First subsidy control decision under the new Subsidy Control Act 2022
The Competition Appeal Tribunal (“CAT”) found that a subsidy must “move between persons” and public authorities cannot be both authority and enterprise.
The judgment in Durham Company Limited v Durham County Council was published on 27 July 2023 will be of interest to local authorities and their advisers when considering whether subsidies have been made contrary to the Subsidy Control Act 2022.
Facts
Durham Company Limited were trading as “Max Recycle”, which provides waste collection services, in competition with Durham County Council (“DCC”). DCC are under a statutory duty to collect both household waste and commercial waste within their county. DCC must not charge for collection of household waste but is required by law to charge for its commercial waste services. The level of commercial charges is set annually by DCC and was last done on 31 March 2023.
Max Recycle alleged that DCC were subsidising between their household waste and commercial waste collection processes, thus allowing DCC to charge businesses at a lesser rate for its commercial waste collection than they would if they ran a solely commercial waste operation. Max Recycle contended that the decision made by DCC on 31 March 2023 was a subsidy decision and they had not considered subsidy control principles, as required under section 12 of the Subsidy Control Act 2022.
The CAT considered the following issues:
- Whether the decision made on 31 March 2023 was a “decision”, within the meaning of section 70 of the Subsidy Control Act 2022.
- Whether the decision was a “subsidy”, within the meaning of section 70 of the Act.
- Whether the subsidy control principles outlined in section 12 of the Act were satisfied.
Judgment
The CAT found that a decision had been made in accordance with section 70 of the Subsidy Control Act 2022 and that the setting of the commercial rates annually was a series of decisions, rather than a subsidy scheme.
However, the CAT ruled that the decision was not a subsidy. Max Recycle could not identify any person other than DCC implicated in the provision of the services – there was no financial assistance “moving between persons”, the economic benefit was solely circulating within the DCC and therefore there was no subsidy.
The CAT clarified that DCC were not an enterprise as they were acting in accordance with their statutory duties driven by environmental and public health concerns. In any event, public authorities can not be both the authority and the enterprise with regard to a subsidy. As there was no subsidy, the subsidy control principles did not apply.
It was noted that EU state aid law was simply persuasive and not binding on the CAT.
Comment
The CAT provided useful guidance on the meaning of decision and subsidy under the Subsidy Control Act 2022. The decision will likely provide comfort to local authorities in knowing that it is unlikely businesses will successfully challenge that a local authority is subsidising itself – the economic benefit must travel between persons for a subsidy to exist in accordance with the Act.
If you have any queries about subsidy control or public law, please contact our highly regarded commercial team here.
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