Subsidy Control Case Law Update: Durham (Again), Ofgem, and What Might the Court of Appeal Make of it All?

Oliver Slater and Beatrice Wood look at the lessons from the latest Subsidy Control case law.

Paragraph 462 of the impact assessment for the Subsidy Control Bill must be one of the most frequently quoted paragraphs in impact assessment history. Based on a quantitative analysis, the author of the assessment estimated that “the volume of judicial reviews anticipated under the new domestic subsidy control regime is 23 per annum, with a range of 15-30 per year.”

As pointed out in almost every piece of commentary relating to the subsidy control challenge regime, that estimate has proved to be hopelessly off the mark. Three and a half years after the Subsidy Control Act 2022 (SCA) came into force, just six challenges have come forward.

That being said, despite the paucity of cases compared to the government’s prediction, the past six months or so have seen an increased level of activity. We summarised the New Lottery Company and Bristol Airport cases in previous articles and there has been a recent further flurry of judicial activity.

Here, we explore the Competition Appeal Tribunal’s (CAT) recent judgments in Thomas v Durham[1] and Zenobē v Ofgem[2], but – first – we touch briefly on cases before (or potentially coming before) the Court of Appeal.

Court of Appeal

We explored the CAT’s judgment in Mr Aubrey Weis v Greater Manchester Combined Authority in an article last summer. As has now become a consistent theme, the CAT found in favour of the public authority in that case. The CAT’s judgment was appealed by Mr Weis and was heard before the Court of Appeal over two days earlier this month. Readers who are particularly interested in this case can find the recording of the hearing on YouTube (266 views and counting). Hopefully judgment will be handed down reasonably swiftly as it will be interesting to see the Court of Appeal’s approach on its first opportunity to consider the provisions of the SCA.

Bristol Airport has also (perhaps unsurprisingly to many) sought permission to appeal the CAT’s judgment of earlier this year relating to the Welsh Government’s £200m subsidy to Cardiff Airport. As seems to have become the CAT’s default position, permission to appeal was refused, but Bristol can still approach the Court of Appeal itself. Commentators will follow progress of that case closely given the implications of the same in respect of assessments against the subsidy control principles.

Durham (Again)

It is perhaps rather unfortunate for Durham County Council (Council) that – of the six subsidy control challenges brought to date – one third of them have involved the Council. The Council successfully defended the first challenge, brought by Max Recycle, but was once again before the CAT earlier this year following a challenge brought by Mr Graham Thomas.

We summarised Mr Thomas’ claim in a previous article for Lexxion’s UK Subsidy Control Insider. Mr Thomas initially argued that the Council had breached subsidy control rules, competition law and procurement rules. By the time of the hearing in April 2026, only the competition and subsidy control arguments remained.

The CAT dealt swiftly with the competition claim: striking the claim out on the basis that there were no reasonable grounds for the same. The CAT noted that the claimants had had multiple opportunities to particularise the alleged breach of the Competition Act 1998 and the CAT had little patience for the claimants’ attempts to reformulate the claim at the hearing. The competition claim originally alleged infringements of both Chapter I and II prohibitions, but these were not considered in detail in the CAT’s judgment as the claimants essentially abandoned these arguments before the CAT. On that basis, there is little of interest from a competition perspective in the CAT’s judgment.

The subsidy control position is of more interest, in particular in relation to timings for subsidy control challenges. The applicants essentially argued that two grants which the Council was proposing to award were unlawful subsidy decisions. It was common ground between the parties that the Council had not made a “final decision” in respect of either grant. On that basis, the applicants sought to stay the claim and the Council sought to have it struck out.

The CAT ruled in favour of the Council, striking out the claim. It did so for three reasons: 1) there was no clear timeframe for a final decision; 2) any subsidy claim in relation to any such final decision would require significant rewriting; and 3) a stay of the claim was likely to generate considerable procedural complexity.

The CAT suggested that it would be preferable for the claimants to file fresh applications if it wishes to challenge any final decision made by the Council.

While the claims were ultimately struck out in short order, the CAT’s judgment was nevertheless useful in clarifying the law on the timing of subsidy control challenges.

The CAT drew a clear distinction between three activities: the making of a subsidy decision, a decision to give a subsidy, and the actual transfer of funds.

The making of a subsidy decision is the trigger for a CAT review and also starts time running on the requirement to upload details of the subsidy to the database. The CAT clarified that a subsidy decision is made when a “final decision” is made (which may only be subject to administrative steps to formalise the agreement). A subsidy decision may therefore precede the execution of legal documents.

Conversely, a subsidy is “given” when an enforceable right arises. This may be the case on signature of a grant agreement, even if funds are not transferred at the same time.

On this basis, the position following the CAT’s judgment in Thomas v Durham is that a subsidy control challenge can be brought once the public authority has taken a formal, final decision to give a subsidy. The point of “final decision” will be fact specific in any case.

The corollary of the CAT’s judgment is that there is a small window of opportunity to bring a subsidy control challenge. Bring your claim too early, and it will be struck out (as per Mr Thomas’ claim here). Bring your claim too late, and you risk being accused of not acting sufficiently promptly (as per the New Lottery Company case). This is a fine balancing act which will require careful legal consideration on a case-specific basis.

On a general basis, applicants would, in our view, be well-advised to issue their claim sooner rather than later. If the claim is struck out for being premature, it can be resubmitted at a later date. If a claim misses the window altogether, there is no hope of success.

Zenobē v Ofgem

The CAT’s most recent subsidy control judgment was handed down on 23 June 2026. Zenobē owns and operates battery energy storage systems. Ofgem has been charged by Parliament (see section 10P of the Electricity Act 1989) with establishing and operating a cap and floor regime for long duration electricity storage (LDES) projects.

Ofgem published documents in September 2025 setting out its intended approach to the cap and floor regime (alongside the names of 77 projects which had passed the eligibility stage). Ofgem adopted this decision in February 2026 following the entry into force of section 10P.

Zenobē argued that Ofgem made two subsidy decisions: in September 2025 and February 2026.

Ofgem had two principal defences: 1) Ofgem had not made a “subsidy decision” (see further analysis in respect of this term in the Durham analysis above); and 2) Ofgem’s decision was made pursuant to a duty imposed by primary legislation (namely section 10P). Ofgem further submitted that, in any event, the scheme did not give rise to financial assistance from public resources.

The CAT agreed that Ofgem had not made a subsidy decision. The work carried out by Ofgem in respect of the two decisions was “preparatory or development work”. These decisions were steps in the process to making a decision, not the making of the decision itself.

Parallels can be drawn between this part of the CAT’s judgment and the judgment in the Durham case described above. In both cases, claims were brought prematurely (i.e. before a “subsidy decision” had been made).

In respect of the primary legislation defence, section 10P states that Ofgem “must… establish and operate a [LDES] scheme.” The SCA exempts subsidies made in primary legislation from the majority of its requirements. The only SCA rules which apply to such subsidies are in respect of mandatory publication on the subsidy database and voluntary referral to the Subsidy Advice Unit. The CAT has no jurisdiction in respect of subsidies for the provision of financial assistance made by means of primary legislation.

The CAT rejected Zenobē’s arguments that the SCA exemption only applies to subsidies that are wholly prescribed by legislation (i.e. without affording any discretion to the implementing public authority). While Ofgem had discretion in designing the LDES scheme, it nevertheless had a duty to establish the scheme pursuant to section 10P. This was enough to satisfy the CAT that the primary legislation exemption applied.

On that basis, the CAT did not have jurisdiction to hear the appeal. The CAT refused to provide obiter judgment on the “public resources” question.

Discussion

The Ofgem case is the sixth subsidy control challenge under the new regime and the sixth defeat for applicants (albeit, as above, certain of those cases have proceeded (or may proceed) to the Court of Appeal).

This run of successful defences poses important questions regarding the efficacy of the subsidy control challenge regime:

• Is it possible for applicants to succeed in this jurisdiction?
• Is the regime too friendly to public authorities or, in other words, is it all bark and no bite?
• Will recent judgments result in an even greater chilling effect for litigation in this area?

Answers to these questions will emerge over coming months and years but, for the time being, there are serious concerns that the regime is not working as intended. The estimated 23 cases per year have not emerged and, even if they had, would any of them have succeeded? On the other hand, perhaps the CAT is just waiting for the “right case” to come along and then the litigation floodgates will open.

We will have to wait and see but, in the meantime, it will be interesting to digest the CMA’s review of the effectiveness and impact of the SCA (due to report this summer).

Commentators will also keep a close eye on any movement in Brussels, following last year’s Commission statement that “it is vital to enhance the effectiveness of the United Kingdom’s subsidy control system to ensure a level playing field in particular with the EU…”.

It remains to be seen how the recent developments discussed in this article will feed into the wider policy debate about the efficacy of the UK’s subsidy control regime.

Help from the experts

Sharpe Pritchard’s market-leading subsidy control team has a wealth of experience advising on the interpretation and application of subsidy control legislation and EU State aid rules.

The team advises on the full range of subsidies, from minimal financial assistance awards to subsidies of particular interest considered by the Subsidy Advice. For more information contact us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Oliver Slater and Beatrice Wood are Associates at Sharpe Pritchard LLP.

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[1] Mr Graham Thomas & Ors v Durham County Council [2026] CAT 47

[2] Zenobē Energy Limited v Gas and Electricity Markets Authority [2026] CAT 53