The US government can't reject them for "we don't like that country" reasons, because that's outside of the scope of its regulatory powers. Regulatory approval of acquisitions is based on competition considerations, not trade war considerations. If they rejected a deal for improper reasons, they'd get sued, and they'd lose.
The draft report by the US House Intelligence Committee, obtained by AFP, said an investigation has concluded that the two firms "cannot be trusted" to be free of influence from Beijing and could be used to undermine US security.
It said US authorities "must block acquisitions, takeovers or mergers involving Huawei and ZTE given the threat to US national security interests".
The panel launched its probe over concerns that China could use the fast-growing firms for economic or military espionage, or cyber attacks.
Is this really the case in the US? Because in Canada, there have been numerous cases of the Canadian government vetoing purchases by foreign companies in the name of protecting Canadian interests and security (e.g. MDA selling to an American aerospace firm, Pot Ash Corp, BlackBerry to Lenovo, etc.)
Or even the case of SEC approval or EU approval for major acquisitions.
I'm guessing there are some national security rules too (and possibly some other specific rules), but the point is that they can't just say, "we don't like China so they can't buy our companies". The government simply hasn't been given that power.
What I'm pointing out though is that their point about "national security" really came down to "we don't trust China"/"we don't trust america". And it passed through Parliament fine because it pretty much had the support of Canadians.
You're right that the legislature can pass any law they want; I was just talking about the executive branch's authority to veto deals directly. I didn't think that--at least in the US--there were instances in which Congress had actually done passed a law like that, and wasn't considering that a relevant possibility. But see Galaxity's comment below refuting that; so I'm withdrawing my argument.
Well the Dubai Ports World issue would seem to imply otherwise. Dubai Ports World was trying to buy Us port management companies. After the executive branch approved it uproar caused congress/House Appropriations Committee to actually vote an amendment to block the deal. DPW eventually had to sell the US operations to an American group (they acquired the us companies through the purchase of a British company). The government wasn't sued over it. So it seems the government certainly can block purchases it doesn't like.
