On 28 April 2022, the Subsidy Control Act 2022 (the "Act") received Royal Assent.
The Act is expected to enter into full force in Autumn 2022, with the relevant date to be confirmed by the UK Government in due course.1
The Act is intended to consolidate and build upon the UK's existing international subsidy control commitments,2 while providing public authorities with the flexibility to grant subsidies at a local level by reference to UK-specific principles (including principles for subsidies in relation to energy and the environment).
Prior to the Act entering into full force, the UK Government is expected to (i) enact secondary legislation to enable the effective implementation of the Act; and (ii) publish further guidance addressing the practical application of the Act and its implications.
Signifcantly, key features of the new UK subsidy control regime introduced by the Act include:
- Focus upon self-assessment: Public
authorities will generally be able to self-assess by reference to
the relevant principles, and decide whether to (i) grant subsidies;
and/or (ii) establish schemes to enable the grant of
- Subsidies and subsidy schemes "of
interest": Where a public authority intends to
grant a subsidy or subsidy scheme "of interest", it may
request the UK's Competition and Markets Authority (the
"CMA") to review the intended grant, and
report upon this (as considered below). The UK Government may also
direct a public authority to request the CMA to review
and report upon a subsidy or subsidy scheme which is either
"of interest", or which risks non-compliance
with the Act.
- Subsidies and subsidy schemes "of particular
interest": Where a public authority intends to
grant a subsidy or subsidy scheme "of particular
interest", it must request
the CMA to review this before the intended grant is made.
What constitutes a subsidy or subsidy scheme "of
interest", or "of particular interest", presently
remains to be determined, with the UK Government consulting upon
draft definitions under the draft Subsidy Control (Subsidies and Schemes of
Interest or Particular Interest) Regulations 2022 (with
the consultation due to end on 6 May 2022).
- CMA's reporting upon subsidies and subsidy
schemes: Where the CMA reviews subsidies and
subsidy schemes, it will evaluate the relevant public
authority's self-assessment of the intended grant by reference
to the UK-specific principles, and prepare a non-binding report
detailing its findings, which may include advising upon:
- how the public authority's assessment may be improved;
- how the intended subsidy or subsidy scheme may be modified to
ensure compliance with the UK subsidy control regime.
- how the public authority's assessment may be improved; and/or
- Minimal financial assistance (i.e. a
UK-specific de minimis threshold): In
certain circumstances, the Act enables the grant of a
subsidy where the total gross value of assistance provided to the
enterprise in question does not exceed £315,000 over the
elapsed period of the current financial year, and the two financial
years immediately prior to this.
- "Steamlined subsidy control schemes" (i.e.
UK-specific "block exemptions"): The
Act also provides for the possibility of so-called
"streamlined subsidy control schemes" being made by the
UK Government. Where such a scheme is established, the intention is
that public authorities will then only need to ensure that they
satisfy the applicable criteria of the relevant scheme in order to
grant subsidies under this.3 The use of streamlined
subsidy control schemes is expected to provide public authorities
with greater clarity and certainty when granting targeted
- Challenging decisions to grant subsidies and subsidy
schemes: An interested party aggrieved by a decision
is able to apply to the Competition Appeal Tribunal
("CAT") for the decision to be reviewed.
When determining an application, the CAT must apply the
same principles as would be applied (i) by the High Court when
determining proceedings on judicial review (in the case of
proceedings in England and Wales, or Northern Ireland); and (ii) by
the Court of Session on an application to the supervisory
jurisdiction of that Court (in the case of proceedings in
Scotland). The CAT is able to grant different forms of
relief, including making a recovery order if a subsidy
breaches the Act. Where a recovery order is made, amongst
- the public authority that granted the subsidy can be required
to recover the value of this from the beneficiary; and
- interest may be payable in relation to the subsidy to be recovered.
- the public authority that granted the subsidy can be required to recover the value of this from the beneficiary; and
The new UK subsidy control regime is expected to afford greater flexibility to UK public authorities, enabling them to provide targeted support to beneficiaries, in order to deliver UK-specific outcomes. The regime marks an obvious departure from the EU State aid regime, which necessarily adopted a wider frame of reference. The effective implementation of the UK's new regime will be key to its success, and further legislation and guidance is keenly awaited.
In the interim, pending the new regime entering into full force, the UK's existing international subsidy control commitments will continue to apply.
1. Notwithstanding the Act, EU State aid law continues to apply in the UK to measures that may affect the trade in goods between Northern Ireland and the European Union, and the production of wholesale electricity in Northern Ireland, pursuant to Article 10 of the Protocol on Ireland and Northern Ireland.
2. Including, for example, under the UK-EU Trade and Cooperation Agreement, and the WTO Agreement on Subsidies and Countervailing Measures.
3. Paragraph 10 of "Streamlined Routes: Objectives, Operation and Next Steps"
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