Subsidy Control: Top tips for public authorities referring measures to the Competition and Markets Authority
11th November, 2025
In November 2025, the Competition and Markets Authority published its 100th report since the Subsidy Control Act 2022 came into force.
In this article, Alexander Rose, draws upon his experience, including advising public authorities in over ten subsidy measures that have been referred to the Competition and Markets Authority, in order to provide expert tips as to how to successfully make a referral and what to do once the report is published.
Subsidy Control law regulates financial assistance awarded using public sector funds and resources, where this benefits businesses or other organisations engaged in economic activity. This competition law regime is primarily based upon the Subsidy Control Act 2022 which sets out a definition of ‘subsidy‘ (which is similar but not the same as a ‘State aid’ in EU law). Where a measure involves the award of subsidy, a public authority is required to take steps to ensure that the measure is designed so that it aligns with the requirements of one of seven routes prescribed within the Act and to undertake checks against prohibited categories.
Fundamentally Subsidy Control is a challenge regime – if an interested party brings an action against a decision to award a subsidy or to establish a subsidy scheme and it is found that the relevant rules have not been satisfied, then the Competition Appeal Tribunal has the power to order the cancellation of the measure alongside the recovery of a sum equal to the value of the benefit received from the beneficiary.
The referral process under Subsidy Control Law
Under Part 4 of the Subsidy Control Act 2022, greater scrutiny is applied to measures which are regarded to have “greater potential to lead to undue distortion and negative effects on competition or investment“.
What this means in practice is that there is a duty to refer certain types of subsidy (and the creation of subsidy schemes which will award such subsidies) to the Subsidy Advice Unit within the Competition and Markets Authority in advance of the public authority making its decision to proceed.
The Competition and Markets Authority then reviews the documentation prepared for this purpose, providing feedback, in the form of a public report, upon the strengths and weaknesses. This should be taken into account in the subsequent decision making process, with steps taken to address aspects which have been criticised.
Which types of subsidy have to be referred to the Competition and Markets Authority?
Any subsidy which is classed as a ‘Subsidy of Particular Interest’ (“SoPI”) or a subsidy scheme which will be used to award a SoPI must be referred to the Competition and Markets Authority in line with the requirements of Part 4 of the Subsidy Control Act 2022, The Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022 (as amended), the relevant Statutory Guidance and the guidance published by the Competition and Markets Authority.
The Competition and Markets Authority is then tasked with reviewing the information provided and, if the submission is regarded to be satisfactory for the purposes of a review, will undertake a “full evaluation of the authority’s assessment of the subsidy or scheme“. The results of this evaluation will be set out in the form of a public report, including suggestions as to where there are weaknesses within the public authority’s reasoning or evidence base which may be addressed prior to making a final decision on the subsidy or subsidy scheme.
What constitutes a SoPI under Subsidy Control law?
A SoPI arises when it is planned to award a subsidy (or to create a subsidy scheme which will be used to award a subsidy in due course) with a value that:
- exceeds £25m;
- exceeds £5m and relates to a sensitive sector;
- exceeds £1m and will fund relocation activities;
- exceeds £1m and will fund restructuring activities; or
- exceeds £1m and the cumulative value of the related subsidies awarded in the last three years exceeds £25m (£5m if within a sensitive sector)
As of November 2025, the sensitive sectors are:
- manufacture of motor vehicles;
- building of ships and floating structures;
- manufacture of motorcycles;
- manufacture of air and spacecraft and related machinery;
- production of electricity;
- manufacture of basic iron and steel and of ferro-alloys;
- aluminium production; and
- copper production.
The Subsidy Control Act 2022 lists certain types of award and subsidy scheme which will not be subject to referral. This includes legacy schemes (established before the Subsidy Control regime came into force on 4 January 2023) and tax measures.
What steps should be taken in the lead up to a referral?
The referral process is not to be underestimated and there have been situations where public authorities have had to abandon measures as a result of receiving critical reports from the Competition and Markets Authority.
Therefore, the public authority should prepare by:
- identifying whether there is a subsidy with reference to the Statutory Guidance and the relevant case law;
- where there is a subsidy, establishing the expected value of this and whether it will affect a sensitive sector or other SoPI category;
- determining whether any of the prohibited categories within the Subsidy Control Act 2022 is triggered by the measure and if so, the impact of this;
- setting out the prescribed route within the Subsidy Control Act 2022 which will be followed in making the award and then setting out how each requirement of this route has been met (if necessary with supporting evidence); and
- drafting the transparency notice which will be published once the award has been made.
The reasoning for all of the above points should be articulated in writing and will be a central element of the referral.
Most public authorities bring in external legal advisers and other professional support at this stage. It is common for a data room to be created for the purposes of the supporting evidence. However the main documentation will normally be the assessment of subsidy and the documentation showing how each of the requirements of the prescribed route has been satisfied.
Once the documentation is in a satisfactory form, the public authority should liaise with the Department for Business and Trade’s Subsidy Control Unit. The Civil Servants in this unit can help the public authority by providing context about other referrals that may be planned, but also providing additional information which may assist in refining the documentation. They can also provide log in codes for the National Transparency Database, so that information about the SoPI can be placed online once an award has been made. Having completed the above actions, the public authority should undertake a further check of the documentation, including supporting evidence.
At this point, we recommend that an email is sent to the Subsidy Advice Unit within the Competition and Markets Authority requesting ‘pre-referral discussions’.
Pre-referral discussions provide the opportunity for informal feedback to be provided. We strongly recommend that legal advice is taken in the lead up to pre-referral discussions and that the recommendations made within these meetings are carefully followed.
How does the Competition and Markets Authority referral process work?
Once the public authority is satisfied with the documentation it has prepared for the purpose of reaching a decision upon the award of subsidy or creation of the subsidy scheme (including taking on board points raised in the pre-referral discussions) then the documentation should be submitted via the Subsidy Advice Unit’s (SAU) Public Authority Portal.
The Competition and Markets Authority has five working days to consider the documentation. If satisfactory, this will start a thirty working day period in which the Competition and Markets Authority evaluates the documentation provided.
The Competition and Markets Authority will notify the public authority of its decision to accept or reject a submission (noting that it also has the option to decline, but this has not happened under the regime so far). At this point it will publish basic details about the referral on its website. Public authorities should be aware that this will mean the proposal is in the public domain. Third parties are able to submit their views at this time and their feedback may be included in the final report.
During evaluation the Competition and Markets Authority has the option to request clarification information and therefore it is important to have a contact within the public authority that is on hand to address any such questions during that period.
What do Subsidy Advice Unit reports contain?
The main focus of the Competition and Markets Authority’s report on a subsidy measure will normally be the arguments and supporting evidence in place in respect of the seven Subsidy Control Principles, these being:
A) Subsidies should pursue a specific policy objective in order to:
- remedy an identified market failure, or
- address an equity rationale (such as local or regional disadvantage, social difficulties or distributional concerns);
B) Subsidies should be proportionate to their specific policy objective and limited to what is necessary to achieve it;
C) Subsidies should be designed to bring about a change of economic behaviour of the beneficiary;
D) Subsidies should not normally compensate for the costs the beneficiary would have funded in the absence of any subsidy;
E) Subsidies should be an appropriate policy instrument for achieving their specific policy objective and that objective cannot be achieved through other, less distortive, means;
F) Subsidies should be designed to achieve their specific policy objective while minimising any negative effects on competition or investment within the United Kingdom; and
G) Subsidies beneficial effects (in terms of achieving their specific policy objective) should outweigh any negative effects, including in particular negative effects on (a) competition or investment within the United Kingdom and (b) international trade or investment.
In certain situations (for example a subsidy towards the construction of a wind farm) the report will also evaluate the arguments and evidence provided in respect of the energy and environment principles. The report may also summarise the views of third parties that have been submitted.
Ultimately the Competition and Markets Authority report sets out an evaluation based on the information provided. It is not intended to cause problems for public authorities, but instead is issued with a view to assisting the public authority to improve its decision making process.
What to do after a Competition and Markets Authority report is published?
The Subsidy Control Act 2022 prohibits the public authority from awarding the subsidy or creating the subsidy scheme for a period of five working days after the report is published.
The public authority should use that time to take account of the points that have been raised. This is most likely to result in the documentation being revised, but it might also lead to the proposal being redesigned or even in some situations stopped.
Top tips for making a referral of a subsidy measure to the Competition and Markets Authority
The overriding recommendation is to treat the process seriously – it takes time and involves methodical work. In most cases, that involves bringing in external expertise.
The main focus will be upon creating a set of documents that sets out a credible argument to proceed, taking into account all the relevant considerations set out within the Subsidy Control Act 2022 and Statutory Guidance. Common criticisms in Competition and Market Authority reports are that only surface level analysis has been undertaken, issues which should have been addressed have been missed and there is insufficient supporting evidence. Therefore, the public authority will want to involve those who have been through the process already, drawing upon their experience to determine what level of analysis and supporting information is required.
Once the report is published, decisions need to be made about how best to proceed. Reports are non-binding, so it is up to the public authority whether to take on board criticisms. In most cases, it is prudent to do so, recognising that a challenger considering whether to bring a Judicial Review is likely to start with the points raised by the Competition and Markets Authority.
Conclusion
Subsidy Control is a challenge regime and measures which constitute SoPIs have the highest profile. A referral to the Competition and Markets Authority is a serious process and public authorities that have failed to prepare properly in the past have found their options limited by negative reports. In contrast those public authorities that have taken the time to work through the requirements in a step by step manner, have often benefited from supportive reports.
Ward Hadaway has a market leading practice providing expert advice upon Subsidy Control. This includes providing opinion letters, defending challenges and supporting with referrals to the Competition and Markets Authority.
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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