Subsidy control in action: Key themes from recent CAT and Court of Appeal decisions

Until this year, just two subsidy control cases had been brought to the Competition Appeal Tribunal (CAT) since the introduction of the Subsidy Control Act 2022 (the Act), such that there was relatively little guidance on the CAT's approach to subsidy control challenges under s. 70 of the Act (which requires judicial review principles to be applied). In recent months, the case-law has evolved rapidly, with the CAT, and for the first time the Court of Appeal, handing down a series of decisions.

Here, we look at three important themes arising from the decisions, what they tell us about the CAT's approach, and what the key takeaways are for public authorities and interested parties who may be looking to challenge such decisions.

Key Points

1. The CAT has continued to exercise its powers under s. 70(1) to determine for itself whether there has been a subsidy at all in cases where that is in dispute, i.e. the classification of a public authority measure as a “subsidy”. The Court of Appeal has confirmed that this is within the CAT's jurisdiction, and this will not therefore be a question where the CAT confines itself to reviewing the authority’s decision or affords deference. However, in the case of public authority transactions, when considering the application of the “commercial market operator” principle as part of this assessment, public authorities will be afforded a wide margin of judgment.
2. By contrast, when reviewing subsidy decisions and their consistency with the “subsidy control requirements”, the CAT applies normal public law principles. In some cases therefore, particularly where claimants seek to rely on irrationality grounds, public authorities will be afforded a wide margin of appreciation. However, the Court of Appeal has noted substantive flaws in one case which demonstrate the courts’ willingness to scrutinise decision making by public authorities in this area.
3. Timing is crucial. A public authority must have made a firm and final decision to give a subsidy before a challenge can be brought. Premature applications relating to earlier steps in the decision-making process risk being struck out, although there is now conflicting case-law in this area. What is clear is that undue delay in filing an application after a final decision is made can lead to the CAT refusing relief in an otherwise successful claim.

Legislative Framework

For background on the operation of the Act generally, see our previous blog.

The CAT's power to review a subsidy decision

S. 70(1) provides that an interested party who is aggrieved by the making of a "subsidy decision" may apply to the CAT for a review of that decision. In determining the application, the CAT must apply the same principles as would be applied in judicial review proceedings.

"Subsidy decision"

A "subsidy decision" is defined as a "decision to give a subsidy or make a subsidy scheme" (s. 70(7)). By s. 2(1), a "subsidy" is financial assistance (such as grants, loans or the provision of goods or services) which:

1. is given from public resources;
2. confers an "economic advantage" on one or more enterprises;
3. is specific, in the sense that it advantages some enterprises over others; and
4. has or is capable of having an effect on competition or investment in the UK or other countries, or on trade or investment between the UK and other countries.

By s. 3(2), for there to be an "economic advantage", financial assistance must be given on terms more favourable than those which the recipient could reasonably expect to find in the market. This is known as the "commercial market operator" (CMO) principle.

Subsidy control principles and other requirements

When deciding to give a subsidy, a public authority must assess it against seven subsidy control principles (the Principles) set out in Schedule 1 and must not give a subsidy unless it considers that it is consistent with the Principles. In the case of certain types of subsidies, for example, rescue and restructuring subsidies for enterprises in financial difficulty, there are additional specific requirements that need to be complied with.

Disputes as to whether there has been a subsidy

In both the cases prior to this year, in which the CAT had exercised its s. 70(1) jurisdiction, there was a dispute between the parties as to whether there had, in fact, been a subsidy at all. The CAT found in both cases that there had not (see our previous blog posts on these decisions here and here). We return to the second of these cases, Weis v Greater Manchester Combined Authority [2025] CAT 4, shortly.

But first, in February this year, the CAT handed down judgment in The New Lottery Company Ltd and Others v the Gambling Commission [2026] CAT 14, which concerned a decision by the Gambling Commission to grant Camelot use of £70.21 million of National Lottery revenues to market the National Lottery. The public authority did not consider this to be a subsidy and, as such, it had not carried out an assessment against the Principles. The Applicants argued that the £70.21 million was a subsidy and that an assessment should therefore have been conducted.

Central to the Applicants' case was that the CMO principle did not apply because there was no relevant market against which the terms of the alleged subsidy could be compared. The CAT rejected this argument and, having regard to EU State aid law on its equivalent "market economy operator" principle, found that the relevant questions were:

1. whether the authority providing the alleged subsidy was undertaking a role comparable to that of a private market operator; and
2. if so, whether it had acted in a way that a rational market operator would act under normal market conditions.

In its analysis, the CAT explained that the CMO principle should essentially be applied in line with the approach taken to the analogous "market economy operator principle" under EU State aid law. In line with this case-law, the CAT confirmed that public authorities have a “wide margin of judgment”. In this vein, when it came to the suitability of the econometric models / analysis used by the public authority, the CAT noted that the public authority "made various choices about model design, specification and testing", but these were "considered and reasonable" and "while other econometricians might potentially have made different choices, none of the Applicants’ criticisms in this regard comes close to establishing that the Respondent acted irrationally". No "economic advantage" had been conferred, and the £70.21 million did not constitute a subsidy.

The issue of determining whether there has been a subsidy decision was considered further by the Court of Appeal in Weis, referred to above, (Weis v Greater Manchester Combined Authority [2026] EWCA Civ 825). The main question was whether the CAT had failed lawfully to review the alleged subsidy decision by making its own de novo determination as to whether the loans in that case constituted a subsidy, rather than confining itself to judicial review on this issue, applying normal public law principles.

The Court of Appeal, in its first decision concerning the Act, upheld the CAT's decision. The court found that as a matter of statutory construction, it is for the CAT to determine for itself whether the relevant public authority has given a subsidy, before it reviews whether the decision was lawfully made: "In order for the CAT to be satisfied that it has jurisdiction under s. 70(1), it must first be satisfied that the decision under review is a subsidy decision. It must determine that all of the criteria relevant to whether it is a subsidy decision are satisfied".

The court also rejected an argument from the Appellant that public authorities are better equipped than courts or tribunals to determine whether there has been a subsidy, noting that this does not involve policy issues but is rather an objective question.

Application of public law principles

The CAT noted in Weis and New Lottery that when reviewing subsidy decisions, it applies normal public law principles in line with s. 70(5). There was further discussion of this in Bristol Airport v Welsh Ministers [2026] CAT 30. In that case, there was no dispute as to whether there had been a subsidy; rather the question was whether the subsidy was consistent with the Principles and the requirements for rescue and restructuring subsidies. With respect to the latter, the central point was one of statutory construction concerning the scope of application of the rescue and restructuring subsidy requirements. Interestingly, and in contrast to the position with respect to the CMO principle, the CAT distinguished the EU approach on this issue, noting that there is no presumption that the approach of the EU to State aid will be exactly replicated in the Act. Here it appeared that there had been a deliberate decision to allow for a different approach. Whereas under EU State aid law, aid to businesses in financial difficulty would have to be granted consistently with the requirements applicable to rescue and restructuring aid, the CAT instead focused on the purpose of the subsidy needing to be one of rescue or restructuring. The mere fact that the subsidy recipient happens to be an enterprise in financial difficulty does not, of itself, automatically trigger the application of the requirements in the relevant provisions.

A further allegation was that the public authority had failed, in a number of respects, to properly apply the Principles. This was firmly rejected by the CAT, which noted that the Applicant had adopted "a 'kitchen sink' approach" and that there was some repetition and confusion in the points raised. The Applicant had not shown any irrationality on the part of the public authority, but rather, a difference of opinion between the parties as to the weight to be given to different factors. In this regard, the Welsh Government had commissioned economic and financial analysis from third party advisors to support their position, which was referred to throughout by the CAT in addressing the Applicant’s arguments.

The Court of Appeal in Weis provided a helpful summary of the policy reasons underlying this broad discretion in the subsidy control context as follows:

"a subsidy decision is a decision on matters on which a court has no or limited competence and for which Parliament has vested responsibility in the elected officials within the public authority. It involves consideration of, among other things, whether the subsidy pursues a specific policy objective, and is proportionate to it. This is a paradigm example of a circumstance where the decision should remain that of the public authority decision-maker, subject only to review on traditional public law grounds."

However, this is not to say the court will not scrutinise the authority’s decision appropriately. It is notable that the Court of Appeal in Weis did highlight a number of material flaws in the process, such as failing to have regard to relevant statutory guidance, misinterpreting other relevant material concerning interest rates and having regard to irrelevant considerations in the form of the creditworthiness of the ultimate beneficial owner. Although these were academic in circumstances where there had been no subsidy decision, in a different case where a subsidy decision was found, these were flaws that may have otherwise justified upholding a claim and granting relief.

Timing for bringing a challenge

Another important issue which arose in New Lottery was the timing for challenging a subsidy decision. The usual time limit to challenge a subsidy decision is one month after the "transparency date", which is the date on which the subsidy is entered into the public subsidy database, or the applicant knew or should have known about the decision. However, as the public authority in New Lottery had never treated its decision as a subsidy decision, the time limits were not directly relevant. The Act was silent on what time limit should apply in these circumstances. The CAT noted the intention for subsidy challenges to proceed on a tight timetable and the policy reasons for that. It held the Applicants to the same time limits by analogy, asking itself two questions:

1. When did or should the Applicants have become aware of the decision?
2. How quickly were the Applicants required to issue proceedings after becoming aware of the decision?

The CAT determined that the Applicants had waited over two months after becoming aware of the decision before making a request for information, and that they had filed proceedings almost four months after becoming aware, with no explanation given for the delay. The CAT indicated that even if the Applicants had been successful, it would have exercised its discretion pursuant to s. 72(8)(a) of the Act to refuse relief for undue delay.

At the other end of the spectrum, Mr Graham Thomas & Others v Durham County Council [2026] CAT 47, illustrates the risks of bringing a subsidy control challenge prematurely. In that case, various public statements had been made to the effect that the council would award two grants to help fund property redevelopment projects, but it was common ground that the council had not, in either case, taken a final decision to grant the subsidy in question.

The CAT struck out the claim, finding that the requirement under s. 70(1) for a public authority to have taken a "decision to give a subsidy" could not be met where only a provisional decision had been taken, subject to further consideration and review following due diligence or other steps in the decision-making process. The formal legal documents pursuant to which a subsidy is given do not necessarily need to have been executed (noting the distinction between a decision to give a subsidy and the actual giving of the subsidy), but there does need to have been a final decision to give the subsidy, albeit that further administrative steps may be required. In concluding that s. 70 does not provide for a review of any earlier stage in the decision-making process leading up to that final decision, the CAT expressly differed from the contrary view expressed in Weis, but noted that the point at which a final decision is taken is fact-specific.

Similar issues arose in Zenobē Energy Limited v Gas and Electricity Markets Authority [2026] CAT 53. The Applicant argued that certain documents published by GEMA in the process of introducing a new cap and floor regime for energy storage, as well as a decision to adopt prior development work concerning the regime, constituted decisions to make a subsidy scheme. The CAT disagreed, noting that establishing the cap and floor regime was a significant multi-stage project. The documents and decision subject to challenge were steps in the wider development of the regime, undertaken with a view to it being established at a later date once a new legislative provision had come into force. The Application was dismissed, with the CAT also finding that it would have had no jurisdiction on the basis that this was a scheme for the provision of financial assistance made by means of primary legislation, which cannot be subject to review under the Act.

Concluding remarks

In its subsidy control decisions so far, the CAT has tended to afford public authorities a wide margin of discretion. This is broadly consistent with how the courts approach other public law cases, particularly where policy and resource allocation considerations are engaged. However, the Court of Appeal’s comments in Weis on multiple flaws in the process demonstrate that the courts will still closely examine decisions and illustrate the potential for successful challenges in this area. Much will depend on the facts of the particular case and whilst we are yet to see a successful subsidy control challenge under the Act, the Court of Appeal has sent a signal that such decisions are not immune from review.

It is important that public authorities and interested parties are alert to the Act's requirements and the issues discussed above, including the question of whether any financial assistance being given falls within the definition of a subsidy as defined by the Act. Decision-making processes, including the assessment of any subsidy against the Principles, should be robust, evidence-based and well-recorded. Ideally, there will be a clear roadmap for the decision-making process, including when a final decision has or will be made.

The cases on timing illustrate just how important it is for applicants to ensure that they file promptly following the making of a final decision. Parties which may be affected by a decision should follow developments closely and involve legal advisors at an early stage if they think they may be affected, particularly since the question of when a final reviewable subsidy decision has been made is not straightforward. The CAT has been clear that it will keep a close watch on filing deadlines (Guidance Note 1/2025) and that, save in exceptional circumstances, it will enforce time limits strictly, which may result in relief being refused.