DLA Piper successfully resists appeal under the Subsidy Control Act 2022

The judgment effectively endorses the strength of GMCA’ s investment processes and its alignment with subsidy control law.

DLA Piper has acted for the Greater Manchester Combined Authority (GMCA) which successfully resisted the appeal in Weis v GMCA, the first Court of Appeal case under the Subsidy Control Act 2022 (SCA).

The Court dismissed the appeal in its entirety confirming that GBP120 million in property development loans did not constitute a subsidy. The judgment is significant both for affirming the robustness of GMCA’s lending model and for establishing how the UK subsidy control regime will operate in practice.

At first instance, the Competition Appeal Tribunal (CAT) rejected the claimant’s challenge which found that GMCA’s GBP120 million property development loans satisfied the commercial market operator (CMO) principle.

On appeal, the Appellant argued that the CAT had gone beyond its proper role and should not have decided for itself whether the loans complied with the CMO principle. The Appellant also argued that the CAT should have confined itself to the material available at the time. On that basis, alleged process deficiencies, including the absence of market comparators and reliance on post-decision material, were said to render the decision unlawful.

The Court of Appeal rejected those arguments and dismissed the appeal in its entirety, with the judgment confirming the CMO principle is an objective test. The question is whether the transaction falls within the range that a rational private market operator might accept.

The decision has important consequences for both public authorities and challengers. For public authorities, the judgment reinforces the importance of ensuring that transactions are commercially robust in order to satisfy the CMO principle and provides comfort where the principle is satisfied. For challengers, the judgment raises the bar for challenges as it makes clear that process-based challenges alone will not succeed. 

The DLA Piper team was led by Litigation partner, Sam Szlezinger and was supported by Associate Tiffany McConaghy. The GMCA was represented in the Court of Appeal by Aidan Robertson KC who also acted for it in the Competition Appeal Tribunal.

Sam Szlezinger, who led the DLA Piper team, commented: “I am delighted that the Court of Appeal has confirmed that the loans in question were granted on market terms.  The judgment effectively endorses the strength of GMCA’ s investment processes and its alignment with subsidy control law.  It is also very helpful that the Court of Appeal clarified that alleged process deficiencies are largely irrelevant to the question of whether a subsidy has been granted”.