Section 2 of the Subsidy Control Act 2022 defines “subsidy”.  It includes conferring an “economic advantage” on one or more “enterprises”, elaborated upon in Section 3, and financial assistance which is “specific”, elaborated upon in Section 4.  These concepts derive from EU State Aid Law, and have been considered by the General Court in its Judgment on 20 September 2023 in MAGNETROL INTERNATIONAL v EUROPEAN COMMISSION.  The Court says at paragraph 45-47 inclusive that the concepts of “advantage” and “selectivity” are 2 separate criteria, but may be examined together.

So far as “advantage” is concerned, in order for there to be State Aid the measure must “improve the financial situation of the recipient”.  So far as “selectivity” is concerned, in order for them to be State Aid the measure must not benefit other undertakings that are in a factual and legal situation “comparable” to that of the recipient.

In the transfer of the business of BULK ENERGY case (2022) EWHC 717 (Admin) a Divisional Court states that, in addition to the Subsidy Control Act 2022 and Regulations and Statutory Guidance thereunder, the TCA has been fully implemented into the UK’s domestic law by means of a blanket, generic implementation. Domestic subsidy control law to that extent means what the TCA says; but how the principle of proportionality should be applied in the particular context is also a matter of domestic law; and a wide margin of appreciation is to be afforded to a public authority when considering commercial circumstances in a private market and the market operator investment principle.

In BTI 2014 LLC v SEQUANA (2022 UKSC 25 the Supreme Court say that Directors owe their duties to the company, rather than directly to shareholders or creditors of the company. There is not a free-standing duty owed to creditors. However, where the company is insolvent, or bordering on insolvency, then the interests of creditors as a general body should be considered even if , and balanced against the interests of shareholders. The greater the company’s financial difficulties the more  the directors should prioritise the interests of creditors when making for example to  pay a dividend and if so how much. Once insolvency is inevitable the  creditors’ interests become paramount.

The new regime is due to come into force Autumn 2022. It will consist primarily of the provisions in the  subsidy control chapters of the Trade & Co-Operation Agreement with the EU, the Subsidy Control Act 2022, Regulations and Guidance from BEIS and the CMA. BEIS is currently consulting on Guidance under Section 79 of the Act.

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Public funding/support given in the UK since 1 January 2021 has no longer been subject to EU State Aid Law. Compliance has since then been required with the Trade and Co-Operation Agreement between the UK and the EU (the TCA), incorporated into domestic law by Section 29 of the EU (Future Relationships) Act 2020.  Now the Subsidy Control Act 2022 (the Act) has been enacted, and Regulations are to be made, and Guidance provided thereunder, including with respect to “Subsidies of Particular Interest” and “Subsidies of Interest”, under Section 11 of the Act. Main purposes of the Act are to provide detail on the implementation of the TCA and to define “subsidy”.

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IN VOLOTEA v COMMISSION, Joined Cases C-331/20P and C-343/20P, Advocate General Capeta addresses, at paras 62-114 inclusive, the Market Economy Operator Principle ( the MEO ). The applicability of the MEO test is governed by the NATURE of the activities, that is by whether the public authority intervention is through an activity comparable to what could be envisaged in the market. The test is applicable to all situations in activities are performed by the authority comparable to market activities. These include when the authority acts in a way comparable to a market operator. This is decided by an objective enquiry into HOW the authority engages with undertakings on a given market, irrespective of the form and reasons for that engagement.

The Combined Authorities (Borrowing) Regulations 2022, S.I. 2022/358, provide the North of Tyne, South Yorkshire and West Yorkshire Mayoral Cas with power to borrow money for any function.

Subsidy Control replaced State Aid six months ago. A Subsidy Control Bill has now been published.

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A fiduciary, such as a company director, must not act in a position where his interest and his duty conflict or may possibly conflict. An exception is when there is fully informed consent, the burden of proving which is upon the fiduciary. As to informed consent, including implied consent, see John Reader v Spie Ltd (2021) EWHC 1221 (QB), in the context of an enhanced bonus on a TUPE transfer.

Damage is caused by an exceptional occurrence, such as the Covid-19 pandemic. The entirety of the damage is not made good. Not all victims receive aid from state resources. In Cases T-378&379/20, Ryanair v Commission, it is held that it does not follow that a measure benefitting an individual company is state aid and/or discriminatory, provided that the benefit does not overcompensate and is proportionate.