Are challenges under the Subsidy Control Act finally taking off?

On 9 July 2025 the BBC reported that Bristol Airport was bringing a challenge under the Subsidy Control Act against a decision by the Welsh Government to spend £205m subsidising the expansion of Cardiff Airport.

Although the case has not yet been published by the Competition Appeal Tribunal (“CAT”) at the time of writing, this would mark the fourth challenge brought under the Subsidy Control Act (the “Act”) since it came into force on 4 January 2023, and the first challenge where the public authority accepts that its assistance actually constituted a subsidy.

The new challenge comes barely eight weeks after the filing of the third (by the New Lottery Company against the Gambling Commission) and while the second (by a property developer against Greater Manchester Combined Authority) is still awaiting judgment.

After two and a half years of very little activity, does this flurry mark the emergence of a more litigious landscape for public subsidies?

Background

We have previously written in more detail here about the bedding in of the UK’s new subsidy control regime – as well as on specific issues arising under it including the first challenge brought under the Act and aid to airlines.

Unlike the State aid regime under EU law, it is not the default position under the Act that subsidies are unlawful. Instead, where financial assistance constitutes a subsidy, and is not in a narrow category of prohibited subsidies, the public authority giving it has to be satisfied that giving that subsidy is consistent with seven “subsidy control principles” set out in the Act. That requires a detailed assessment of the subsidy and how it ties in to those principles, and engagement with some detailed statutory guidance.

The Act also provides for two types of subsidy to be referred to the Subsidy Advice Unit within the Competition and Markets Authority: subsidies or schemes of interest (''SSoI'') and subsidies or schemes of particular interest (''SSoPI'') (that the thresholds for these will soon be increased).

SSoPIs must be referred to the SAU before they can be given, whereas for SSoIs this is at the discretion of the public authority giving the subsidy. If a subsidy is referred, the SAU's report on it is not binding on the public body making the referral, but it will have to consider the report – see for example our previous blogs on reports to Birmingham City Council, the Department for Business and Trade, and Transport Scotland.

Bristol Airport’s challenge

The CAT is a specialist UK-wide tribunal that has jurisdiction to hear claims relating to competition and markets, including subsidies. Until July 2024, it had only heard one challenge brought under the Act. This slow start has been partly attributed to a restrictive time limit on bringing a challenge (one month from the date that the subsidy is published on the subsidy database) and broader difficulties associated with bringing a judicial review claim.

Bristol Airport’s case is therefore important for two reasons. First, it may mark the turning point in the willingness of businesses to challenge subsidies to their competitors, and may have the effect of encouraging others to follow suit. After a period in which the environment for giving subsidies has been perceived as “low risk”, this may be about to change.

Second, it is being brought not on the basis that the Welsh Ministers erred in deciding that the Act did not apply, but instead on the basis that they applied the Act incorrectly.

Given the size of this subsidy, it had to be referred to the SAU as a subsidy of particular interest. The SAU’s report, published in October 2024, accepted that the Welsh Ministers had established an appropriate policy objective and that the subsidy was an appropriate tool to achieve it, but was rather more scathing on the failure of the Welsh Ministers to properly consider what would happen without the subsidy, let alone to consider the distortive effects that it would have on the market for airports and how to minimise those. Since the Welsh Ministers had not properly assessed the market impact of their assistance to Cardiff Airport, they could not have properly grappled with the question of whether the benefits outweighed the harms.

Comment

The UK subsidy control regime remains in its infancy. Many public authorities continue to make use of legacy schemes set up before the Act came into force, and others have sought (with varying degrees of foundation) to characterise their market interventions as not being subsidies at all, whether because they are being given on “commercial market terms”, because the recipient is not really an “enterprise”, or because they are “general” in nature rather than specific to the recipient. Others still have sought to give subsidies wherever possible as “minimal financial assistance” – capping recipients at £315,000 from all sources in any three year period.

The effect of that has been a limited need to engage with the Act. However the gradual expiry of legacy schemes and growing awareness of the duties that public authorities have in relation to subsidies has meant a significant uptick in authorities deciding to proceed with standalone subsidy awards, with the accompanying need for detailed subsidy principles assessments.

It is one thing for the CAT to decide whether something is a subsidy – that is after all a “simple” (!) matter of interpreting the statute. The real test of the regime will be in how prepared the CAT is to scrutinise the substance of a decision to award one. If the CAT defers to the Welsh Ministers then other public authorities may take that as their lead to adopt similarly “high level” assessments (in the thrice-repeated phrase used by the SAU in its report). If the CAT takes the opportunity to underline that the duties imposed by the Act are substantive and not a box-ticking exercise, then challengers may see a door to challenge that is slightly more ajar than it previously looked.

If you would like to discuss how this affects your organisation please contact Jamie Dunne, Charles Livingstone or your usual Brodies contact.