BEIS sets out final proposals on thresholds for subsidies of interest and subsidies of particular interest

On 24 August, BEIS announced the government’s final proposals on thesholds for subsidies of interest (“SoIs”) and subsidies of particular interest (“SoPIs”) under the Subsidy Control Act 2022. Those thresholds are set by regulations made by the Secretary of State.

Essentially, SoIs can be referred to the Subsidy Advice Unit (“SAU”) of the Competition and Markets Authority (either by the granting authority or by the Secreatry of State), and SoPIs must be referred to the SAU before they are granted. The SAU’s advice does not bind the granting authority’s assessment of whether the subsidy is consistent with the subsidy control principles, but the granting authority is likely to be well-advised to depart from it only with good reason, given the risk of judicial review in the Competition Appeal Tribunal.

The government’s position is summarised at paragraphs 123-126 of the response.

123. Having taken the consultation responses into account, the government’s revised policy position is set out below. The final regulations will reflect this position and set out the criteria and thresholds that will determine whether a subsidy or scheme is a SSoI or a SSoPI:
• Subsidies given outside of sensitive sectors are Subsidies of Particular Interest if they are over £10m, or cumulate above this threshold.
• All other subsidies of between £5 to £10m, or which cumulate to such a value, that do not meet the Subsidy of Particular Interest criteria are Subsidies of Interest.
• Subsidies given in sensitive sectors will be Subsidies of Particular Interest if they are over £5m, or cumulate above this threshold.
• Where subsidies cumulate above the SSoPI threshold, there will be a minimal value for referral of £1m. Public authorities will only be required to make a mandatory referral if the subsidy in question exceeds £1m.
• All restructuring subsidies will be Subsidies of Particular Interest.
• All rescue subsidies will be Subsidies of Interest.
• Subsidies that are explicitly conditional on relocation and meet the conditions set out for an exemption from the general prohibition in section 18 of the Act will be treated as Subsidies of Interest below a value of £1m, and Subsidies of Particular Interest above that value.

  1. Regarding subsidy schemes, if the parameters of a scheme allow a subsidy award to be given under that scheme that meets the definition of a Subsidy of Particular Interest, then that scheme will be defined as a Scheme of Particular Interest. Similarly, a scheme which would allow a subsidy award of a Subsidy of Interest is defined as a Scheme of Interest (unless it is already a Scheme of Particular Interest). Referral to the SAU will take place at scheme level, when the scheme is made.

  1. Subsidies given to the same recipient for the same purpose (which meet the definition of a “related subsidy”) within a defined period of three financial years (the “applicable period”) will count, or “cumulate”, together for the purposes of the monetary thresholds for SSoI and SSoPI. This will avoid cases in which an enterprise receives several similar subsidies that are just under the threshold for referral. We have added a minimum referral value of £1m to the cumulation mechanism so that public authorities will only be required to make a mandatory referral if the subsidy in question exceeds £1m.

  1. A distinct approach will apply to tax schemes. The GCE / A regulations will enable public authorities to use estimates to ascertain the maximum likely value of any award under a tax scheme for the purposes of determining whether the scheme is a Scheme of Particular Interest (i.e. because it would allow for subsidies which exceed the SSoPI threshold). Furthermore, the general cumulation rules will apply differently to subsidies given under tax schemes. Only subsidies given as part of the same tax measure within the applicable period will count towards the cumulative SSoPI thresholds. All tax schemes will be Schemes of Interest (and may be referred to the SAU but would not be required to do so) unless they would in themselves allow for the giving of subsidies which cumulate over the SSoPI thresholds within the applicable period (in which case they will be Schemes of Particular Interest). The government will set out in guidance that, where there is significant potential for cumulation with other subsidies given outside of a tax scheme for a similar purpose, this is a design feature which should generally result in a referral to the SAU.
This entry was posted in New UK subsidy control regime. Bookmark the permalink.