U.S. National Security Issues in Cross-Border Food, Beverage & Agribusiness Deals
On October 28, 2021, a bipartisan group of U.S. Senators introduced the Food Security is National Security Act of 2021 (the “Act”). Among other things, the Act would require the Committee on Foreign Investment in the United States (“CFIUS”) to consider the “potential effects of [certain foreign investment transactions] on the security of the food and agriculture systems of the United States, including any effects on the availability of, access to, or safety and quality of food.” In other words, certain foreign investment in the U.S. agricultural industry would be treated similarly to foreign investment in U.S. companies that hold critical technology or that collect and maintain sensitive personal data. Additionally, the Act would expand CFIUS from its current nine members to 11 members by adding the Secretaries from the U.S. Department of Agriculture (“USDA”) and the U.S. Department of Health and Human Services (“HHS”).
Regardless of whether the Act becomes law, leading members of Congress will likely continue to press CFIUS to consider food safety and food security issues in cross-border deals in the food, beverage, and agribusiness (“FB&A”) sector, and CFIUS will certainly continue to do so. Accordingly, both foreign and U.S. FB&A companies involved in such cross-border investments or acquisitions should consider the impact CFIUS may have on a proposed transaction and assess whether a mandatory filing is required or a voluntary filing is advisable and the impact of the whole CFIUS process on the closing timetable of such transactions.
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