Subsidy Control

A general guide to assist you in identifying whether Subsidy Control (formerly known as State Aid) may arise on any projects that you are working on.

"Subsidy Control" is post-Brexit speak for the old EU concept of "State Aid". In the public procurement context it has the potential to arise where there is a use of state resources to advantage a particular provider. For example, the making of grants, or the provision of cash back incentives, or the promise of other non-pecuniary benefits of some kind, all have the potential to create Subsidy Control concerns. 

Under the old EU state aid regime, by no means all state aid was unlawful, far from it. There existed several types of pre-approved state aid, and where aid did not fall within one of these categories, there was potential for it to be approved via a notification and approval regime. 

Working out whether a procurement involves Subsidy Control and, to the extent that it does, whether that Subsidy Control is lawful, is complicated at present. 

Until 11pm on 31 December 2020 (the "Exit Date"), the UK was subject to the state aid regime that applied across the EU. This had "direct effect" in the UK - and was not implemented here by any separate UK regulations.

No UK-based regulations have yet been introduced. Therefore, on Exit Day, the existing EU state aid regime "fell away" and as yet has not been replaced by a formal UK-based Subsidy Control regime. This leaves something of a vacuum at present in terms of what Subsidy Control rules now apply here.

That said there are some minimum requirements implied by the terms of the Trade and Co-operation Agreement that came into force on Exit Day and there is also some BEIS guidance which provides a steer. For Subsidy Control  issues in this interim period, please refer to our article here which explains the current state of play.  Once the picture becomes clearer, we will update this page accordingly. 

Simon Elsegood is our Subsidy Control specialist and is happy to be contacted for a chat by any readers who are concerned that Subsidy Control may be at issue in their procurement project.






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