Part 4 of the Subsidy Control Bill (the Bill) sets out the new role that the Competition and Market Authority (the CMA) will play in the UK's new subsidy control regime.
As well as setting out the CMA's functions, it also sets out the process by which public authorities will need to make referrals to the CMA, and the steps that the CMA must take following receipt of such referrals.
Mandatory referrals to the CMA
Of note, the Bill requires public authorities to make mandatory referral requests to the CMA before giving a subsidy of particular interest, or where the Secretary of State has directed the public authority to refer to the CMA.
A mandatory referral request will need to set out the public authority's assessment as to whether the subsidy would be consistent with the requirements in Part 2 of the Bill (dealing with subsidy control principles, prohibitions and requirements) and the justifications for the decision.
The CMA will then have a short timescale in which to respond, being required to notify the public authority within five working days whether the request contains all of the required information.
Where the referral contains all of the relevant information, the CMA will then generally be required to publish a report (and provide a copy to the public authority) on the subsidy within thirty days (although there are certain circumstances where that reporting period may be extended).
Following the CMA's report, public authorities will need to observe a "cooling off" period of five working days before they are able to give a subsidy. As with the reporting period, that cooling off period may be extended where the Secretary of State considers that there are serious deficiencies in the assessment set out in the mandatory referral request.
Of note, where the CMA has failed to publish its report within the thirty day reporting period (or any extended period), the public authority will be permitted to give the subsidy on or after the date of expiry of the reporting period.
Voluntary referrals to the CMA
Additionally, public authorities will be permitted to voluntarily request a report from the CMA before giving a subsidy of interest. As with the mandatory referral request, a voluntary request will need to set out the public authority's assessment as to why the subsidy would comply with the requirements in Part 2 of the Bill.
Again, the CMA will be required to notify the public authority within five working days whether or not it will prepare a report on the proposed subsidy. Where the CMA gives notice that it will prepare a report, it is required to publish the report (and, again, provide a copy to the public authority) within thirty working days of the notice that it will prepare a report. As with the mandatory referrals, that timescale can be extended in certain circumstances.
Contents of Reports
The Bill sets out specific requirements for what the CMA's report must contain, including an evaluation of the public authority's assessment contained in its referral request, as well as any advice from the CMA as to how that assessment could be improved, or how the subsidy or scheme might be amended so as to comply with the requirements in Part 2 of the Bill.
Post-Award Referrals
Additionally, the Bill sets out a process whereby the Secretary of State may refer subsidies to the CMA anytime within 20 working days of the subsidy being published on the database (or, where publication to the database is not required, within 20 working days of the date that the subsidy was given or made).
As part of such a post-award referral, the Secretary of State must also direct the public authority concerned to provide relevant information to the CMA in respect of any subsidy assessment that was carried out prior to the subsidy being given, and that information must be provided to the CMA within 20 working days of the post-award referral.
The CMA will be required to publish a report on any post-award referral within thirty working days of either date on which the information is provided by the public authority, or the day after the deadline for providing such information (whichever is earlier). The report must contain an evaluation of any assessment carried out by the public authority, and may provide advice as to how an ongoing subsidy could be amended to comply with the principles, prohibitions and requirements in Part 2 of the Bill.
Monitoring and reporting on subsidy control
In addition to the referral powers outlined above, the CMA will also be required by the Bill to carry out a periodic review of the effectiveness of the Bill every five years (or sooner in respect of a specified period if required to do so by the Secretary of State). There is also a requirement for the CMA to include in its Annual Report (which it is already required to prepare) the details of any subsidies or subsidy schemes which it reported on in the previous year (including mandatory and voluntary referrals, and any post-award referrals).
The Bill also gives specific information gathering powers to the CMA to assist it in carrying out its functions in respect of the new subsidy control regime. These powers include the ability to serve information notices on, or require the production of documents by, individuals, business or public authorities.
The Bill also sets out the sanctions that the CMA will be able to impose in the event that a person fails to comply with any information notice or request for documentation, including the ability to impose financial penalties under the United Kingdom Internal Market Act 2020.
Subsidy Advice Unit (SAU)
Finally, the CMA will be required to establish the new Subsidy Advice Unit – a committee of its Board, to which the CMA will be entitled to delegate its functions in respect of the new subsidy control regime.
The SAU may request the constitution of a CMA panel group (which must consist of at least three members of the CMA Panel) and the CMA may, in turn, refer its subsidy control functions to that panel group who will be required to carry out, on behalf of the SAU, the referred functions.
Invite for Subsidy Control bill Webinar of 21 July
SPEIs (Services of Public Economic Interest) treatment under the bill
