At the end of July, the Competition Appeal Tribunal (CAT) handed down judgment in The Durham Company v Durham CC,1 its first (and so far only) judicial review application under the Subsidy Control Act 2022 (SCA22).<\/p>\n
The <\/span>only <\/span>issue on <\/span>the <\/span>application was whether there was a subsidy decision at all: Durham CC (the Council) accepted<\/span><\/span>2<\/span><\/span> that if there had been a subsidy decision,<\/span><\/span>3<\/span><\/span> it had not even attempted to comply with its duties under section 12 SCA22 (the duty to consider application of the subsidy control principles) so <\/span>any such decision would have to be quashed. \u00a0Although there does not seem to have been any argument on the point, the <\/span>judgment<\/span> appears to settle<\/span> that in a case where there is a dispute over <\/span>whether a measure is <\/span>a subsidy falling under SCA22, the CAT is the right forum for resolving that dispute (the answer \u201cno\u201d effectively meaning that it has no <\/span>jurisdiction<\/span>).<\/span> Since the position in the <\/span><\/span>Durham <\/span><\/span>case (that the authority will have proceeded on the basis that there was not a subsidy and therefore have failed to address the section 12 duty at all) is likely to be typical<\/span> of cases where the authority <\/span>denies that there is subsidy decision<\/span>, in most such cases a \u201cyes\u201d answer to the \u201cis it a subsidy decision?\u201d question will result in the decision being quashed without further ado.<\/span><\/span>\u00a0<\/span><\/p>\n Before turning to the issues, a quick summary of the facts. \u00a0The Durham Company (the Company) <\/span>provides<\/span> wa<\/span>s<\/span>te collection services <\/span>to businesses in parts of England and Scotland. \u00a0In doing so, it competes with local authority waste collection services<\/span>.<\/span> Local authorities that are waste collection authorities<\/span> (WCAs)<\/span>, as the Council is, are <\/span>required<\/span> to collect commercial waste in their area from any business that requests it, for which it must recover a reasonable charge. <\/span>WCAs <\/span>are also required to<\/span> collect domestic waste, for which they are not allowed to charge.<\/span><\/span>\u00a0<\/span><\/p>\n Over the past <\/span>few years<\/span>, the Company has brought a number of legal actions in different areas of law to deal with what it sees as the disadvantages that it faces in competing with <\/span>WCAs<\/span> in collecting commercial waste<\/span>: <\/span>In the area of VAT, it <\/span>tried to judicially review HM<\/span> Revenue and Customs\u2019<\/span> position <\/span>that charges made by WCAs <\/span>are not<\/span> subject to VAT<\/span><\/span>,<\/span><\/span><\/span> and while the UK was still in the transition period it tried to claim damages for breach of the State aid rules<\/span><\/span>.<\/span><\/span><\/span>\u00a0<\/span><\/span>\u00a0<\/span><\/p>\n In the present case, the core of the Company\u2019s <\/span>claim<\/span> was that the Council was <\/span>allowing its domestic waste collection activity, which inevitably required an infrastructure of equipment, staff<\/span>,<\/span> and property, <\/span>to <\/span>subsidis<\/span>e<\/span> its commercial waste activitie<\/span>s<\/span>, resulting in the Council\u2019s commercial waste <\/span>collection being charged at subsidised prices<\/span>.\u00a0 <\/span>The difficulty it faced was how to translate that claim into an argument that there was a subsidy <\/span>decision <\/span>under the SCA22.<\/span><\/span>\u00a0<\/span><\/p>\n The CAT\u2019s approach<\/em><\/p>\n First<\/span><\/span>,<\/span><\/span><\/span> however, the Company had to overcome an argument by the Council that the decision complained about was under a subsidy scheme made before SCA22 came into force<\/span>.\u00a0\u00a0<\/span><\/span>\u00a0<\/span><\/p>\n The Company claimed that the relevant subsidy decision was taken on 31 March 2023, when the Council set its charges <\/span>for commercial waste collection for the next financial year. \u00a0However, the Council relied on the fact that in 2020 it had reviewed and decided how commercial waste collection should be charged for, so that (if there were a subsidy) <\/span>the<\/span> 2020 decision would have been a \u201csubsidy scheme\u201d<\/span>.<\/span> A<\/span>s a subsidy scheme made before the coming into force of SCA22 on 4 January 2023, any decision made under it (such as, according to the Council, the charging decision on 31 March 2023) would be excluded from SCA22 by section 48(1)(a).<\/span><\/span>\u00a0<\/span><\/p>\n In finding for the Company on that point, the CAT held that <\/span>in order to<\/span> count as a \u201cscheme\u201d a measure had to have an element of fettering <\/span>subsequent<\/span> decisions<\/span>. \u00a0Since the 2020 decision <\/span>merely charted a course <\/span>for future <\/span>years, and<\/span> left open the <\/span>possibility that the <\/span>Council<\/span> might take a different approach<\/span>, it did not count as a <\/span>scheme<\/span><\/span>:<\/span><\/span><\/span> T<\/span>he CAT <\/span>emphasised that \u201c<\/em><\/span><\/span>there is nothing in the 202<\/span>0<\/span> Scheme Decision to suggest that th<\/span>e Council was in any way <\/span><\/span>binding<\/span><\/span><\/strong> itself to follow the<\/span> 2020 <\/span>Scheme Decision in future years<\/span><\/span><\/em>\u201d<\/em> (original emphasis). \u00a0<\/span><\/span>\u00a0<\/span><\/p>\n Comment<\/em><\/p>\n The approach taken by the CAT <\/span>contradicts the approach taken by the Department of Business and Trade<\/span> (DBT)<\/span> in its statutory guidance, where <\/span>it distinguishe<\/span>s<\/span> between a subsidy and a subsidy scheme as follows<\/span> (emphasis added)<\/span>:<\/span><\/span>\u00a0<\/span><\/p>\n It will be seen that, for DBT, <\/span>a decision that binds the authority <\/span>to what it does in future years (or binds it contingently <\/span>on external events) is not a subsidy <\/span><\/span>scheme<\/span><\/span><\/strong><\/em> but a subsidy <\/span><\/span>tout court<\/span><\/span>: In its view, t<\/span>he existence of a substantial degree of discretion does not, as the CAT holds<\/span>, tell you that the decision is not a subsidy scheme: rather, it tells you that it <\/span><\/span>is<\/span><\/span> a subsidy scheme (and not a subsidy <\/em><\/span><\/span>to<\/span><\/span>ut<\/span><\/span> court<\/span><\/span><\/strong>). \u00a0<\/span><\/span><\/em><\/p>\n In my view, DBT\u2019s approach is supported by the <\/span>text and <\/span>structure of the SCA22, while the CAT\u2019s view is not<\/span> \u2013 and therefore is, in my view, incorrect<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n It is significant that the CAT\u2019s approach is analogous to \u2013 though the CAT, perhaps deliberately, does not mention the analogy \u2013 the case-law on what constitutes an aid scheme under EU State <\/span>aid law<\/span>, where the relevant legislation<\/span><\/span>7<\/span><\/span> provides that an <\/span>aid scheme <\/span>exists only<\/span> where<\/span> no further implementing measures are required for individual aid to be granted on the basis of the act constituting such a scheme<\/span>.<\/span><\/span>8<\/span><\/span>\u00a0 <\/span>I<\/span>n <\/span><\/span>Commission v Belgium and <\/span>Magnetrol<\/span><\/span>,<\/span><\/span><\/span> the Court of Justice <\/span>held that <\/span>that a <\/span>\u201c<\/span><\/span>Background<\/h3>\n
Subsidy scheme?<\/h3>\n
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