State aid and Subsidy Control after EU exit

From 4 January 2023, all subsidies provided by public authorities in Northern Ireland have to comply with either the European Union's State aid rules or the UK Subsidy Control regime

Public authorities should note that in some cases both the UK Subsidy Control Regime and the EU State aid rules could apply to a scheme if beneficiary companies are from sectors both within and outside the scope of Article 10 of the Windsor Framework. In this circumstance public authorities should contact DfE Subsidy Control Advice unit for further advice before proceeding.

The EU State aid rules, and Article 10 of the Windsor Framework

The EU and the UK formally adopted the Windsor Framework on 24 March 2023.

The Windsor Framework, replaces the Northern Ireland Protocol, providing a new legal and UK constitutional framework.

Article 10 provides that the State aid rules will continue to apply to the UK in respect of measures which affect trade in goods between NI and the EU (including the production of and trade in agricultural products) and the production of wholesale electricity in NI (i.e. measures impacting on the Single Electricity Market).

For the State aid rules to apply, the effect on trade between Northern Ireland and the European Union cannot be merely hypothetical, presumed, or without a genuine and direct link to Northern Ireland. It must be established why the measure is liable to have such an effect on trade between Northern Ireland and the European Union, based on the real foreseeable effects of the measure.

The European Commission and the United Kingdom have recently published their respective guidance on the circumstances in which Article 10 of the Windsor Framework will apply.

Further information on the State aid rules:

The UK Subsidy Control Regime

The Subsidy Control Act 2022

The Subsidy Control Act 2022 provides the framework for the provision of subsidies and builds on the provisions in the subsidy control chapters of the Trade and Co-operation Agreement, which applied in the interim after the UK’s exit from the EU.

Please note that the UK subsidy control regime does not replace the State aid rules in respect of measures which affect trade in goods between Northern Ireland and the European Union which will still have to follow the State aid rules.

Guidance

Subsidy Control legislation

The Competition and Markets Authority (CMA)

The CMA has established a Subsidy Advice Unit (SAU) which has been in operation since the Subsidy Control Act 2022 came into full effect on 4 January 2023.

The SAU is a new function of the CMA created by the Subsidy Control Act 2022. It forms part of the new regime for governing the provision of subsidies within the UK following its exit from the EU

The SAU is responsible for discharging the CMA's functions and powers under Part 4 of the Subsidy Control Act 2022.

The CMA published their Guidance on the operation of the subsidy control functions of the Subsidy Advice Unit on 11 November 2022.

The guidance explains the role of the SAU which will provide independent non-binding advisory reports regarding certain subsidies that are referred by public authorities, and will periodically monitor and review the operation of the subsidy control regime.

Role of the DfE Subsidy Control Advice Unit

The DfE Subsidy Control Advice Unit (SCAU) provides advice and assistance to Northern Ireland government departments and their arm's length bodies on the application of the State aid rules and the UK Subsidy Control regime

If you have any questions on any aspect of the arrangements please contact the SCAU by e-mailing subsidycontrol@economy-ni.gov.uk