CFIUS Releases 2020 Annual Report to Congress
August 10, 2021
Key Takeaways
- On July 26, 2021, the U.S. Treasury Department, as chair of the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”), published its Annual Report to Congress on key activities, including notices, declarations, and withdrawals through 2020 (“Annual Report”). CFIUS, an interagency committee principally comprising nine members and chaired by the Secretary of the Treasury, has broad powers to review foreign investments in and acquisitions of U.S. businesses to determine the potential impact on U.S. national security. The Committee has the authority to impose mitigation measures, suspend transactions and, where appropriate, recommend that the President block or unwind transactions.
- The Annual Report holds important insights for non-U.S. acquirers contemplating acquisitions and other investments in the United States. The Annual Report also marks the third data set for reviews and investigations completed since the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) became law. FIRRMA made several substantial changes to the CFIUS process—including expanding the scope of CFIUS jurisdiction to permit review of a wider range of transactions, adopting a new, short-form declaration process and strengthening the Committee’s authority to restrict transactions that threaten U.S. national security—the effects of which are reflected in the Annual Report data.
- Post-FIRRMA, CFIUS has been extremely active, and the 2020 data highlight this point: there were 313 filings (both declarations and notices) in 2020 and, in a change from 2019, 40% of filings in 2020 were declarations (whereas only 28% of filings in 2019 were declarations). There were also more declarations presented to the Committee overall in 2020 in comparison to 2019 (126 versus 94) and a substantially larger portion of these declarations (81 versus 35) resulted in notifications by the Committee that it had completed all action under Section 721 on the basis of its review.
- Although CFIUS received slightly fewer filings in 2020 than it did in 2019 (313 versus 325), the number of second-stage investigations remained consistent. In 2019 49% of reviews extended into the investigation phase; in 2020 47% of reviews extended into the investigation phase.
- The percentage of notices withdrawn from the Committee’s consideration has also remained consistent from 2019 to 2020 (3% in 2019 and 2% in 2020).
- Japan, the United Kingdom, Canada and China were the leading sources of foreign investments in and acquisitions of U.S. businesses reviewed by CFIUS in 2020, as was the case in 2019, with the recent downward trend in Chinese investment continuing (55 in 2018, 25 in 2019 and 17 in 2020).
- Below, we highlight six important data sets in the Annual Report. To revisit our OnPoint that covers the 2019 Annual Report, please find it here.