The Subsidy Control Act 2022 came into force on 4 January 2023

The Subsidy Control Act (SCA) came into force on 4 January 2023, marking the end of the Brexit transition period in relation to subsidy control.

The UK’s Subsidy Control regime aims to be more permissive than its pre-Brexit predecessor, state aid. Public authorities are now required to self-assess a subsidy’s compliance against the seven Subsidy Control Principles to determine its suitability in relation to competition and investment.

BEIS published updated guidance in November 2022 in advance of the SCA coming into force aimed at assisting public authorities in complying with the new Subsidy Control regime. The guidance includes a Subsidy Control Principles Assessment Template which confirms that the depth of the assessment of compliance with the principles for a subsidy (or subsidy scheme) should be commensurate with the size and the potential distortive impact of the subsidy. In addition, a “quick guide to key requirements” has been published for public authorities to assist in the determination of whether support constitutes a subsidy within the SCA. The guide sets out 6 steps for public authorities to follow when giving support which may fall within the definition of subsidy.

The newly established Subsidy Advice Unit (within the Competition and Markets Authority) is tasked with evaluating the assessments made by public authorities of subsidies over certain thresholds and will provide non-binding advice to public authorities.

With the SCA now in force, expect to see public bodies start to publish “subsidy schemes”: a set of rules that describe the eligibility, terms, and conditions for subsidy that that body intends to provide. A public authority must assess the subsidy control requirements in setting up a subsidy scheme, however awards given in compliance with an established subsidy scheme are not required to be separately assessed against the relevant subsidy control principles.

On 9 January 2023 the UK Government announced 3 Streamlined Routes (a type of subsidy scheme which any public authority may use to give subsidy without needing to carry out a separate assessment against the subsidy control requirements) in relation to (i) research, development and innovation (with a maximum award of £3,000,000 per enterprise per project), (ii) energy usage (with a maximum award ranging from £1,000,000 to £15,000,000 per enterprise per project depending on the category) and (iii) local growth (with a maximum award ranging from £400,000 to £5,000,000 per enterprise per project depending on the category and type of subsidy).

Public authorities must disclose the details of subsides given on the UK’s new subsidy database (unless an exemption applies). The UK subsidy database can be searched here. The database itself contains a full list of active subsidy schemes and details each of the businesses that have received subsidies under each scheme. Any claims/appeals regarding subsidiaries must be brought within the Competition Appeal Tribunal (CAT) in accordance with the judicial review principles, within one month of the subsidy being entered on the database.

For information about the UK’s Subsidy Control Act regime, please contact Jonathan Jarvis or Joanna Bouloux.

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