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CMA to be appointed as post-Brexit UK State aid regulator

Business meeting Print publication

12/04/2018

The Government has indicated that it intends to appoint the Competition and Markets Authority (CMA) as a newly appointed regulator to monitor State aid enforcement following Brexit.

The appointment was detailed in a letter from the Minister for Small Businesses, Consumers and Corporate Responsibility, Andrew Griffiths, to Lord Whitty, the Chair of the House of Lord’s EU internal market sub-committee on 28 March 2018 following a request by the sub-committee for further clarity on how State aid policy would be managed following Brexit.

The letter states that the Government has concluded that an independent State aid authority would be required following Brexit and that the Government has concluded that the CMA would be “best placed to take on the role of State aid regulator. This reflects its experience and understanding of markets as the UK’s competition regulator and the independence of its decision-making from Government.”

In the Brexit transition period (between March 2019 and 31 December 2020), existing EU State aid rules and regulations will continue to apply and the European Commission will continue to be responsible, as now, for approving and monitoring aid.

Following the transition period, the CMA will take over the role of the newly appointed State aid regulator under a new State aid regime. The letter states that the Government intends to transpose the EU State aid rules under the European Union (Withdrawal) Bill and that the new regime will replicate existing exemptions from State aid rules.

Comment

State aid is often a politically sensitive area and the new role may put the CMA further in the political spotlight. State aid rules are designed to prevent governments from giving financial advantages to firms in a way which could distort competition. The new regime may lead to the CMA needing to challenge government and/or local government policy in future where it considers that competition is being distorted. For instance, these issues could arise where the Government steps in to rescue failing companies or where local authorities provide subsidies to certain companies.

News of the appointment will also mean that the CMA will likely require further resources to deal with its additional workload following Brexit. The CMA has indicated in a statement that it has appointed two directors to assist in preparing for exercising its new powers and that it will provide details of how it will exercise this function in due course. We would expect to see a newly established State Aid Team to be set up within the CMA over the coming year and further consultations on the proposed new regime.

If you require any advice or assistance on any of the points raised above, then please contact David Kilduff, Richard Auton or Richard Butterworth.

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