Stroock, Stroock & Lavan reports:
The DeLauro bill, HR 5581, would extend the scope of CFIUS reviews to include not only an assessment of the national security impact of a merger, takeover, acquisition by or with a foreign person, but also the “net benefit” of the transaction – namely, the effect of the transaction “on the level of economic activity” in the United States, including “the level and quality of employment” (among other factors) and “the effect of the proposed or pending transaction on productivity, industrial efficiency, technological development, technology transfers, and product innovation,” as well as the compatibility of the proposed action with U.S. “cultural policies,” and the “effect on the public health, safety, and well-being of United States consumers.” HR 5581 would also, for the first time, extend reviews to “construction of a new facility in the United States by any foreign person,” regardless of whether the investment entailed a merger, acquisition, or takeover.
This is a terrible idea. US companies (and our own trade representatives) fight hard to make sure that such laws don’t impact US investments in foreign enterprises; now, this bill would politicize our own review process, and perhaps even take it beyond the most egregious examples of such protectionist “net benefit” legislation that we see in other countries. At a time when CFIUS should become more transparent, more predictable, and less politicized, we get this proposed regulation. Hopefully it will die quickly.