Ensuring a level playing field post-Brexit: State aid control

UKSALA members may be interested in a very good article by Vincent Verouden and Pablo Ibanez-Colomo available here.

One issue leapt out at me, which concerns the backstop.  (Readers who have decided that the backstop, or indeed the withdrawal agreement itself, will never happen can switch off now.)

Under the backstop, the CMA will apply EU State aid rules in relation to measures affecting EU/UK trade.  In considering compatibility, it will be obliged to consider the interests of the EU27+the UK as a whole.  But it doesn’t seem to be as obvious as one would have thought it should be that the Commission has to consider the UK interest when applying the State aid rules in the EU27 during the backstop period.  This point was picked up (in slightly sensational terms) by a recent piece in the Financial Times (£).

The authors of the paper refer to Article 7(1) of the body of the Withdrawal Agreement.  But I am not sure that that provision helps.  It provides that “For the purposes of this Agreement, all references to Member States … in provisions of [EU] law made applicable by this Agreement shall be understood as including the United Kingdom.”  But when the Commission is applying Articles 107 and 108 TFEU after Brexit, it is not, in any sense, applying legal provisions that are “made applicable by this Agreement”.

The apparent asymmetry of obligation here is so odd that one suspects that any court would simply read in to the provisions of the Agreement a symmetrical obligation of the EU to consider the UK interest in applying Articles 107 and 108 TFEU.  But the position is somewhat unsatisfactory.

George Peretz QC



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