United Kingdom

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.

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

Over the summer, the UK Secretary of State for Business, Energy and Industrial Strategy (“BEIS”) delivered the first decisions, in the form of final orders, under the National Security and Investment Act 2021 (“NSIA”).  We consider these decisions and other cases in the context of the first nine months of the UK’s new (quasi) Foreign Direct Investment (“FDI”) regime.

Key takeaways:

  • The NSIA has broad reach, and BEIS has shown willingness to exercise the powers to review transactions that can stretch beyond mergers and acquisitions, for example, to licensing agreements.
  • NSIA review involves the weighing of a number of factors relating to the target, the acquirer and the level of control being obtained.  Early decisions suggest that target’s products/services and activities are just as important a factor as the acquirer’s identity, among the cases that have engaged the attention of the Investment Security Unit (“ISU”).
  • “Behavioural” undertakings, e.g. involving implementation of security controls or granting of audit rights to regulators appear to be a continuation of trends seen in the predecessor UK ‘public interest’ regime, and similar to other EU FDI procedures.

Continue Reading UK FDI: Decision-making practice emerging under the National Security and Investment Act

The English High Court (“High Court”) has issued an important judgment in the claim that Gemalto group companies (“Gemalto”) brought against Infineon (“Infineon”) and Renesas Electronics (“Renesas”) companies, for damages arising from the smart card chips cartel (Gemalto NV and others v Infineon Technologies AG [2022] EWHC 156 (Ch), the “Judgment”).  The claim arises from a European Commission decision in 2014.  The High Court has found that Gemalto brought its claim out of time because the limitation period started to run not when the Commission adopted that decision, but about one and a half years before that, when the Commission adopted preliminary charges in the form of a Statement of Objections.  The Judgment gives a clear signal that prospective claimants can no longer assume that the limitation period starts running from the date of a regulatory decision and gives some reassurance that potential defendants should not be on the receiving end of claims that could have been brought earlier.
Continue Reading English High Court issues warning shot to cartel damages Claimants who delay

The UK’s NSI Act comes into force on January 4th, 2022. In these brief audio recordings, our team sets out what companies in the energy, life sciences and technology sectors need to know about the UK’s newly expanded investment control regime. For further details contact any member of our London team.

In this episode, our…
Continue Reading The UK’s National Security and Investment Act Audiocast Series: Episode 3 – Technology

The UK’s NSI Act comes into force on January 4th, 2022. In these brief audio recordings, our team sets out what companies in the energy, life sciences and technology sectors need to know about the UK’s newly expanded investment control regime. For further details contact any member of our London team.

In this episode, our…
Continue Reading The UK’s National Security and Investment Act Audiocast Series: Episode 2 – Life Sciences

The UK’s NSI Act comes into force on January 4th, 2022. In these brief audio recordings, our team sets out what companies in the energy, life sciences and technology sectors need to know about the UK’s newly expanded investment control regime. For further details contact any member of our London team.

In this episode, our…
Continue Reading The UK’s National Security and Investment Act Audiocast Series: Episode 1 – Energy

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

Covington’s four-part video series offers snapshot briefings on key emerging trends in UK Competition Law. In part four, James Marshall and Sophie Albrighton look across the horizon at the CMA’s plans for the future: what are the proposed reforms for competition law in the UK, what is the CMA looking to do post-pandemic, what are…
Continue Reading Emerging Trends in UK Competition Law Vlog Series – Part IV: Horizon Scanning

Covington’s four-part video series offers snapshot briefings on key emerging trends in UK Competition Law. In part three, James Marshall and Sophie Albrighton discuss digital markets, one of the key areas of focus of competition authorities around the world today, including in the UK. They are joined by guest speaker Martin Hansen, Of Counsel in…
Continue Reading Emerging Trends in UK Competition Law Vlog Series – Part III: Digital Markets

Covington’s four-part video series offers snapshot briefings on key emerging trends in UK Competition Law. In part two, James Marshall and Sophie Albrighton focus on current trends in enforcement and litigation. They are joined by guest speaker Louise Freeman, co-chair of Covington’s Commercial Litigation and European Dispute Resolution Practice Groups, who has extensive experience…
Continue Reading Emerging Trends in UK Competition Law Vlog Series – Part II: Enforcement and Litigation