A Information Regarding 2019 Covered Transaction Notices . 2.
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TABLE OF CONTENTS The Committee on Foreign Investment in the United States .. .iii SECTION I: COVERED TRANSACTIONS 1 Introduction . 1 A Information Regarding 2019 Covered Transaction Notices . 2 B. Specific, Cumulative, and Trend Data for Covered Transactions, Withdrawals, and lnvestigations .. 3 C. Information on the Time It Took the Committee to Provide Comments on, or to Accept, Notices .. 4 D. Covered Transactions by Business Sector and Country .. 5 1. Covered Transactions by Business Sector of U.S. Companies, 2010-2019 5 2. Covered Transactions by Country or Economy, 2017-2019 .. 21 E. Withdrawn Notices . 25 F. Mitigation Measures : . 26 G. Perceived Adverse Effects of Covered Transactions .. 29 H. Critical Technologies Pilot Program .. 33 1. Information Regarding 2019 Declarations 33 2. Declarations by Country or Economy, 2018-2019 .. 34 SECTION II: CRITICAL TECHNOLOGIES . 36 A Whether There Is Credible Evidence of a Coordinated Strategy to Acquire Critical Technology Companies .. 36 1. Key Judgments .. 36 2. Summary of Foreign M&A Activity in the United States 37 3. Frequency of Activity by Countries and Companies .. 37 B. Whether Foreign Governments Used Espionage Activities to Obtain Commercial Secrets Related to Critical Technologies .. 38 1. Key Finding .. 38 SECTION Ill: FOREIGN DIRECT INVESTMENT IN THE UNITED STATES BY COUNTRIES THAT BOYCOTT ISRAEL OR DO NOT BAN TERRORIST ORGANIZATIONS . 39 Introduction .. 39 A Summary of Findings and Conclusions of Study 39 8. Study Methodology 40 C. Detailed Findings of Study .41 APPENDIX .. 43
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period-as an alternative to a voluntary notice, which has been the traditional means of filing a transaction with CFIUS. CFIUS will conclude all action with respect to a transaction (i.e., clear it to proceed) if it determines that the transaction does not pose any unresolved national security concerns, that any national security concerns are adequately addressed by laws other than Section 721 and the International Emergency Economic Powers Act, or that mitigation measures agreed to or imposed by CFIUS address any unresolved national security concerns. If CFIUS determines that the transaction poses unresolved national security concerns, it will refer the transaction to the President unless the parties choose to abandon the transaction. The President may suspend or prohibit the transaction, including by requiring divestment. By law the President has 15 days after completion of CFIUS’s investigation to make a decision. The President must publicly announce such a decision. CFIUS will seek mitigation measures or refer a transaction to the President only after such action is justified in a detailed written analysis of the national security risk posed by the transaction. CFIUS determinations are confirmed at senior levels by all CFIUS member agencies. With limited exceptions, any transaction submitted to CFIUS for review that CFIUS determines is subject to its jurisdiction-i.e., a “covered transaction” or equivalent under the regulations at chapter VIII of title 31 of the C.F.R.-and for which it concludes all action receives a “safe harbor.” This means that CFIUS and the President will not subject the transaction to review again, absent certain exceptional circumstances. By law CFIUS does not publicly disclose information provided to CFIUS by parties to a transaction, nor does it reveal the fact that the parties have submitted the transaction for review. Critical Technologies Pilot Program On October 11, 2018, the Department of the Treasury, as chair of CFIUS, issued temporary regulations to protect U.S. companies with critical technologies from potentially harmful foreign investments (the Pilot Program). See 83 FR 51322 (October 11, 2018). The Pilot Program implemented authorities provided under FIRRMA that expand the scope of transactions subject to CFIUS jurisdiction to include certain non-controlling investments in U.S. businesses involved in critical technologies. The Pilot Program also implemented a provision in FIRRMA allowing CFIUS to require declarations, which the Pilot Program requires for transactions that fall within its scope. The Pilot Program commenced on November 10, 2018, and was in effect through February 12, 2020. It ended on February 13, 2020, when the final FIRRMA regulations were fully implemented. See 85 FR 3112 (January 17, 2020). Transactions falling within the scope of the Pilot “pilot program covered transactions”-were subject to a mandatory declaration (which also could be satisfied by filing a written notice). Under the Pilot Program and consistent with FIRRMA, CFIUS conducts 30-day assessments of declarations. Upon conclusion of an assessment CFIUS can take one of four actions: (1) complete all action with respect to a transaction (i.e., clear it to proceed); (2) determine that CFIUS is unable to complete action with respect to the transaction on the basis of the declaration; (3) request that the parties to the transaction file a written notice; or (4) initiate a unilateral review of the transaction. iv
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Information on transactions subject to the Pilot Program is included in the summary data at Section I.A and the data on declarations at Section I. I. 2 This Annual Report This CFIUS Annual Report (Annual Report or Report) covers transactions filed with CFIUS in calendar year 2019, and thus describes the CFIUS process after certain provisions of FIRRMA became effective. FIRRMA includes new reporting requirements that became effective 18 months after the enactment of FIRRMA (i.e., on February 13, 2020). CFIUS anticipates that information responsive to these additional requirements will be provided in the Annual Report for calendar year 2020. 2 The information at Section I.I is included in this Annual Report in an effort to provide an overall summary of transactions that CFIUS assessed under the Pilot Program in 2019, even though such declaration information is not required in this Annual Report. V
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SECTION I: COVERED TRANSACTIONS Introduction This section of the Annual Report has been prepared in accordance with the following information requirements under Section 721 (m) and as applicable for the reporting period (calendar year 2019): A. a list of all notices filed and all reviews or investigations completed during the period, with basic information on each party to the transaction, the nature of the business activities or products of all pertinent persons, information about any withdrawal from the process, and any decision or action by the President under Section 721; B. specific, cumulative, and, as appropriate, trend information on the numbers of filings, investigations, withdrawals, and decisions or actions by the President under Section 721; C. information on the time it took the Committee to provide comments on, or to accept, notices submitted under Section 721(b)(1)(C)(i); D. cumulative and, as appropriate, trend information on the business sectors involved in the filings that have been made and the countries from which the investments have originated; E. information on whether companies that withdrew a notice to the Committee in accordance with Section 721(b)(1)(C)(ii) later refiled the notice, or, alternatively, abandoned the transaction; F. the types of security arrangements and conditions the Committee has used to mitigate national security concerns about a transaction, including a discussion of the methods that the Committee and any lead agency are using to determine compliance with such arrangements or conditions; and G. a detailed discussion of all perceived adverse effects of covered transactions on the national security or critical infrastructure of the United States that the Committee will take into account in its deliberations during the period before delivery of the next report, to the extent possible. Sections of the Report below address other information requirements under Section 721 (m). 1
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A. Information Regarding 2019 Covered Transaction Notices Table 1-1 on the following pages provides a list of all 231 written notices of transactions that were filed with CFIUS in 20193 and that CFIUS determined to be “covered transactions” under 31 C.F.R. part 800 or “pilot program covered transactions” under 31 C.F.R. part 801 (collectively referred to herein as covered transactions). The table sets forth information regarding the acquirer and the U.S. business that is the subject of the transaction, including the nature of the business activities or products, and details on any withdrawal. Ł CFIUS conducted a “review” with respect to the 231 notices of covered transactions that were filed in 2019. Ł CFI US conducted a subsequent “investigation” with respect to 113 of those 231 notices. Ł CFIUS concluded action on 28 of the 231 notices after adopting mitigation measures pursuant to Section 721 to resolve national security concerns. CFIUS adopted mitigation measures to address residual national security concerns with respect to five notices that were voluntarily withdrawn and the transactions were abandoned. Ł 30 of the 231 notices were withdrawn. In 15 of these instances, the parties filed a new notice in 2019. In three of these instances, the parties filed a new notice in 2020. In eight of these instances, the parties withdrew the notice and abandoned the transaction after either CFIUS informed the parties that it was unable to identify mitigation measures that would resolve its national security concerns or it proposed mitigation measures that the parties chose not to accept. In four of these instances, the parties withdrew their notice and abandoned the transaction for commercial reasons unrelated to CFIUS review. Ł CFIUS rejected one of the 231 notices for failing to satisfy CFIUS process requirements. Ł CFIUS referred one transaction to the President. The President issued an order prohibiting the acquisition of StayNTouch, Inc., a Delaware company, by Beijing Shiji Information Technology Co., Ltd., a public company organized under the laws of China. Ł No investigations were subject to an extension under subsection (b)(2)(C)(ii)(I) of Section 721 (which allows for one 15-day extension of the investigation period in extraordinary circumstances). 3 In a limited number of instances, notices were filed at the end of 2018 and accepted for review in 2019. Those notices are accounted for in this Report. 2
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