Demystifying Subsidy Control – AMION Leads The Way To CMA Referrals

Demystifying Subsidy Control – AMION Leads The Way To CMA Referrals

Subsidy Control – what’s it all about?

After years of navigating the European Union’s State Aid regime, the United Kingdom’s new Subsidy Control legislation came into effect in January 2023.  Emanating from Brexit, this momentous legislative event changed the rulebook that applies to financial support made by public authorities.

In this article, we help to demystify the new Subsidy Control regime. We also outline how AMION has been leading the field, supporting public sector clients with challenging referrals to the Competition and Markets Authority (CMA) through its Subsidy Advice Unit (SAU).

What’s changed since Brexit?

Subsidy Control is the UK’s framework for regulating financial support given by public authorities to organisations engaged in economic activity.  Its purpose is to ensure that subsidies do not distort competition, create unfair market advantages, or negatively impact international trade.

Prior to Brexit, the UK adhered to the EU’s State Aid rules.  These rules were designed to regulate government subsidies across all EU Member States, ensuring that no single country could give unfair financial support that might distort the EU’s Internal Market. However, with the country’s departure from the EU, the State Aid regime no longer applies.  In its place, the country has implemented the Subsidy Control Act 2022.

The key differences in the new Subsidy Control framework include decentralised decision-making, where public authorities now “self-assess” subsidy compliance without needing prior approval from the European Commission, as well as a proportionate approach, which allows for varying levels of scrutiny based on the subsidy’s size and potential market impact, helping to streamline smaller and lower risk subsidies.

What needs to be notified to the CMA?

Under the UK’s Subsidy Control framework, certain types of subsidies must be notified to the CMA through its SAU for review before they can be awarded.  This process ensures that subsidies likely to have a significant impact on competition are carefully scrutinised, maintaining fairness in the marketplace.  The SAU assesses whether subsidies meet the criteria set out by the Subsidy Control Act and provide “non-binding” advice to the granting authority.

Subsidies of Particular Interest (SoPI) are the main category requiring mandatory notification. These are subsidies that have a higher potential to distort competition, such as large-scale financial support (usually over £10 million), or those in sectors of strategic importance. In contrast, Subsidies of Interest (SoI), while not requiring mandatory notification, can also be voluntarily referred to the SAU if the granting authority believes there may be competition concerns.  AMION supports its public clients to help determine is notification to the CMA is required.

How can AMION assist?

Navigating the complexities of the new Subsidy Control regime can be challenging.  At AMION, we provide expert guidance to help clients comply with the framework.  Our services include:

  • Preparing SAU Referral Reports – AMION has extensive experience in producing comprehensive subsidy referral reports for submission to the SAU, ensuring all necessary details are captured to facilitate a smooth review process.
  • Guidance on Key Referral Topics – AMION provide expert advice on key referral topics, including defining clear policy objectives, addressing market failures, considering social equity impacts, and developing a strong reference case (the ‘Do Nothing’ scenario).
  • Developing an Evidence Base – AMION support clients in building a robust evidence base for their subsidy referral, including market competition analysis, primary data collection, and socio-economic assessments, to strengthen their case.
  • Navigating the SAU Process – AMION helps clients navigate each stage of the SAU referral process, from pre-referral planning to potential liaison with the Department for Business and Trade, ensuring compliance and timely submissions.

AMION Case studies

Here are just two case studies showcasing AMION’s expertise in helping clients achieve compliance while unlocking the strategic value of their subsidies.

  • Lancaster City Council (Eden Project Morecambe) – AMION supported the analysis of the competitive market by delivering a primary research study. This landmark cultural and environmental project required detailed assessment to evaluate potential market distortions. AMION’s team collected data on local and regional competitors, produced a thorough competitive market analysis, and developed an evidence-backed report for submission to the SAU that presented a compelling case for the subsidy in alignment with the Subsidy Control principles (view the SAU response here).

  • London Borough of Barking and Dagenham (Long-Term Loan for Affordable Housing) – AMION worked with Barking and Dagenham on a low-interest, long-term loan subsidy designed to support affordable housing management. Our team provided complete assistance in understanding legal advice surrounding the subsidy, calculating its value, and preparing a robust referral report for submission to the SAU (view the SAU response here). We also helped the borough develop a strong evidence base to demonstrate the social equity rationale of the subsidy.

Want to know more?

If you are looking for expert guidance on navigating the UK’s Subsidy Control obstacle course, in particular CMA support with your subsidy project, AMION is here to help.

Please contact Simon Dancer – simondancer@amion.co.uk

Return to News