Re-Politicising Merger Policy: Regulating Foreign Takeovers in Britain and Italy

A growing body of works has drawn attention to the depoliticization of decision-making across many policy domains and polities since the 1980s, with cross-border mergers and acquisitions (CBMAs) offering a major example due to extensive delegation to independent competition authorities and strong norms that decisions are taken solely on economic and legal criteria. Yet de-politicisation can be reversed, and indeed, such repoliticisation has occurred for CBMAs. Especially since the early 2010s, European states, including not just France but also Germany, the UK, Italy and Spain, have adopted new rules that increase the powers of elected officials and expand the scope for grounds for non-competition criteria such as national security, public health and public order. Even the EU has encouraged member states to introduce ‘screening’ mechanisms to protect firms in certain ‘sensitive sectors’ against non-EU takeovers. Most recently, the range of controls for elected politicians has been greatly extended in the 2020 Covid emergency. Why has such re-politicisation of CBMA rules occurred? We argue that the change in direction from depoliticization to repoliticisation predates recent fears of Chinese investment, national security, and the pandemic. By adopting a historical institutionalist analysis, the article instead reveals that the currently observed repoliticisation has deeper, and rather surprising roots: not only in a statist political economy (Italy) but also in the archetypal example of liberal market economy (the UK), repoliticization of CBMAs was driven by identity politics, and had its origins in a policy domain not conventionally included among strategic sectors (milks and chocolate products). The article shows that a new coalition between nationalistic Right-wing politicians and trade unions and associations representing suppliers grew up that resisted CBMAs on non-economic grounds as well as economic ones. By tracing a reversal in depoliticization, these findings challenge arguments in the comparative political economy literature that merger policy has become increasingly depoliticized, showing the limits and reversability of depoliticization, and underlining the role of non-economic factors in repoliticisation.