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The Court of Appeal today gave judgment in R(British Gas Trading and E.ON) v Secretary of State for Energy Security and Net Zero, the first case before it dealing with the post-Brexit UK subsidy control regime. The case concerned the then government’s package of subsidy to facilitate the acquisition in 2022 by Octopus of Bulb, a major retail supplier of electricity that went into special administration in 2021. British Gas and E.ON brought judicial review proceedings in the Administrative Court claiming breach of the subsidy control provisions in the UK/EU Trade and Cooperation Agreement (“TCA”), which has been incorporated into domestic law by the EU (Future Relationship) Act 2020. (The Subsidy Control Act 2022, which now regulates grants of subsidy by UK authorities, had not at that stage come into force.) They claimed that defects in the tender process leading to the selection of Octopus as the acquirer meant that the subsidy could not properly be regarded as the minimum necessary and that subsidy had been granted to Octopus as well as to Bulb: they also claimed breach of the specific TCA provisions relating to restructuring subsidies. The Divisional Court rejected their claims in March 2023, refusing permission to bring judicial proceedings on the ground of delay and also finding that the graunds of judicial review failed in any event. British Gas and E.ON appealed to the Court of Appeal.
In its judgment, the Court of Appeal finds that the Divisional Court was wrong to refuse permission on the ground of delay in relation to the claim for financial relief (a recovery order), both on domestic law principles and because of provisions of the TCA that required the claimants to be provided with sufficient information about the subsidy, information that was not provided until very shortly before they brought their claim. However, the Court of Appeal rejected the appeal on the merits, holding that the decision to grant subsidy was subject to review only on conventional domestic law principles of judicial review, including rationality. It went on to hold that the Secretary of State was entitled to take the view that the process followed to select Octopus was open, transparent and non-discriminatory so as to provide the basis for a conclusion of minimum subsidy to Bulb (and no subsidy to Octopus) and that he was also entitled to take the view that the subsidy responded to a global or national economic emergency: a conclusion that made it unnecessary for the Court to decide whether the subsidy complied with the specific rules on restructuring subsidy.
George Peretz KC and Harry Gillow, instructed by Pinsent Masons LLP, acted for E.ON in the appeal to the Court of Appeal.