scope.
Many factors are driving these emerging trends – the lack of trade negotiations since the Doha Round has increased the focus on national interest considerations such as protectionism, populism and industrial policy; heightened concerns over cybersecurity have led to enhanced national security protection measures; and an increased focus in some jurisdictions on the stream of capital flowing from state-owned enterprises has driven greater scrutiny of proposed investments in certain economic sectors such as natural resources. Where, historically, national security concerns were limited to businesses involved in manufacturing or supplying military equipment and to infrastructure industries critical to national sovereignty, the scope of transactions reviewed on the basis of national security has broadened significantly. Transactions in sectors such as banking and finance, media, telecommunications, transportation industries and even real estate may be potential focal points for foreign investment review.
Differences in foreign investment regimes (including in the timing, procedure, thresholds for and substance of reviews) and the mandates of multiple agencies (often overlapping and sometimes conflicting) are contributing to the relatively uncertain and unpredictable foreign investment environment. This gives rise to greater risk of inconsistent decisions in multi-jurisdictional cases, with the potential for a significant 'chilling' effect on investment decisions and economic activity. Foreign investment regimes may be challenged by the need to strike the right balance between maintaining the flexibility required to reach an appropriate decision in any given case and creating rules that are sufficiently clear and predictable to ensure that the home jurisdiction offers the benefits of an attractive investment climate.
These evolving issues continue to attract attention in major international forums of public authorities, such as the International Competition Network (ICN) and the Organisation for Economic Co-operation and Development (OECD). In 2015, the American Bar Association Section of Antitrust Law (ABA SAL) Task Force on Foreign Investment Review reviewed the state of foreign investment review in key international jurisdictions and prepared an analytical report on the interface between competition and antitrust reviews and national security, national interest and industry-specific regulatory reviews. The report was approved by the Council of the ABA SAL in December 2015. The Task Force was given the opportunity in June 2016 to present and discuss its report at an OECD Competition Committee Working Party.
The new ABA SAL Task Force on National Interest and Competition Law is building on the work of the previous task force. It is looking more closely at the potential implications of national interest considerations and the evolving breadth of national security reviews, including, in some cases, as they may relate to, or interface with, normative competition reviews. In so doing, the Task Force is examining a number of cases in selected jurisdictions where these issues have been brought to the forefront and will prepare a report for Council to consider.
Among other forums, these emerging trends and the evolving issues in the interface of foreign investment and competition reviews were the subject of panel discussions at the ABA SAL's Global Seminar Series in Düsseldorf, Germany, in May 2018, the Global Competition Review Live Conference held in New York in September 2017, the ICN's Annual Conference in Porto in May 2017, and of a panel at the Pre-ICN Forum held by the International Chamber of Commerce, the International Bar Association and the World Bank Group in Porto in 2017. It is apparent that interest in this important area is continuing to grow.
In the context of these significant developments, we hope this publication will prove to be a valuable guide for parties considering a transaction that may trigger a foreign investment review, which often occurs in parallel with competition reviews. It provides relevant information on, and insights into, the framework of laws and regulations governing foreign investment in each of the 17 featured jurisdictions, including the timing and mechanics of any required foreign investment approvals, and other jurisdiction-specific practices. The focus is on practical and strategic considerations, including the key steps for foreign investors planning a major acquisition, or otherwise seeking to do business in a particular jurisdiction. The recent trends and emerging issues described above and their implications are also examined in this publication. Parties would be well advised to thoroughly understand these issues and to engage with regulatory counsel early in the planning process so that deal risk can be properly assessed and managed.
I am thankful to each of the chapter authors and their firms for the time and expertise they have contributed to this publication, and also thank Law Business Research for its ongoing support in advancing such an important and relevant initiative.
Please note that the views expressed in this book are those of the authors and not those of their firms, any specific clients or the editor or publisher.
Calvin S Goldman QC Goodmans LLP Toronto September 2018