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 cheap loans, or the promise of other non-pecuniary benefits (eg guarantees) of some kind, all have the potential to create Subsidy Control concerns.
Subsidies from UK public authorities are now governed by the Subsidy Control Act 2022 (although subsidies or State aid awarded before the Act came in to force on 4 January 2023 will be governed by the Trade and Cooperation Agreement or the EU State aid rules depending on which was in force at the time).
Although subsidy control is a separate regime to procurement, there are some cross overs. A public authority is very unlikely to be giving a subsidy to a provider if the award of the contract to the provider is made in accordance with the public procurement rules. In the terms of the Act, the provider will not be receiving more favourable terms that is available to it on the relevant market, and so there will be no subsidy, by definition.
Not all subsidies are prohibited by the Act. There are a number of mechanisms by which public authorities can give subsidies, but these usually involve the need to publish those subsidies and they can be challenged through judicial review.
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.
