Mrs May spoke about the need to make it more difficult for certain foreign investors to take control of UK companies in her economic speech prior to becoming PM.
She wants to design a new industrial strategy, which would need to incorporate her latest thinking on this topic as part of it.
I approach this issue from a largely liberal position. If people in the UK own shares in a business and want to sell them to foreigners, I generally have no problem with that. It would be wrong usually for a government to intervene and tell owners they cannot sell their assets. It would put other investors off venturing here, for fear of not being able to sell when they wish to move on.
If the shares being sold represent substantial investments in UK infrastructure and real estate, perhaps as the facilities for a manufacturing or service business, the foreign owner cannot parcel up the road or railway line or office building and take it abroad. They remain important UK assets which the new owner has to operate or sell on to someone else to operate. In that sense UK investments are not at risk from a change of owner.
The legitimate fears that people have are threefold. The first is what if the foreign owner buys up UK factories in order to close them, to reduce world capacity and make his factories and products elsewhere more valuable? The second is what if the buyer is a foreign state or nationalised industry which is buying strategic assets in the UK to gain power over our economy and to increase its leverage at times of tension? The third concern is about intellectual property. What if the purchase is to take crucial technology or other information that could be harmful to us to share?
Our current policy allows normal competition rules to be suspended over defence technology. We can buy from ourselves, and can restrict access to defence companies as part of a national security override. As the ubiquitous digital technology spreads more widely so we may need to broaden our definition of what is a defence interest.
The first worry of future closures to concentrate world output elsewhere can partly be tackled through current anti monopoly provisions. When a large company seeks to take over another in the UK it has to demonstrate that this does not lead to an anti competitive concentration. Maybe stronger or enforceable requirements need to be placed on businesses about maintaining capacity in the UK if it is an option for the buyer to promise to keep our factories whilst intending at a later date to close them. Where someone wishes to acquire a central infrastructure asset, like the Stock Exchange, the answer should usually be No. It will be too easy in the future for foreign owners of the Exchange to switch business from London to Frankfurt.
The second needs new policy. It is wrong if a foreign state or nationalised industry can buy our businesses in a given sector but we cannot buy theirs owing to their public ownership structure. There should be a ban on foreign state purchases where we cannot have similar access to their market, unless the UK authorities think it is in the UK interest to allow it.
The third area also requires some broadening of the areas where the competition authorities can halt or add conditions to an acquisition.