Regulations amending the rules on foreign state investment in UK news sources

Approximate read time: 15 minutes

1. Introduction

The House of Lords is scheduled to consider the following statutory instruments on 22 July 2025:

• Draft Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025
• Draft Enterprise Act 2002 (Definition of Newspaper) Order 2025
• Enterprise Act 2002 (Amendment of Section 58 Considerations) Order 2025

The Draft Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025 would create exceptions within the foreign state influence (FSI) regime that applies to mergers involving newspaper enterprises. The second and third instruments would broaden the scope of the media mergers and foreign state intervention regimes; for example, so that they would apply to online news sources.

The first two statutory instruments listed above are subject to the draft affirmative procedure.^[1] This means they must be approved by both Houses of Parliament before they can become law. The third instrument in the list is subject to the made affirmative procedure.^[2] This means it is signed into law before being laid before Parliament, but then requires both Houses to approve it within a specified period to remain law. The House will consider the approval of each instrument in its 22 July 2025 debate.

This briefing focuses on comment around the Draft Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025 (‘the merger regulations’). This is because a motion has been tabled by Lord Fox (Liberal Democrat spokesperson for business) calling on the House to reject these regulations. At the time of writing, no motions had been tabled against the other two statutory instruments listed for debate. However, section 3.3 of the briefing does include brief comment on these two instruments from the House of Lords Secondary Legislation Scrutiny Committee.

2. Foreign state influence regime for newspapers

2.1 Introduction of regime

The merger regulations would introduce exceptions to the FSI regime set out in the Enterprise Act 2002. The regime currently prohibits mergers involving a newspaper enterprise (relating to UK newspapers or periodical news magazines) that result in a “foreign power being able to control or influence the policy of the person carrying on the newspaper enterprise”.^[3] Full details on how the regime operates is set out on p 3 of the explanatory memorandum (EM) for the regulations. However, in essence, it requires the secretary of state to compel the Competition and Markets Authority (CMA) to investigate and report on any potential foreign state newspaper merger situations. Upon receiving advice from the CMA that they believe such a merger to be taking place, the secretary of state would then be required to make an order reversing or preventing the merger.^[4]

The EM also explains how the definition of foreign powers and their involvement would be considered:

The definition of a “foreign power” (based on the definition in the National Security Act 2023) has been drawn widely and covers a foreign government and agencies of a foreign government as well as individuals such as a head of state, senior members of a foreign government or agency and officers of the governing political party. The FSI regime also applies where shares or voting rights are held by a person associated with a foreign power. For example, the regime would apply in a situation where a business owned by the spouse of a government minister of a foreign state held a share, directly or indirectly in a newspaper owner.

The FSI regime would also capture legitimate investments by state owned investors such as sovereign wealth funds and public pension reserve funds who may be tracking indices and where UK newspapers or their parent companies may be listed. This is because such investors would be ultimately owned by a foreign power.^[5]

The FSI regime was added to the Enterprise Act 2002 by the Conservative government’s Digital Markets, Consumers and Competition Act 2024. This followed concerns about a proposed takeover of the Daily Telegraph and the Spectator led by a United Arab Emirates-backed investment firm.^[6] The provisions were added to the legislation by an amendment moved by the then government at third reading in the House of Lords.

Introducing the amendment, Lord Parkinson of Whitley Bay, then parliamentary under secretary for culture, media and sport, outlined its importance to protect democracy and a free press:

His Majesty’s government agree that the importance of these publications to our democracy cannot be overstated: newspapers have always been, and must continue to be, free to develop relationships with their readers and develop editorial lines supporting different positions. The plurality of views across different newspapers ensures that there is a wide range of views supporting a culture of argument, debate and challenge, which in turn contributes to a healthy democratic society.

[The] government are therefore taking steps to preserve the freedom of the press, recognising the risks that foreign state ownership of, or control or influence over, the UK’s newspapers and news magazines could pose to democracy and to free speech. Foreign state ownership, if used to develop or control narratives which align with another state’s interests, may over time corrode trust in our media as a whole. That is why many countries already have laws limiting foreign state ownership, and why we are creating a new regime which will prevent foreign states having any stake in a UK newspaper or news magazine.^[7]

However, the minister also stressed the importance of newspapers receiving necessary financial backing. Therefore, he said that then government were planning to introduce an exception, by regulations, allowing foreign state investment if it is below 5% of the total investment:

It is, however, essential that these new measures do not have undesired effects in relation to wider business investment in UK media. We will therefore introduce an exemption for investments where the stake is below 5% of the total investment being made. This would apply to passive investments by established and pre-existing sovereign wealth funds, pension funds or similar.^[8]

He also explained that the government would be looking at expanding the regime so that it would apply to online news websites. He said this would bring the “regimes up to date in order to reflect modern news consumption habits and better protect the freedom of our media”.^[9]

The amendment received cross-party support and was agreed without a vote. Labour’s shadow spokesperson, Lord Bassam of Brighton, stated:

We on these benches have been more than happy to lend our support to this issue because of the importance in our political landscape of protecting a free and independent press that is not handcuffed by our state.^[10]

The FSI regime came into effect in May 2024.^[11]

2.2 Government consultations on the regime

The Conservative government ran a consultation on the arrangements for the new FSI regime from May 2024 to July 2024.^[12] This sought opinions on exceptions to the regime; for example, setting a maximum level for state owned investment organisation (SOI) shareholdings and discounting very small shareholdings (such as those below 0.1%). On the level of shareholdings, the then government suggested that there could be different rates of 5% and 10%, with the higher rate applying where certain conditions were met allowing it to be considered a “diversified business”. The consultation also sought responses on the definition of state owned investments.

The consultation outcome was published by the Labour government on 15 May 2025, having received four responses.^[13] It outlined one “significant change” to the plans for exceptions put forward by the previous government, namely an increase in the shareholdings cap to a single rate of 15% (rather than 5% and 10%). It said this decision was based on stakeholder feedback about the need for investment and was intended to make the system less complex. It set out the government’s belief this would be a proportionate approach:

This change will maintain a hard cap on SOI investment in newspapers and news magazines, and for that reason, the government does not believe it will weaken the overall effect of the regime because the threshold will still be set at a level below the level at which investors would generally be deemed to obtain material influence in other areas of the merger control regime.

Overall, the government believes that an increase to the threshold to 15% is a proportionate approach which recognises the issues raised by the newspaper groups who responded, balancing the need for investment in the sector with ensuring the UK has strong and effective legislation in place to protect the UK’s newspaper and news magazine sector from the risk of undue influence from foreign states.^[14]

The consultation outcome also set out views on matters such as the definition of SOIs, whether the regime should be extended beyond newspapers and news magazines, and whether it would differentiate between direct and indirect holdings.

In addition, in October 2024 the government published an impact assessment of the FSI regime.

Subsequently, between November 2024 and January 2025, the government ran a consultation on the government’s plans to expand the breadth of the regime; for example, so that it would cover online news sources. This received 14 responses. The government’s response to the consultation confirmed it would be going ahead with these proposals.^[15]

3. Regulations on the regime

3.1 Introduction of merger regulations

The Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025 were laid before Parliament on 15 May 2025. If approved, the provisions in the regulations would state that a foreign power is not considered able to control or influence the policy of a newspaper owner where:

• All the shares or voting rights which the foreign power holds in the newspaper owner are held by the foreign power indirectly via a SOI (eg a sovereign wealth fund) and that state owned investor holds no more than 15% of the shares or voting rights.
• The foreign power holds shares or voting rights as a result of those shares or voting rights being held by a person associated with a foreign power (eg a relative of an individual who is a foreign power) and the associated person owns no more than 0.1% of the shares or voting rights. That is a ‘de minimis’ threshold for small-scale investments.
• The foreign power holds shares as a result of those shares being held by a person associated with a foreign power and the associated person holds the shares via certain types of investment funds (eg Individual Savings Accounts (ISAs) or Self Invested Personal Pension Schemes (SIPPs)).^[16]

Giving a statement on the regulations in the House of Commons, Culture Secretary Lisa Nandy emphasised the government’s intention to ensure the FSI regime was proportionate and said the provisions reflected views received during the consultation. She explained:

Our policy intention is to ensure that state owned investment vehicles, where they do invest, could not have influence over the business of a UK newspaper. We want to ensure that the measures brought in through secondary legislation are proportionate, and support routes for legitimate investment and growth while safeguarding UK newspapers from foreign state influence.^[17]

3.2 Parliamentary scrutiny of the merger regulations

The House of Lords Secondary Legislation Scrutiny Committee has drawn the merger regulations to the special attention of the House of Lords on the basis that they are “politically or legally important and give rise to issues of public policy likely to be of interest to the House”.^[18]

In particular, the committee highlighted the increase in the cap proposed from 5% or 10% to 15% and the government’s statement that this decision was based on the consultation responses. It queried why the consultation only received four responses and expressed concerns about the desire of the government not to disclose who the responses were from. It stated:

[…] this consultation received only four responses, primarily from newspaper groups affected by the new FSI regime. It is not clear to us why there were not more responses given the public interest in this part of the UK media landscape. We were asked by the department not to reveal the identity of the organisations which responded to the consultation, although we understand that the Department for Culture, Media and Sport (DCMS) is currently processing a freedom of information request which may lead to the publication of the names of those organisations. We are concerned about the department’s decision to treat information about the respondents to a public consultation confidentially: this is an unusual approach, especially as the published consultation document made clear that a summary of the key points raised would be published on the department’s website, including “a list of the organisations that responded”. The House may wish to question the minister as to the basis on which the department adopted this approach.^[19]

It noted that, according to the DCMS, the respondents were of the view that the initially proposed exceptions were too restrictive and should be increased to 15%. It said the respondents cited “the lack of tangible influence” available within a 15% threshold and highlighted the 25% threshold under the National Security and Investment Act 2021. In addition, the committee noted that 25% is the shareholding threshold above which the CMA typically determines an investor is able to exert material influence on a company.

The committee also highlighted statements by the department that there would still be occasions where the government would be required to intervene even in relation to holdings under 15%. For example, DCMS said to the committee:

The exception for sovereign wealth funds and other state-owned investors is further limited to investments that are passive in nature. In cases where the state-owned investor invested within or up to the threshold, but held the right—directly or indirectly—to appoint or remove company officers (including directors) of a newspaper enterprise; or the right or ability to direct, control or influence a newspaper owner’s policy or activities to any extent, the secretary of state would still be required to intervene. This requirement will ensure that shareholdings up to the 15% threshold are not used by state-owned investors to seek to control or influence the strategy or editorial policies of UK newspapers and news periodicals.^[20]

Concluding, the committee stated:

Given the interest the House has demonstrated in the protection of UK newspapers against the influence of foreign states, we welcome that the Department has committed to “keep the operation of the new FSI regime under review to ensure its effectiveness”. We consider that Parliament should be kept informed. As the secretary of state will be required to intervene in cases where an SOI has invested within the 15% threshold but is able to direct or influence a newspaper’s policy, the House may wish to ask the minister how the secretary of state will be reliably able to detect, and, if necessary, prove that the SOI can exert this influence. The House may also wish to seek further assurance from the minister that, in practice, the new increased threshold will not undermine the original intention of the FSI regime to protect UK newspapers from inappropriate foreign state influence.^[21]

The House of Lords will consider a motion to approve the instrument on 22 July 2025. However, as noted above, Lord Fox (Liberal Democrat spokesperson for business) has tabled a motion calling on the House to decline to approve the instrument on the basis that:

[…] the proposal to allow foreign states to own up to 15 percent of UK newspapers constitutes a direct threat to the freedom of the British press; and is contrary to the policy intention of the Digital Markets, Competition and Consumers Act 2024.

If agreed, this motion would prevent the regulations becoming law. ’Decline to approve’ motions are sometimes referred to as ‘fatal’ motions.

In addition, a ‘non-fatal’ regret motion has been tabled by Baroness Stowell of Beeston (Conservative). If this is agreed it would not stop the regulations becoming law, but would instead put the House’s concerns about them on record. The non-fatal motion reads:

To move that this House regrets that the draft Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025 do not distinguish between state investment funds that are directly or indirectly controlled by a foreign power; that they set the newspaper investment cap at 15 per cent; and that the secretary of state must be relied upon to intervene if a state investment fund does not act in accordance with the regulations.

3.3 Introduction and scrutiny of regulations on the breadth of the regime

The Draft Enterprise Act 2002 (Definition of Newspaper) Order 2025 and the Enterprise Act 2002 (Amendment of Section 58 Considerations) Order 2025 (SI 2025/737) were laid on 26 June 2025. As mentioned above, these instruments would expand the media mergers and foreign state intervention regimes so that they would apply to online news sources.

The secondary legislation scrutiny committee has published the following explanation and analysis of these instruments:

The Draft Enterprise Act 2002 (Definition of Newspaper) Order 2025 would amend the definition of newspaper under the Enterprise Act 2002 (“the act”) to cover all print and online newspapers, news magazines and news publications published periodically, while the Enterprise Act 2002 (Amendment of Section 58 Considerations) Order 2025 (SI 2025/737) extends the application of the newspaper public interest considerations under the act. In combination, these changes would enable the secretary of state to intervene in mergers involving print and online newspapers, periodical news magazines or news programmes if any of the following public interest considerations are relevant: the need for accurate presentation of news; free expression of opinion; or a sufficient plurality of views in the UK news market. We consider that the shared explanatory memorandum that has been provided in support of these instruments should have made clearer that all online news magazines and news publications, not just online newspapers, which are published periodically would be covered by the new rules.^[22]

It said that DCMS explained the change was being made to reflect the changing ways people are consuming news. It therefore hoped the changes would “help to safeguard media plurality in the UK and prevent foreign state interference in the UK news market”.

The committee classed them as ‘instruments of interest’, but did not draw them to the special attention of the House.

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