It seems we’ll never find out exactly what Boris Johnson meant when he said that “no action [was] off the table” to prevent six of England’s largest football clubs from joining the much-maligned European Super League; all six have pulled out.
But the speed and enthusiasm with which the government condemned the new league was something to behold. Within hours of the league’s big reveal, everyone from the future king to the X-Factor 2004 winner had moved to condemn it, while Oliver Dowden, the Secretary of State for digital, culture, media and sport, solemnly lamented that he was left with “no choice but to formally trigger… a fan-led review of football”. The Competition and Markets Authority (CMA), the UK’s competition regulator, said it was “carefully considering” competition concerns.
This was in sharp contrast with the way the government usually works in these situations. Take the $40bn (£28.7bn) sale of the Cambridge-based chip designer Arm by the Japanese lender SoftBank to a US rival, Nvidia, announced last September. The day before Dowden launched his football review, he announced an intervention into the Arm deal, notifying the CMA that it has until midnight on 30 July (so just over three months) to complete a “phase one” investigation into the transaction on security grounds.
One of these interventions took less than 48 hours to announce; the other has taken more than six months.
To be fair, the Arm-Nvidia investigation is exactly the sort of long-winded, bureaucracy-mired process we would expect from government. But imagine if it wasn’t like that: what if the government had moved as fast or as decisively to intervene in, say, Kraft’s £12bn takeover of Cadbury?
That deal, completed in 2010, soured before the ink had dried on the contract. Kraft had pledged to protect 400 jobs at the chocolate manufacturer’s Somerdale factory, but a week after the government gave the go-ahead for the sale, Kraft closed the plant and moved the jobs to Poland. Lord Mandelson, then the business secretary, blustered a lot about how disappointed he was – but ultimately, the government couldn’t do much.
The Super League announcement did not include any suggestion that jobs would be lost, and the argument that it could have been anti-competitive is speculative. But while the Kraft deal was accepted as an inevitable consequence of globalisation, the government’s swift action suggests something is changing.
Neil Baylis, a partner in Mishcon de Reya’s competition group, points out that legislation such as the National Security and Investment Bill, which is in the process of being ushered through parliament, is designed to create interventions in deals that would have previously been unthinkable, particularly under a Conservative government. But the government is becoming increasingly anxious about who owns what.
“The ethos of recent UK governments has been that it’s just the international community that we live in, and people should be able to come in and buy what they like,” said Baylis. “If a buyer wants to shift all the target’s manufacturing activities from the UK to China, then it’s their right to do that.
“We’re playing catch-up now, I think, in response to some of the deals that have been done recently. With China having as much money as it has, and being asked difficult questions on its human rights record and on freedom of speech, do we want more controls in place to stop them buying up our companies in strategic industries? Probably, yes. So this is a legitimate concern that is now starting to be addressed.”
The Super League wouldn’t have been covered by the bill, because – whatever football fans might argue – the move didn’t actually pose a threat to anyone’s human rights or national security – and technically the league wouldn’t have constituted a takeover. But the reaction to it does, nonetheless, suggest that the government’s attitude towards intervening in mergers and acquisitions has changed. The question now is whether the next cross-border deal will prompt a similarly full-throated response, or if the Super League was just an easy bit of PR for a government that will only intervene in cases it knows it can win.