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. 

Read the full Insight