Late last week the Competition Appeal Tribunal (CAT) came to the conclusion of its first judgement. This is the first of what will hopefully be many judgements that will ultimately guide the wider industry on where, when, and how it can give subsidies, and the nuances between particular instances.
In this first case, the CAT were assessing whether the Council was subsidising its commercial waste operation. The commercial waste operation was allowed to use the equipment and infrastructure owned by the Council for the purpose of collecting domestic waste. The Council cannot charge for the collection of domestic waste.
The Council collects the majority (78%) of commercial waste, which it is obliged to charge for. The Council does not collect waste outside County Durham. The Durham Company Limited are a provider of waste collection services in North-East England, North-West England, Southern Lakes and Southern Scotland. They are active in County Durham and compete with the Council in regard to the services provided by the Council.
There are three main issues that have arisen from this. Firstly, whether a subsidy decision was made, then whether it was a subsidy and lastly whether the subsidy principles were satisfied.
The CAT has dismissed the claim brought. In a divergence from the old State Aid Laws, a subsidy is the transfer of resources from a public institution to another institution or person. The transfer of funds from one part of an institution to another part of the same institution, albeit with a separate function did not constitute a subsidy. In this case, the Council is not providing a subsidy internally to its own department.
Furthermore, the CAT provided an opinion on the transfer itself. It stated the transfer gave no economic advantage on the recipient.
The Key Takeaways
This Tribunal had a swift outcome.
The Council cannot be both the authority and the enterprise receiving the subsidy at the same time.
Local Authorities that offer services will benefit from this decision, as they will not be challenged on the same grounds, for providing services to their residents. It also gives a first guidance on what a subsidy is, how the state aid laws offer a guide but not a binding effect.