The Competition Appeal Tribunal (Tribunal) in Weis v GMCA has provided welcome clarity on 'no subsidy' decisions and the importance of evidence in a public authority's assessment of whether a measure is granted on market terms and is therefore not a subsidy.

Background

The Tribunal's judgment was handed down on 24 July 2025, in response to a challenge brought by Weis under the Subsidy Control Act 2022 (SCA) regarding the Greater Manchester Combined Authority's (GMCA) decision to grant two loans (the Renaker Loans) to the Renaker Group for the development of housing in Manchester. Both Weis and the Renaker Group carry out property development activities in Manchester.

Weis alleged that the Renaker Loans constituted an unlawful subsidy since they were provided on non-market terms that would not have been granted by a commercial market operator (CMO). GMCA in turn argued that the CMO principle did apply, since they were provided on no more favourable terms than might reasonably be available from a private lender in comparable commercial circumstances (disregarding any public policy or social objectives and having regard to the foreseeability of obtaining a return), and therefore they did not confer any "economic advantage".

The judgment provided welcome clarity on two key issues that are of broader relevance to subsidy control decisions.

1. When is a subsidy decision taken?

The SCA distinguishes between when a decision to give a subsidy is made, and when a subsidy is actually given (i.e. when an enforceable right to the financial assistance in question arises).

The Tribunal found that, for the purposes of bringing a challenge, the challenge window opens when the public authority makes a clear, substantive decision to approve or grant the financial assistance – even if further steps are required before the funds can be contractually committed. As such, in respect of the Renaker Loans, the relevant subsidy decision was taken when the GMCA approved the loans in principle – subject to completion of due diligence and legal documentation.

2. How can the CMO principle be evidenced?

Weis argued that the GMCA had not demonstrated compliance with the CMO principle, since it had not followed the SCA's statutory guidance (Guidance) or statutory reference rates. The Tribunal dismissed this argument, finding that even if the GMCA did not obtain independent expert advice or benchmark the loans against market rates (as suggested in the Guidance), the Renaker Loans were still granted on market terms and were within the range that a commercial lender would offer.

The Tribunal noted the following as important to evidencing the GMCA's compliance:

a. The GMCA carried out a robust and extensive approval process that involved scrutiny by advisors with private house-building and banking expertise, the preparation of multiple internal supporting documents, review by an experienced lending team, the receipt of market intelligence from other borrowers, as well as learnings from other recent comparable 'club' loans whereby the GMCA had lent alongside commercial lenders that did commission their own independent expert analysis to assess if the terms were in line with the market; and

b. The terms of the Renaker Loans in the round would have been considered low risk by any other lender and a higher interest rate did not need to be charged, particularly given the strength of security offered, the low loan-to-value and cost ratios and the robust conditions precedent to drawdown. Such protections would ensure the GMCA would still likely recover the full amount plus interest, even in the event of a default.

In doing so, the Tribunal confirmed rulings in past cases (which applied to the similar test under the EU State aid rules) which held that "the law recognises that there is a wide spectrum of reasonable reaction to commercial circumstances in the private market" and that public authorities therefore had "a generous margin of judgment or appreciation", such that a subsidy will only be found if the measure would not have been entered into "by any rational private market operator in the circumstances of the case".

What are the key takeaways?

1. Interested parties do not need to wait until a subsidy has been "given" to bring a challenge. It is therefore important to monitor public authority decision making processes to identify when a decision in principle is made. While the one-month challenge window likely does not open where a "no subsidy" decision has been taken on such facts, an interested party may not be able to claim relief where there has been an undue delay in bringing the claim.

2. It is advisable to obtain expert or legal advice to understand whether a public authority has carried out the necessary compliance assessment. Ultimately, the risk of clawback and any financial assistance being quashed will be borne by the recipient if any such assistance were to constitute an unlawful subsidy. Recipients cannot safely assume that the financial assistance will be risk free. This is a key, and often overlooked, area of diligence, and one on which we regularly advise both recipients and interested parties.

3. The process followed by a public authority is important; statutory guidance is not a mandatory checklist. Close attention should be paid to a public authority's broader decision-making process and the contemporaneous documents and evidence considered (including those requested and received in pre-action information correspondence), as these will carry weight and assist in proving that any assumptions used to present the initial investment case have either been tested and the terms remain on market terms, or if the contrary is true.

4. The identity of the granting public authority will be a relevant factor. Whether the public authority has a strong track record of similar lending and first-hand market knowledge should be considered; large, sophisticated public authorities may be given a broader degree of discretion than smaller public authorities with less established funding schemes, from whom an independent expert report (or lack thereof) to corroborate the authority's assessment may otherwise be needed to demonstrate that the funding is or is not compliant.

5. Ultimately, evidence is key. Whether a public authority has carried out a sufficient assessment should be carefully considered by both recipients and interested parties alike. Regardless of whether the financial assistance is determined to be a subsidy, a well-documented rationale (or lack thereof) that does not simply rely on unsubstantiated assumptions will be vital in both instances; a fact supported by both the updated Guidance of 4 August 2025 and the recent challenge commenced by Bristol Airport.

a. The updated Guidance now explicitly recommends that public authorities maintain clear documentation in support of their assessment, particularly where it has "determined that the assistance does not constitute a subsidy and is awarding the assistance in a highly competitive market with known challengers".^[1]

b. Even where a public authority recognises that the financial assistance constitutes a subsidy, evidence continues to be imperative – with the challenge commenced by Bristol Airport against the decision of the Welsh Ministers to grant a subsidy to Cardiff International Airport explicitly citing the Subsidy Advice Unit's criticisms in its report as evidence to make its claim that the subsidy was unlawful, noting that the report makes reference to the "high level" nature of the Welsh Government's assessment that should have been supported by "objective and verifiable evidence" to demonstrate the subsidy's compliance with the SCA.

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[1] Statutory Guidance for the United Kingdom Subsidy Control Regime, Fifth Edition (August 2025), Chapter 2, Footnote 19.