Skip to content

How can third parties challenge subsidies awarded under the new Subsidy Control Act.

Following on from my recent article on the forthcoming Subsidy Control Act 2022, this article focuses on the way in which third parties can challenge subsidies awarded under the Act.

It considers the changes in working practices that granting bodies will need to adopt as a result of the way the Act applies.

What is Changing?

Under EU State aid law the primary route of challenge for an aggrieved third party is to make a complaint to the European Commission.  The European Commission plays a central role in EU State aid law, as well as approving proposed aid it investigates potential illegal aid and can effectively require that aid is repaid.  Under the Subsidy Control Act 2022 there is no equivalent role for the UK Regulator (the Competition and Markets Authority (CMA)).  The CMA’s role is advisory only and there is no procedure whereby third parties can complain to the Regulator about a subsidy.  Third party complainants under the Act must bring judicial review proceedings

Therefore, the Act marks a shift from primarily regulatory enforcement to private enforcement.  It was always possible to enforce State aid law via the UK courts.  However, such court action was rare.  This is possibly due to the availability of complaint to the European Commission and the added complexity of applying provisions of EU law.  It was also the case that many measures which constituted State aid were not transparent and so potential complainants were unaware of aid.  This will change under the Act as granting bodies are required to publicise any aid in excess of £100,000.

As I have suggested previously, the increased transparency combined with the familiarity of judicial review proceedings is likely to lead to an increased frequency of court challenges in the UK.

What is the procedure?

A complainant in the UK is required to pursue a claim that subsidy has been granted unlawfully via a judicial review application.  This application is made to the Competition Appeals Tribunal.  The time limit for bringing a claim is generally one month from the time the details of the subsidy are published on the transparency database.

Stay up to date with:

  • Trending Topics
  • Latest Insights
  • Upcoming Events
  • Company Updates

Prior to bringing a claim a potential claimant has the right to request information from the granting body to permit the potential claimant to assess whether the subsidy was granted in accordance with the Act.  The granting body has 28 days to respond to this request and provide the information.  The making of a request effectively “stops the clock” in relation to the period in which a judicial review claim can be made.  The claimant can bring its claim within one month of being notified by the granting body that it has complied with its information request.

In practice these tight timescales will mean that granting bodies will need to have in place appropriate information to respond to a request from a potential complainant at the time when they grant the subsidy.  This will ultimately be the information that the granting body will be relying upon in resisting the judicial review.  It will not be practicable for a granting body to put together this information, and consider issues surrounding disclosure (confidentiality, data protection etc.), in a reactive way.

What will the court consider?

In a judicial review the Competition Appeals Tribunal will consider whether the decision to award the Subsidy was made in accordance with the law (including the Act),  It will not consider issues such as whether the subsidy will work or whether it is an appropriate use of the granting body’s resources.  It will want to see that the granting body has considered the requirements for compliance and applied these properly to the particular subsidy.  This emphasises the need, apparent from the Government’s draft guidance, to ensure that the subsidy is fully assessed against the principles of the Act,  It also evidences the need to be able to demonstrate that this assessment has occurred – both in response to an information request and in the judicial review proceedings themselves.

What does this mean for granting bodies?

The changes heralded by the Subsidy Control Act 2022 mean that granting bodies will need to be ready to explain and defend their decisions to award subsidy within tight timescales.  The preparation of audit trail in a proactive way would be prudent in order to avoid severe difficulties in the event of a complaint.

Please fill out the form below if you’d like to be kept updated with any developments to the incoming Subsidy Control Act, as and when they happen.

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.

This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.

Follow us on LinkedIn

Keep up to date with all the latest updates and insights from our expert team

Take me there

What we're thinking