Subsidy control law – does the Zenobē case prove that the enforcement regime is finally taking off?
17th November, 2025
In the first 800 days of the UK's Subsidy Control regime, just two cases were brought in the Competition Appeal Tribunal. In the last 200 days four more have been lodged, with the latest being the case of Zenobē Energy Limited v Gas and Electricity Markets Authority.
In this article, Alexander Rose looks into this latest case and assesses whether this flurry of new actions means that the UK’s enforcement regime is now working as was envisaged at the time the regime was created.
Introduction
The UK’s Subsidy Control regime was always designed to be different to the EU State aid regime. Whereas the EU system relies upon an independent regulator capable of proactively investigating measures and ordering recovery, the UK system relies upon proceedings being brought by commercial rivals that are willing to finance a judicial review action against a public authority.
When the UK’s Subsidy Control regime was first set up it was forecast in a government impact assessment report, provided to Parliament, that there would be around 23 challenges brought per year. If that had been accurate we would have seen around 65 cases brought by this point.
However between 4 January 2023 and 1 May 2025, just two actions were brought. In The Durham Company Limited v Durham County Council [2023] CAT 50 the Competition Appeal Tribunal ruled that the local authority’s arrangements to deliver waste collection services did not constitute subsidy. In Mr Aubrey Weis v Greater Manchester Combined Authority [2025] CAT [41] the Competition Appeal Tribunal found that Greater Manchester Combined Authority’s loan fund had entered into two facilities with development companies on market terms and therefore neither transaction amounted to subsidy.
New cases
Since May 2025, the situation has changed, with the following cases brought:
- The New Lottery Company Ltd and Others v The Gambling Commission is based upon an allegation that c. £70m of funding from the Gambling Commission towards Camelot’s marketing costs amounted to subsidy but did not follow the requirements of the Subsidy Control Act 2022. The case is expected to be heard before the end of the year;
- Bristol Airport Limited v Welsh Ministers is based upon an allegation that the decision made by the Welsh Government to award a £205.2 million subsidy to Cardiff International Airport failed to meet the requirements of the Subsidy Control Act 2022 because the conclusions reached in respect of the Subsidy Control Principles were incorrect and the rules relating to subsidies to air carriers for the operation of air routes were not properly applied. The case is expected to be heard early in 2026;
- Mr Graham Thomas & Others v Durham County Council is not expressly brought under Section 70 of the Subsidy Control Act 2022, but does seek “a declaration that the contested awards constitute unlawful subsidies and/or breaches of competition and procurement law“;
- In late October, Aubrey Weis received permission from the Court of Appeal to have the Competition Appeal Tribunal’s decision reviewed on the grounds that the established principles of judicial review had not been followed and that the Competition Appeal Tribunal had erred in law by concluding consideration was given to the statutory guidance despite no evidence that the relevant decision-making body did so.
The Zenobē case
In Zenobē Energy Limited v Gas and Electricity Markets Authority a challenge is being brought by a private company operating in the battery storage market against a decision made by the Gas and Electricity Markets Authority (“GEMA”) to provide support to longer-duration energy storage (“LDES”) projects by way of a ‘cap and floor mechanism’.
Under this initiative projects are guaranteed a minimum level of revenue and will receive a ‘top up’ payment should revenues fall below this ‘floor‘. There is also a maximum revenue threshold – the ‘cap‘ – above which some revenues will be returned. The floor payments originate from suppliers, but are collected by the National Energy System Operator, operating within a framework established by GEMA.
GEMA has not treated the measure as a subsidy scheme and therefore the argument made by Zenobē Energy Limited is that GEMA has failed to comply with Section 12(3) of the Subsidy Control Act 2022, which requires a public authority to “consider the subsidy control principles before making a subsidy scheme” and “not to make the Scheme unless it is of the view that subsidies under the scheme will be consistent with those principles“.
In addition it is alleged that there has been a failure to apply the energy and environment principles at schedule 2 of the Subsidy Control Act 2022 and also to make a referral to the Competition and Markets Authority in advance of establishing a scheme.
There are two counter-arguments which seem likely to be advanced by GEMA. The first relates to the Section 25 of the Planning and Infrastructure Bill (which is currently being considered by Parliament) which will place an obligation on Ofgem (which delivers functions on behalf of GEMA) to deliver a scheme which makes payments in regard to long duration electricity storage. The second is whether the redirection of supplier funds is a transfer of a public authority’s resources – an issue which was scrutinised in the EU State aid case of PreussenElektra [C-379/98].
Does this mean the subsidy control enforcement is operating as envisaged?
Not necessarily. Although there has been a sharp increase in cases, it is far below the 65 envisaged to have been brought by now.
In part this is because of the hurdles that a challenger faces. To bring an action under Subsidy Control law, a competitor needs to be able to finance a case and bring this within a short challenge window.
So far, neither claim under Subsidy Control law has succeeded. If all these cases fail then perhaps that will deter challengers from bringing cases in the future. However if one or more succeeds then perhaps the UK’s enforcement regime will begin to take off.
Conclusion
The Zenobē Case is important in its own right – it will clarify the degree of control required for funds to be regarded as the resources of a public authority, but also the situations where a subsidy scheme should be created. The wider context is also important – there has been a sharp increase in cases, but it is too soon to state that this is a trend. Much will depend on the outcome of these cases.
Ward Hadaway is one of the UK’s leading law firms for Subsidy Control advice. Our Subsidy Control lawyers can help you deliver your objectives within the law, but also can support you if you wish to challenge an unlawful subsidy that is undermining your interests. Please get in touch if we can help you with any matters involving Subsidy Control.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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