Beyond Brexit: Preparing For Changes To The Treatment Of UK State Aid

Published date07 August 2020
Law FirmMayer Brown
AuthorMr David Harrison and Julian Ellison

The deadline for the UK government to make a request to extend the Brexit transition period under the Withdrawal Agreement has now passed. While it may technically be possible for an alternative form of extension to be negotiated later in the year, this would present significant legal and practical challenges, and would involve agreement on a continuing UK contribution to the EU budget. It is therefore prudent for businesses to assume that the transition period will end on 31 December 2020 (Completion Day).

The interface between the EU and UK competition law regimes may therefore present businesses with significant challenges in the coming months. This update outlines the transitional arrangements for 'live' State aid notifications at the end of the year. It also examines the extent to which the EU State aid rules will continue to be relevant to, and in, the United Kingdom in the future.

EU State aid rules

The European Union operates a system of State aid (subsidy) control which applies when financial support is given to an economic entity by an EU Member State, leading to a selective advantage which is liable to distort competition. The rules apply to the extent that there is an effect on trade between Member States. State aid can take many forms, for example direct grants, tax advantages (such as exemptions or deferrals) and State guarantees. Any aid not falling within existing EU exemptions or pre-approved schemes must be notified to, and approved, by the European Commission (Commission). If the Commission finds that unlawful State aid has been granted, it may order that the aid be recovered from the recipient. This order can only be suspended by an application...

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