BEIS announced yesterday, in an update to its website, that the substantive provisions of the Subsidy Control Act 2022 will come into force on 4 January 2023. Any subsidy given on or after that date will be subject to the duties and procedures set out in that Act.
BEIS also published the final versions of the regulations that define “subsidies of interest” and “subsidies of particular interest” (known as “SOIs” and “SOPIs”). SOPIs must be referred to the Competition and Markets Authority for advice before being given; SOIs may be referred either by the granting authority or by the Secretary of State. The regulations must be approved by both Houses of Parliament before becoming law, but that is likely to be a formality.
Under the final version of these regulations, SOPIs include
- restructuring subsidies (but not rescue subsidies),
- relocation subsidies (ie ones that require displacement of activity from elsewhere in the UK) exceeding £1m,
- subsidies of over £1m that, together with related subsidies, result in a cumulative total of £10m to any one enterprise, and
- subsidies of over £1m that are in a “sensitive sector” and together with related subsidies, result in a cumulative total of £5m to any one enterprise
SOIs include: –
- all rescue subsidies, of whatever size
- all tax measures and relocation subsidies that are not large enough to be SOPIs
- any other subsidy of over £1m that, together with related subsidies, results in a cumulative total of £5m to any one enterprise
“Sensitive sectors” are listed in Schedule 1, and include sectors a particular trade policy sensitivity:
|24.10||Manufacture of basic iron and steel and of ferro-alloys|
|29.10||Manufacture of motor vehicles|
|30.11||Building of ships and floating structures|
|30.91||Manufacture of motorcycles|
|30.30||Manufacture of air and spacecraft and related machinery|
|35.11||Production of electricity|
Because they will almost certainly be subsidies and “tax measures”, it would appear that any plans for “investment zones” with favourable tax rates will be SOIs or SOPIs. It will be interesting to see how the CMA approaches them.
The decision to make all rescue subsidies SOIs rather than SOPIs means that they will not automatically be looked at by the CMA, but will be examined only if the granting authority or Secretary of State wants the CMA to look at them. The rationale for that apparently odd result (given the economic implications of rescue subsidies) is that they are often too urgent for there to be time for a CMA review before grant: but granting authorities may well want the CMA to look at them if there is any possibility of a rescue subsidy being challenged by a competitor.
GEORGE PERETZ KC