EU (Withdrawal) Bill and State aid: a note

The EU (Withdrawal) Bill, published last week, has already attracted much comment.

One feature of it that has not been mentioned, however, is a State aid aspect that emerges from the Explanatory Notes to the Bill.

Clause 4 of the Bill provides for EU rights and obligations which are currently recognised in domestic law as a result of section 2(1) of the European Communities Act 1972 to continue being recognised in domestic law after exit.  As paragraph 87 of the Explanatory Notes explains, that provision will mean that directly effective rights contained within EU treaties continue to be law (unless something is done to stop them being law).

Paragraph 89 goes on to list the provisions of the Treaties that the Government considers will be preserved as a result of clause 4.

That list of “preserved Articles” includes Article 108(3) TFEU: the “standstill” provision that precludes a Member State from implementing State aid unless and until it is notified to an approved by the Commission.  That provision has direct effect: so, for example, a third party affected by the implementation of a non-notified State aid has the right to obtain relief from the UK courts.

In other words, the Government’s position is that (absent some other measure), Article 108(3) will, under clause 4, continue to be law the day after Brexit.

That would, however, be a very odd result.  Article 108(3) makes no sense in a context where, out of the EU, the UK is unable to notify a State aid to the Commission and the Commission has no power to approve it.

It is therefore practically certain that the Government will need to address the matter by statutory instrument: depending on the decisions it takes about a State aid regime after Brexit it will either need to modify Article 108(3) to make it operable or provide that it lapses on Brexit day.  So far, the Government has said nothing about its intentions in that regard.


George Peretz QC


This entry was posted in Brexit issues. Bookmark the permalink.