What to do when your subsidy is reviewed

So, you have awarded a grant or set up a scheme and, as far as you are concerned, everything complies with the Act. But you find that you have received a request for pre-action information from an interested party and that your subsidy may be subject to review. What does this mean? And what should you do next?

Under section 70 of the Subsidy Control Act 2022, an “interested party” can make an application to the Competition Appeal Tribunal (CAT) for a subsidy scheme or award to be reviewed.

An interested party means the secretary of state or a person whose interests may be affected by the giving of the subsidy or the making of the subsidy scheme. This may include those who have lost out on a subsidy award to another or those who would be excluded under a scheme if it were to be set up. The Secretary of State may intervene if they consider that the scheme or the subsidy interfere with competition or don’t comply with the framework of the act.

Pre-action information can be requested by an interested party. If requested, the public authority has a duty to provide the party with information which would allow them to assess whether the subsidy or scheme was made in accordance with the requirements set out under Chapters 1 and 2 of Part 2.  The public authority must give notice to the interested party that they have provided this information in accordance with their request.

Information to be provided is likely to include:

• The subsidy assessment against the principles of subsidy control
• Their review of Chapter 2 requirements
• Contractual documentation where applicable

Chapters 1 and 2 of part 2 set the principles and prohibitions on subsidy control, more detail on which can be find in our other blog posts in this series, linked below.

The exact documents to be disclosed will vary based on the subsidy or scheme to be created, and many may be withheld or redacted if they fall within the below exemptions.

Public authorities are able to keep particular information confidential, or impose other measures where proportionate to protect certain categories of information.

The protected categories of information are :

• Commercially sensitive information;
• Confidential information;
• Information subject to legal privilege;
• Information which would be against the public interest to disclose.

These categories are similar to those set out in the Freedom of Information (Scotland) Act 2002, as such Public Authorities and it is likely that these will be interpreted along the same lines. It is likely that authorities will need to conduct a detailed analysis of information before disclosure. Such information must be provided by the body in writing and within 28 days of the request.

The interested party must make their application for review of the decision within a month of the relevant date.

The “relevant date” is either the date of publication or provision of pre-action information (if within one month of the transparency date), the date on which a post-award referral report is published, or the transparency date of the subsidy or scheme.

The transparency date is the date the subsidy or scheme is published on the subsidy database, or where publication is not required, the date on which the interested party first knew or ought to have known of the making of the subsidy decision. 

If a request is made for pre-action information, this will mean the relevant date is calculated from the date of publication of that information, rather than the initial transparency date.

Once the party has made an application to the Tribunal for review, the CAT will consider the information provided by the public authority to the interested party. If it decides to review, it will follow The Competition Appeal Tribunal Rules 2015. These rules govern the general procedure before the CAT and have been amended to include detailed provision on subsidy control review.

Particular points to note include:

• The Tribunal is able to disregard minor omissions or errors when these had no prejudicial impact on the interested party’s assessment of whether to make an pre-action information request.
• The Tribunal is only able to extend time limits in exceptional circumstances.
• The subsidy is not suspended during the consideration of the application unless the Tribunal directs.

The Act sets out that the principles to be applied are the same as those used in Judicial Review in England, Wales, or Northern Ireland, or the same as those used in an application to the supervisory jurisdiction of the Court of Session in Scotland. This means that decisions could vary slightly depending on the jurisdiction of the parties.

If the CAT considers that the decision of the authority did not comply with the decision to give a subsidy or make a subsidy scheme, they can grant relief in respect of this decision and order recovery of the subsidy.

A recovery order will require the public authority to recover the contested subsidy from the beneficiary. The CAT may set specific requirements as part of the order, including a time limit, a method of recovery, and levels of recovery needing to be carried out – i.e. all or part of a subsidy, all subsidies granted under a scheme or specific ones set out in the order.

An appeal of the CAT’s decision can be made to the Court of Session in Scotland, or the Court of Appeal in England, Wales, and Northern Ireland. Appeals are restricted to points of law, which means that the substantive decision cannot be reopened.

If you receive a pre-action information request or notice of appeal, the timescales set out in the act have already begun. It is important to review the subsidy assessment process and the information to be provided swiftly and thoroughly and ensure that all decisions comply with the principles of subsidy control. If you have any questions about any of the above, or the contents of our other blogs in this series, contact our subsidy control team.