Draft Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) (No. 2) Regulations 2025
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The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stephanie Peacock)
I beg to move,
That the Committee has considered the draft Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) (No. 2) Regulations 2025.
It is a pleasure to serve under your chairship, Mrs Jardine. I am pleased to speak about the draft regulations, which were laid before the House on 30 October. They form an important part of the foreign state influence newspaper mergers regime, which is designed to protect our newspapers and news magazines from foreign state influence and control, while permitting legitimate investment that can support newspapers to thrive at a challenging time for the industry.
An independent press is crucial for our democracy. Just as we value the importance of a press that is independent from Government in the UK, we must equally ensure that foreign states are unable to assert influence over this sector. The foreign state influence regime carefully balances these two priorities: an independent press and the importance of investment in the sector. In July, the Government introduced targeted exemptions to allow certain state-owned investors to invest up to 15% in UK newspapers and news periodicals. This approach will still limit any scope for foreign state control or influence of news organisations, while giving newspapers much-needed flexibility to seek business investment that supports their long-term sustainability.
The 15% ceiling is lower than the level at which the Competition and Markets Authority generally identifies that material influence arises. The regime has a low bar for intervention. Regardless of whether there is an intention to influence, if the Secretary of State has “reasonable grounds for suspecting” that a foreign power may hold the ability to influence or control the policy of a UK newspaper enterprise as a result of a merger, she must intervene. This is not discretionary.
During the parliamentary scrutiny process in the lead-up to the debate on the 15% targeted exemptions, colleagues raised concerns about a potential unintended consequence that could allow multiple state-owned investors acting on behalf of foreign powers of different countries or territories to each invest 15% in one newspaper enterprise. The argument was made that foreign state-owned investors could collectively own the majority of a newspaper enterprise.
The Government made a commitment to deliver today’s draft regulations; in fact, it was I, as Media Minister, who first made that commitment in the Third Delegated Legislation Committee on 18 June. While we considered it a remote risk, we saw the concerns in this House and in the other place, and committed to putting the matter beyond doubt through an additional statutory instrument. That is what brings us here today, having consulted on the draft regulations, with the response published on 30 October.
The draft regulations will introduce a 15% cap on investments in a newspaper by a state-owned investor acting on behalf of foreign powers of different countries or territories. That will apply to the combined total of direct and indirect holdings of shares or voting rights. To make the limit workable, the regulations also introduce a specific and narrow exemption for holdings of 5% or below in quoted companies. This will apply only when calculating whether the 15% cap has been reached in cases where multiple state-owned investors from different countries or territories all have investments in the same newspaper.
That exemption will avoid a chilling effect on legitimate inward investment by removing the need for state-owned investors to take account of existing, undisclosed, small direct or indirect investments in the same newspaper. Holdings in companies with publicly traded shares are not disclosed unless they cross certain thresholds; 5% is a common benchmark, beyond which the investor must declare the interest to the company and wider market.
The draft regulations also impose new transparency requirements on state-owned investors that acquire shares or voting rights in UK newspaper enterprises. They must notify the Secretary of State if acquiring a direct holding of more than 5% in a newspaper, before the end of a period of 14 days after the relevant transaction is made. If a state-owned investor is required to notify the Secretary of State, they must also publish certain details of their investment within the same timeframe of 14 days. That will allow the Secretary of State to report to Parliament on the published details of acquisitions.
The purpose of those requirements on state-owned investors and the regular report is to improve the confidence of both the public and Parliament through greater transparency about news enterprise ownership. We intend for the Secretary of State to report to Parliament every six months, beginning in July 2026, six months after the notification and publication requirements come into force. If a state-owned investor makes an acquisition that results in them having a direct holding in a newspaper of more than 5%, and does not comply with the notification and publication requirements, the Secretary of State will be compelled to issue a foreign-state intervention notice, and refer the case to the Competition and Markets Authority.
Essentially, the regulations address the remote risk of multiple state-owned investors from different countries each investing 15% in one newspaper, and further improve transparency around investment. Both those things benefit the UK press sector and the role that it plays in our democracy.
I commend the draft regulations to the Committee.
Mr Louie French (Old Bexley and Sidcup) (Con)
As always, it is a pleasure to serve under your chairmanship, Mrs Jardine. I am grateful to the Minister for her remarks in outlining the regulations. The Opposition broadly welcome the regulations, to which His Majesty’s Government committed during discussions on the No.1 regulations before the summer recess.
My first question is on the 5% carve-out. In the other place, the Secondary Legislation Scrutiny Committee quoted the correspondence it has had with the Minister’s Department about the carve-out and the way in which it will be used. The Department for Culture, Media and Sport said:
“Our judgment is that the possibility of the carve out being misused is remote”.
We can appreciate where the Government are coming from. Even though the scenario that the previous Government initially looked at—of multiple countries getting together and each seeking to acquire a 15% stake—was perhaps a little far-fetched, it was not entirely implausible. So it is right that this Government have listened and now acted to close that loophole.
Peter Fortune (Bromley and Biggin Hill) (Con)
I welcome the statutory instrument, and I wonder whether my hon. Friend agrees that this is about ensuring not just the future of the free press and editorial independence, but the financial stability of the industry? It is vital that any state-owned investors do not deter legitimate investment or the capital investment that the news industry needs.
Mr French
I thank my hon. Friend and neighbour for that intervention. I agree with his sentiment, and I will come on to explain why. The approach that the Government are taking, of carving out holdings of 5% or less in quoted companies, reduces the risk further. However, will the Minister tell us about the work that has been done by her Department to ensure that even in the unlikely event of foreign-state investors seeking to circumvent the rules, this has been ruled out?
As my noble Friend Lady Stowell said in the other place last week, the path to getting to this point has been rather longer than any of us expected or would have wished. Delay has a price for investors and vendors, as well as for the readers and journalists of our newspapers. My noble Friend took the opportunity to ask about whether and when we might expect a conclusion to this for the sake of The Daily Telegraph, and more broadly, whether His Majesty’s Government will look again at the Enterprise Act 2002 regime to ensure that future scenarios do not have to play out at such length.
We are all aware of the underlying need for investment in our newspapers, national and local, if they are to continue to flourish and perform the job that they do, which is vital for public discourse and democracy in the UK. That is why it is important that we get the rules right in the regulations before us, and that we maintain a framework that properly protects this essential part of our democracy, while still giving room for responsible investment. We need a regime that safeguards independence and free speech, but that also ensures that our newspapers and media organisations have the ability to grow and thrive for years to come.
Stephanie Peacock
I appreciate the shadow Minister’s comments and the broad support that he and his party have given. I read the Lords Hansard debate, so I am familiar with some of the topics that were discussed in the other place. I join the shadow Minister and other Members in paying tribute to the work of Baroness Stowell; it is a fair representation to say that she felt these regulations were a proportionate way forward. Indeed, DCMS officials have worked very hard with several Members of Parliament.
To respond to concerns raised about the 5% exemption, I highlight the narrow applicability: it applies in very limited circumstances and for an explicit and important purpose—which speaks to the intervention the hon. Member for Bromley and Biggin Hill made—removing any chilling effect that may occur as a result of requiring a state-owned investor to be aware of undisclosed smallholdings from other countries in quoted companies before deciding whether they can invest.
I do not recognise the delay. It is a complex piece of legislation. I took the other instruments through Parliament; I believe that this Government have moved apace and that we will crack on. The shadow Minister will of course appreciate that I cannot comment on The Daily Telegraph, but I draw his attention to the written ministerial statement placed on record by the Secretary of State on 24 November.
Question put and agreed to.