From Private Business to National Treasure: Changing Dynamics in 2020

Taso Advisory
May Fri, 2020


  • COVID-19 has changed policy makers’ perception of companies. They are no longer just private entities, but also strategic tools for economic recovery. 
  • The importance of protecting domestic companies is explicit in the short-term to control unemployment rates, and in the medium-term with first mover advantages for nations seeking quicker than average recoveries once lockdown ends. 
  • The tools at governments’ disposal to address these issues are unprecedented and forward-thinking companies will need to engage to navigate the opportunities and challenges that arise. 


The effect of the pandemic on people, business and government is bound to disrupt the status quo whichever way it is approached. At its core, the economic challenge facing leaders is an inextricable link between government measures to protect people’s health, the resulting impact on economic activity, and then the pressure on governments to alleviate the pain caused from shutdowns.

One of the effects of this loop has been a change in how governments view the role of business. Initially this has focused on ensuring job losses and bankruptcies are stymied. Looking forward, there will be other pressures once economic activity begins to resume and there are already signs that protecting relative national economic interests is high on the list. These tensions have provoked extraordinary responses compared to previous practice. 


In the UK, the government recently intervened when a chipmaker, Imagination Technologies, warned that they were at risk of losing control though attempts by their owner Canyon Bridge to appoint board members viewed as linked to the Chinese government. This intervention was unrelated to COVID-19, but it is a sign of Western governments being increasingly wary of foreign ownership. This trend could be set to continue.

The UK Competition and Markets Authority (CMA) also moved to provisionally approve an investment by Amazon into UK-born Deliveroo. This deal was still raising eyebrows a few months ago over its anticompetitive implications. The CMA specifically cited the ‘deterioration in Deliveroo’s financial position as a result of coronavirus’ as a reason for their change of heart. Competition authorities always have to balance competitive market principles against arguments that scale is needed to survive and grow. The pandemic may suppress some of those instincts for greater competition when a firm’s survival is at stake. 

A shift is also apparent at a European level. Early in the pandemic response, the Executive Vice-President of the European Commission in charge of competition policy, Margrethe Vestager, issued a warning that EU governments should be wary of foreign takeovers of cheap assets as a result of the downturn, stating that she has no issue with Member States buying stakes in companies to ward off takeovers. Perhaps more controversially, EU Member States are in the midst of heated discussions regarding temporary state-aid spending which has led to accusations that richer northern Member States are asymmetrically funding their firms to the south’s disadvantage.  

These trends alter how companies are viewed. Rather than being a simple part of a free market economy, the delineation of business and national asset changes, with governments willing to reconsider their approaches to supporting home grown business in response to the pandemic and resultant downturn. 


The UK government and others will have a keen eye on their medium-term recovery and there will be an abundance of policy positions, legislative agendas and political machinations in the coming months and years which businesses would do well to engage with. In the immediate term there may well be further support available to businesses, whilst the pressures will also mount from specific industries or firms seeking respite. But there will also be changes to policy areas which in normal times have stricter rules.

Specifically for foreign ownership, the UK’s National Security and Investment Bill set out in the December 2019 Queen's Speech could see stronger protections for UK firms. The Bill is expected to allow greater scrutiny of mergers and acquisitions which trigger national security concerns. One of the important questions here will be what constitutes national security after COVID-19? Lastly, it will be crucial to understand how different government measures intersect with each other, particularly between the UK and EU Member States. For example, the European Commission has an upcoming white paper on an EU ‘Instrument on Foreign Subsidies’ and a legislative proposal expected in 2021. Brexit negotiations aside, it is an open question whether the UK’s COVID-19 measures, such as state aid, could fall foul of these moves against non-EU state subsidies. 

Taso Advisory supports clients with the political, policy, and regulatory challenges they face, and helps them to design and deliver credible responses to mitigate risks and seize opportunities. We make complex challenges simple, give actionable advice, and support in delivery. You can find out more about what we do and who we work with.

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