UK State aid regime in the event of a no-deal Brexit

On 21 January, the UK government published a draft Statutory Instrument (SI) transposing the existing EU State aid regime into UK law and, if there is a no deal, designating the Competition and Markets Authority (CMA) as the responsible State aid enforcement authority.  On 23 January, the CMA issued guidance on its State aid role in the event the UK leaves the EU without a deal.

The State aid rules and the CMA’s role if there is no Brexit deal

The draft SI, the State Aid (EU Exit) Regulations 2019, does not materially alter the substantive set of rules that currently apply.  It does though make important institutional and procedural changes affecting the process by which aid can granted and the enforcement of those rules. 

These changes centre around the UK’s national competition authority, the CMA, effectively taking on the current role of the European Commission as regards the application of the current rules in the UK.  As well as the CMA taking on the supervision and enforcement powers of the Commission, it is required to adopt the existing EU guidelines on State aid – as the existing body of rules – before the UK’s exit from the EU. 

At this stage, only minimal changes will be made to the guidelines to ensure that they are operable on Exit Day.

The CMA’s State aid procedures

The CMA will release further details of its decision making structure in complex cases prior to Exit Day.  In an attempt to provide certainty and continuity to businesses if there is no deal, the processes will be similar to the European Commission’s current procedural rules. 

However, within the confines of the Regulations, the CMA has said that it will endeavour to ensure the processes are as clear, accessible and efficient for aid grantors as possible.

On or before Exit Day, the State aid SI requires the CMA to publish a notice setting out:

  • the form and content for notifications
  • the form and content for complaints
  • the form, content and date for the submission of annual reports in relation to existing aid schemes, and aid which is exempt from notification
  • the form and summary information for aid that is exempt from notification.

The CMA expects to publish these notices before the end of March 2019.

Notifying the CMA of State aid

If there is a no deal, the CMA will accept notifications of State aid from the date the UK leaves the EU.  Aid grantors can provide the notification using a new online state notification system.  The CMA will provide further guidance and training to aid grantors on accessing and using the system in advance of the UK leaving the EU.

The CMA will also engage in informal ‘pre-notification’ discussions with aid grantors who are expecting to notify state aid cases to the CMA in the first three months after the UK’s exit.

The new rules for previously approved or ongoing State aid cases

In the event of a no-deal Brexit, State aid already approved or exempted by the European Commission will not need to be re-approved.  However, the CMA will have power to act where this aid is misused. 

Ongoing State aid cases that have been notified to the European Commission before exit, but that have not been decided on or before 29 March 2019, will need to be re-notified to the CMA.

In a no-deal scenario, the SI also gives the CMA powers to investigate cases where aid has been granted without prior approval and where no block exemption applies (whether before or after Exit Day).  Interested parties who wish to complain to the CMA about aid granted will be able to do so using an online complaints form.