Subsidy Control Act 2022 receives Royal Assent

 

 

Subsidy Control Act 2022 receives Royal Assent

On 28 April 2022 the much awaited Subsidy Control Bill (the Bill) received Royal Assent and became the Subsidy Control Act 2022.   The new regime is expected to come into force in Autumn 2022.

The Bill was published on 30 June 2021 and is intended to create a legal framework for a UK subsidy control regime that meets the UK's international commitments.  These include the subsidies chapter of the UK-EU Trade and Co-operation Agreement (TCA).

Since 1 January 2021 public authorities have been subject to two parallel commitments in relation to subsidy control:

1)    The (limited) continued application of EU State aid rules under the Northern Ireland Protocol to the UK-EU Withdrawal Agreement: applies to aid measures which could affect trade in goods and electricity between NI and the EU

2)    The new TCA rules on subsidy control: have force of law within the UK by virtue of section 29 of the European Union (Future Relationship) Act 2020

The new regime under the Subsidy Control Act reflects the following elements:

1)    Public authorities will be responsible for self-assessing that subsidies they intend to grant comply with the statutory subsidy control principles and requirements

2)    Certain types of subsidy will be prohibited, or only permitted subject to specified conditions.

3)    A Subsidy Advice Unit (SAU) will be set up within the Competition and Markets Authority (CMA).  Its functions include monitoring and oversight, and providing pre-award and post-award advice.

4)    The Secretary of State will, in secondary legislation, designate some types of subsidy as "subsidies of interest" or "subsidies of particular interest". Public authorities can ask the SAU to provide advice on subsidies of interest (voluntary referral) and must ask the SAU to provide advice on subsidies of particular interest (mandatory referral).

5)    There are transparency requirements relating to the award of subsidies/ making a subsidy scheme.

6)    The Competition Appeal Tribunal will hear appeals by interested parties (or the Secretary of State) against subsidy decisions, using judicial review principles.

The government has announced that it will be publishing guidance to support public authorities in advance of the new rules coming in to force.

 

https://www.gov.uk/government/news/new-subsidy-control-system-will-support-uk-jobs-boost-the-economy-and-strengthen-the-union

CMA opens investigation into education software solutions

 

 

 

 

The Competition and Markets Authority has launched an investigation into suspected competition law breaches concerning the renewal of school management information systems contracts by Education Software Solutions Ltd Group (ESS).

School management information systems are required in UK state schools.  They administer student information including safeguarding and student attendance,

ESS requires customers to move from one year to three year contracts.  The CMA has questioned whether this allows customers to consider their options.  The long procurement process may also make it difficult for alternative providers to compete.

The CMA is also considering the pricing of ESS packages and its bundling practices.  The CMA also states that will consider interim measures while the investigation is ongoing,

The CMA’s initial investigation will take place between April and August 2022.

https://www.gov.uk/government/news/cma-to-investigate-ess-s-move-to-three-year-contracts-for-schools

Government publishes response to consultation on reform of competition and consumer policy

 

Government publishes response to consultation on reform of competition and consumer policy

 

The Department for Business, Energy and Industrial Strategy (BEIS) has published the government's response to the July 2021 consultation on reforming competition and consumer policy.

The government has decided to implement a number of reforms.  My ‘top 10’ are the following:

(1)   Requiring the Competition and Markets Authority (CMA) to produce regular reports on the state of competition.

(2)   Introducing a statutory duty of expedition for the CMA in relation to its competition and consumer law functions including in relation to the new digital markets regime.

(3)   Improving procedures for market inquiries including more opportunity for binding commitments to be accepted, greater flexibility to define the scope of market investigations, and removing the requirement to consult on a market investigation reference within the first six months of a market study.

(4)   More flexible and versatile remedies in market investigations.  The CMA will be able to require businesses to amend remedies in a 10-year period following its finding of an adverse effect of competition.

(5)   Reforms to the merger regime including:

a.     The turnover threshold for qualifying mergers will be increased to £100 million and there will be a safe harbour for mergers between small business (with UK turnover below £10 million).

b.     A new threshold to enable the CMA to investigate mergers where at least one party has a UK share of supply of 33% and has UK turnover of more than £350 million will also be introduced.

c.      Allowing commitments to be given earlier during Phase 2 and introducing an automatic fast-track referral procedure.

(6)   Competition Act investigations:  Reforms will include adjusting the territorial scope of the Chapter I prohibition, granting the CMA new evidence gathering powers, changing the standard of review for interim measures, introducing a new statutory framework for confidentiality rings and reducing the turnover threshold for immunity from financial penalties for breaches of the Chapter II prohibition.

(7)   Administrative penalties:  Tougher financial penalties for failure to comply with an investigation and new civil penalties for non-compliance with CMA orders, undertakings or commitments.

(8)   Stronger powers and tools for international co-operation will also be introduced.

(9)   Algorithms:  The CMA will have new powers to test and verify whether the use of algorithms by companies complies with competition law.

(10)                   Giving the Competition Appeal Tribunal (CAT) the ability to grant declaratory relief and returning to the courts and CAT the discretion to award exemplary damages for breaches of competition law.

The government has decided at this time not to amend the standard of review for competition appeals.

 

https://www.gov.uk/government/news/new-rules-to-protect-consumers-hard-earned-cash

Payment Systems Regulator finds anticompetitive conduct in pre-paid card market

 

Payment Systems Regulator finds anticompetitive conduct in pre-paid card market

 

The Payment Systems Regulator (PSR) published its decision finding that Mastercard, allpay, APS, PFS and Sulion breached the Chapter I prohibition of the Competition Act 1998 by engaging in anti-competitive market-sharing in the prepaid card services sector.

This is the first Competition Act infringement decision issued by the PSR since it obtained concurrent competition powers in April 2015.

The PSR found that the parties agreed not to target each other’s public sector clients during the currency of existing public sector clients until the contracts came up for tender and they exchanged customer information to facilitate this behaviour.

The conduct took place under the National Prepaid Cards Network (the Network), which was sponsored by Mastercard and organised by Sulion which acted as a facilitator.

The public interest focus of the decision is striking as the PSR found that the violations had as their object the restriction of competition in the supply of prepaid card services for welfare payments.

The PSR imposed fines amounting to about £33 million in total.

https://www.psr.org.uk/media/qk0a22tw/psr-final-infringement-decision-non-confidential-april-2022_.pdf