As announced earlier this summer, the UK Government last week published the first batch in what is expected to be a series of over 80 Brexit 'no deal' technical notes. The 25 notices contain information about some of the potential impacts of a 'no deal' scenario, and identify steps that could mitigate those. Our briefing on the Government's approach to no-deal planning is available here. This update covers the guidance issued in respect of State aid.

What rules currently govern State aid?

Currently, State aid is governed by the rules set out in Articles 107 and 108 of the Treaty of the Functioning of the European Union (TFEU) and associated EU legislation (an overview can be found here).

These State aid rules have direct effect in EU Member States without the need for any domestic legislation. There is therefore no UK legislation regulating State aid. While unlawful State aid can be challenged in the UK courts, the rules are chiefly enforced by the European Commission.

State aid in the UK if there is 'no deal'

Subject to any agreement to the contrary (including on a transition period), EU law will cease to apply in and to the UK at 11pm on 29 March 2019 (exit day). The EU State aid framework, as with the rest of applicable EU law will be transposed into UK law by virtue of the European Union (Withdrawal) Act 2018. There will therefore be a 'new' UK State aid regime, though it will mirror the EU regime including the various 'block exemptions' setting out specific rules for areas such as agriculture and fisheries.

The recent technical notice on State aid sets out the UK Government's plan to set-up a UK-wide subsidy control framework to replace the current EU system. The UK competition regulator, the Competition and Markets Authority (CMA), will become the supervision body for State aid. This new role for the CMA was actually announced some time ago, so it seems likely that the only question is whether the CMA will take on responsibility for State aid on 29 March 2019, if there is no deal, or at the end of a transition period if a deal can be reached.

The UK Government has pledged to work with the devolved administrations to 'ensure the new State aid regime works for the whole of the UK'. Previous papers on Brexit and devolution had identified possible disagreement on whether State aid is a devolved responsibility or reserved to Westminster. However, the statement in the most recent notice suggests the UK Government may now have accepted that the devolved legislatures would have competence. There may therefore need to be discussions to agree a UK-wide State aid framework, and possibly a 'freezing order' under the Withdrawal Act to preserve the EU-derived status quo in the meantime.

What does this mean for pre-Brexit State aid cases?

The State aid notice envisages that current State aid approvals and proceedings would be dealt with as follows:

  • Existing approvals, including under block exemptions, will be carried over into the new UK system and remain valid;

  • Notifications not yet approved by the European Commission will have to be re-submitted to the CMA.

What will change for businesses and public authorities after Brexit?

The new UK State aid rules will apply to aid granted by UK public authorities to all businesses with UK operations, whether based in the UK, EU or elsewhere.

The notice states that public authorities will need to notify State aid granted to any undertaking 'through either the block exemption or through a full notification to the CMA'. However, those exemptions that allow aid to be granted without any notification will presumably still apply, given the intention to incorporate the current framework in its entirety.

Any complaints about unlawful State aid will have to be made to the CMA instead of the European Commission, with the CMA taking on the Commission's investigation powers.


The UK Government's 'no deal' notice on State aid is 'meant for guidance only'. Further clarity on the envisaged UK-wide framework will become available when secondary legislation is published under the Withdrawal Act, though the technical notice anticipates that that will simply replicate the current EU rules with some 'technical modifications'. The CMA will then publish guidance in early 2019 on how it will approach its new responsibilities.