The surge in Subsidy Control litigation

In the first 800 days of the UK's Subsidy Control regime, just two cases were brought in the Competition Appeal Tribunal. In last 200 days four more have been lodged, with the latest being the case of Zenobē Energy Limited v Gas and Electricity Markets Authority and an appeal has been accepted in a fifth.

Introduction

The UK's Subsidy Control regime was always designed to be different to the EU State aid regime. Whereas the EU system relies upon an independent regulator (the European Commission) that is capable of proactively investigating measures and ordering recovery, the UK system relies upon proceedings being brought by commercial rivals that are willing to finance a judicial review action against a public authority.

When the UK's Subsidy Control regime was first set up it was forecast in a government impact assessment report, provided to Parliament, that there would be around 23 challenges brought per year. If that forecast had been accurate we would have seen around 65 cases brought by this point.

However between 4 January 2023 and 1 May 2025, just two actions were brought. In The Durham Company Limited v Durham County Council [2023] CAT 50 the Competition Appeal Tribunal ruled that the local authority's arrangements to deliver waste collection services did not constitute subsidy.

In Mr Aubrey Weis v Greater Manchester Combined Authority [2025] CAT [41] the Competition Appeal Tribunal found that Greater Manchester Combined Authority's loan fund had entered into two debt instruments with development companies on market terms and therefore neither transaction amounted to subsidy.

New Cases

Since May 2025, the situation has changed, with the following cases brought:

• The New Lottery Company Ltd and Others v The Gambling Commission is a challenge brought in the Competition Appeal Tribunal that is based upon an allegation that c. £70m of funding given by the Gambling Commission towards Camelot's marketing costs amounted to subsidy but did not follow the requirements of the Subsidy Control Act 2022 at the time of award. The case is expected to be heard before the end of the year;
• Bristol Airport Limited v Welsh Ministers is another challenge in the Competition Appeal Tribunal and is based upon an allegation that the decision made by the Welsh Government to award a £205.2 million grant to expand and update Cardiff International Airport failed to meet the requirements of the Subsidy Control Act 2022 because the conclusions reached in respect of the Subsidy Control Principles were incorrect and the rules relating to subsidies to air carriers for the operation of air routes were not properly applied. The case is expected to be heard early in 2026;
• Mr Graham Thomas & Others v Durham County Council has been lodged in the Competition Appeal Tribunal and whilst not expressly brought under Section 70 of the Subsidy Control Act 2022,, the notice of appeal refers to seeking "a declaration that the contested awards constitute unlawful subsidies and/or breaches of competition and procurement law";
• in late October 2025, Aubrey Weis received permission from the Court of Appeal to have the Competition Appeal Tribunal's decision reviewed on the grounds that the established principles of judicial review had not been followed and that the Competition Appeal Tribunal had erred in law by concluding consideration was given to the statutory guidance despite no evidence that the relevant decision-making body did so.

The Zenobē Case

In Zenobē Energy Limited v Gas and Electricity Markets Authority a challenge is being brought by a private company operating in the battery storage market against a decision made by the Gas and Electricity Markets Authority (“GEMA") to provide financial support to longer-duration energy storage (“LDES”) projects by way of a 'cap and floor mechanism'.

Under this initiative LDES projects can benefit from a guaranteed minimum level of revenue through a ‘top up’ payment should revenues fall below this 'floor'. There is also a maximum revenue threshold (the 'cap') above which some revenues will be returned. The floor payments originate from suppliers, but are collected by the National Energy System Operator, operating within a framework established by GEMA.

GEMA has not treated the measure as a subsidy scheme. Therefore the argument made by Zenobē Energy Limited is that GEMA has failed to comply with Section 12(3) of the Subsidy Control Act 2022, which requires a public authority to "consider the subsidy control principles before making a subsidy scheme" and "not to make the Scheme unless it is of the view that subsidies under the scheme will be consistent with those principles".

In addition other allegations made include that there has been a failure to apply the energy and environment principles at schedule 2 of the Subsidy Control Act 2022 and also to make a referral to the Competition and Markets Authority in advance of establishing a scheme.

There are two counter-arguments which seem likely to be advanced by GEMA. The first relates to the Section 25 of the Planning and Infrastructure Bill (which is currently being considered by Parliament) that will place an obligation on Ofgem (which delivers functions on behalf of GEMA) to deliver a scheme which makes payments in regard to long duration electricity storage. The second is whether the redirection of supplier funds involves a transfer of a public authority's resources - an issue which raises similar issues to the famous EU State aid case of PreussenElektra [C-379/98].

Does this mean the Subsidy Control enforcement is operating as envisaged?

Not necessarily. Although there has been a sharp increase in cases, it is less than one tenth of the 65 legal challenges that the forecast would have envisaged to have been brought by now.

This low figure is in part because of the hurdles that a challenger faces. To bring an action under Subsidy Control law, a competitor needs to be able to finance a case and issue proceedings within a short challenge window.

This is a significant bar and may well have allowed some unlawful measures to be put into effect because a challenger did not become aware of the issue within the challenge window, lacked the expertise to know how to challenge or could not afford a challenge.

It is also important to recognise that this is a comparatively young regime. As legal frameworks mature, challenges are more likely to occur because stakeholders develop a better understanding of their legal rights and the process that must be follow.

Much depends on the outcome of this flurry of cases. So far, neither claim under Subsidy Control law has succeeded. If all these cases also fail then perhaps that will deter challengers from bringing cases in the future. However if one or more succeeds then it seems more likely that the UK's enforcement regime will begin to take off.

Conclusion

The Zenobē case is important in its own right – when the review is published next year it is expected to clarify the degree of control required for funds to be regarded as the resources of a public authority and also the interaction of the subsidy control regime with legislation. However it is also important as the fifth Subsidy Control case brought in the Competitional Appeal Tribunal. There has been a surge in cases brought in recent months but is this part of a trend or simply coincidence? Practitioners will be watching closely, because if this is merely coincidence it will increase the calls to update and improve the enforcement regime so it is more effective.

Alexander Rose is a leading Subsidy Control expert and Partner at Ward Hadaway. He advised on the UK's first case under the Subsidy Control Act 2022 and regularly provides Subsidy Control opinions for public authorities administering funding and businesses seeking support to deliver projects.