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On 4 January 2023, the UK’s new subsidy control regime came into force, implementing a new subsidy regulation framework designed for the post-Brexit era.  Underpinned by the Subsidy Control Act 2022 (the “Act”), related statutory instruments and government guidance, the new regime aims to grant public authorities the power to design and award subsidies in an agile way while complying with the UK’s international commitments on subsidy control.   Key things you need to know:

  • The UK’s new subsidy control regime seeks to provide a framework that allows public authorities to award subsidies efficiently, while ensuring that such subsidies do not distort the domestic market or fall foul of the UK’s international commitments on subsidy control.
  • Public authorities are responsible for self-assessing a proposed subsidy or scheme’s compliance with the regime’s requirements.
  • Proposed Subsidies and Schemes of Interest (“SSoIs”) and Particular Interest (“SSoPIs”), i.e. subsidies above certain thresholds or of certain importance, are subject to referral – voluntary (for SSoIs) and mandatory (for SSoPIs) – to the Competition and Market Authority’s Subsidy Advice Unit (“SAU”), which will provide non-binding advice regarding the proposed subsidy. The Government can exercise a “call-in” referral power, i.e. refer a subsidy or scheme to the SAU for review.
  • Subsidies that qualify for assessment under a “Streamlined Route” (“SR”), i.e. subsidies that are less likely to cause distortions on the market and meet the relevant criteria set out by legislation, will not be subject to referral or the Government’s call-in powers.
  • An awarded subsidy can be challenged in court, though during a relatively short (in many cases 30-day) window. A range of remedies are available to challenging parties, including prohibition, injunctions and recovery orders.

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Continue Reading The UK’s new subsidy control regime comes into force

On 28 April 2022, the Subsidy Control Bill (the “Bill”) received Royal Assent, becoming the Subsidy Control Act 2022 (the “Act”).  The Act lays the basic framework for the new UK-wide subsidy control regime, which is now expected to come into force in Autumn 2022.  Although the Act primarily addresses UK public authorities and their legal obligations relating to the awarding of domestic subsidies, the new regime will be of particular interest to companies wishing to benefit from the more flexible post-Brexit subsidy regime moving forward.
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Continue Reading UK Subsidy Control Bill granted Royal Assent

When the UK left the EU on 31 December 2020, the Competition and Markets Authority (“CMA”) gained new powers, functions and responsibilities previously exclusively reserved to the European Commission (the “Commission”).

This blog explores how the CMA has tackled its increased workload in the first year post-Brexit, under the shadow of the global pandemic, and the extent to which the CMA’s practice has diverged from EU law.…

Continue Reading Trends, developments and divergence from EU law? The CMA’s first year as a global competition authority

On 3 November, the UK’s Competition and Markets Authority (“CMA”) issued a recommendation to the Secretary of State for Business, Energy and Industrial Strategy to replace the EU Vertical Agreements Block Exemption Regulation or ” VABER” with a UK Vertical Agreements Block Exemption Order (“UK Order”) when the VABER expires on 31 May 2022.  The VABER (which provides a safe harbour from the prohibition against anti-competitive agreements for vertical agreements that meet the applicable requirements) formed part of retained EU law following Brexit, but its upcoming expiry triggers the need for a UK Order to be issued in its place.
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Continue Reading The UK CMA publishes its recommendation for replacing the retained Vertical Agreements Block Exemption Regulation

What is happening and why?

On 30 June, the UK Government announced its draft Subsidy Control Bill (the “Bill”) which sets out the framework for how the UK will subsidise businesses post-Brexit.  The UK government has hailed the Bill as a major departure from the EU state aid rules.  In practice, the Bill provides a framework for implementing the UK’s international commitments on subsidy control, as set out in the Trade and Cooperation Agreement agreed with the European Union, and in other existing international trade obligations and World Trade Organisation (“WTO”) rules.

The Bill introduces a decentralised subsidy control framework outlining principles with which public authorities must comply when awarding subsidies.  One of the key aims of the Bill is to ensure that the subsidy control regime is not used to encourage a “race to the bottom” between different regions of the UK.

While there are some important differences as compared to the EU state aid regime, the fundamental principles are comparable and any subsidies given under the Northern Ireland Protocol will continue to be governed by EU rules.…

Continue Reading The UK’s post-Brexit Subsidy Control regime — what to expect

On 21 January 2019, the UK government published its draft statutory instrument on State aid, outlining the changes to the UK State aid regime in the event of a no deal Brexit. Its publication comes at critical moment for the UK as it considers the potential options for leaving the European Union: (i) leave with a deal; (ii) leave without a deal; or (iii) postpone the date of leaving.

The State Aid (EU Exit) Regulations 2019 (“State Aid No Deal Regulation”), which still requires the approval of the UK Parliament, does not make material changes to the substance of the EU State aid framework, but rather transposes the regime into UK domestic law, establishing the UK Competition and Markets Authority (“CMA”) as the UK State aid enforcement authority, thereby replacing DG Comp.…

Continue Reading “No Deal” Brexit and the UK State Aid Regime (Part 2)

Potentially significant changes are just around the corner for the UK competition system, as the country prepares to take the final step of exiting the European Union. In this regard, the UK has three potential options: (i) leave with a deal; (ii) leave without a deal; or (iii) postpone the date of leaving. Should the UK leave the EU with a deal, then its departure shall be governed by the Withdrawal Act ( “WA”), which simply confirms much of the competition framework will remain until December 2020 (the “Transition Period”). At the time of writing, the WA still awaits Parliamentary approval. In the case that the UK leaves without a deal in place, then from 29 March 2019 competition law will be governed by the statutory instrument titled The Competition (Amendment etc.) (EU Exit) Regulations 2019 (“No Deal Regulation”).

A very brief summary of the key differences between the WA and the No Deal Regulation in terms of the effect on the UK competition framework is as follows:

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Continue Reading Deal or No Deal Brexit? The Lowdown for Competition Law (Part 1)

The UK Government published its highly-anticipated technical guidance on merger review and anti-competitive activity on 13 September 2018 which will apply in the case of a ‘no-deal’ Brexit (the ‘Guidance’). Although brief, it provides market players with some form of practical advice and insights on what to expect, how cases are likely to be divided between the EU and UK regimes, how UK competition law will develop, and suggests in what ways post-Brexit competition damages actions in the UK Courts may change. This Guidance follows on from the previously released ‘no-deal’ state aid guidance – as was covered in our previous Covington alert – forming part of a larger suite of ‘no-deal’ Brexit guidance papers released by the Government in recent weeks.

The Guidance provides several key pieces of practical advice for businesses regarding different types of competition law processes in the wake of a ‘no-deal’ Brexit.
Continue Reading The UK Government Issues ‘No-deal’ Competition and Merger Guidance

The Financial Conduct Authority (“FCA”) has published its third Annual Competition Report which focusses on its proposals for promoting competition and innovation, particularly with respect to the impact of FinTech on UK financial services. It also addresses the FCA’s ongoing role in supporting the UK Government prepare for Brexit, and uphold an orderly transition as part of the withdrawal process – avoiding any cliff edges – for UK financial markets.
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Continue Reading UK’s Financial Conduct Authority gives guidance on future priorities, FinTech and Brexit