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Boris Johnson's speech: What's next for State Aid and Competition?

03 February 2020
Jonathan Branton, Head of EU/Competition at DWF, comments on the issues regarding State Aid and Competition following Boris Johnson's speech this morning on EU negotiations: 
"Boris Johnson's statement today is an opening salvo in a long negotiating process, so there will clearly be movement in many ways before any landmark deal is done to secure the UK's future relationship with the EU.  Interestingly Mr. Johnson's statement provides reassurance that far from withdrawing from having no rules at all to regulate issues such as subsidies (State aid) and the environment, the UK will indeed have its own laws, determined by itself, which in some cases may be even tougher than those in the EU. 

"Positively, there appears to be scope for agreement to be struck between the UK and EU on State aid, with the UK's Competition and Markets Authority (CMA) administering a UK based and enforced regime which applies equally high standards to subsidy control as found in the EU.  This would address many of the UK's issues with the current regime, in particular that decisions can take a long time to be made, whilst also representing a taking back of control.
"The EU has set out its position for negotiation which includes an expectation that the EU's State aid rule will be applied. If no agreement can be achieved by the end of the transitional period, then the Northern Ireland Protocol states EU State aid rules shall apply to measures that "affect" trade between Northern Ireland and the EU. 

"Whatever is ultimately agreed on State aid, the UK will need some new domestic laws, whether similar in effect to the current EU rules or not, and have the same enforced in the UK by the CMA and the courts. Whether this will prove sufficient to satisfy the EU that there will not be a significant disruption of the level playing field remains to be seen. However, the EU may take comfort from the fact it would hardly make sense for the UK to continue the tough competition policy and enforcement for issues like merger control and cartels that it already has, only to allow the level playing field to be thwarted by completely unregulated State aid.   

"The statement today also observes that the State Aid EU rules are designed to be a leveller across the EU (even though there is a built in favouritism to the most under-developed areas).  The UK was and remains free to give out more than it has done. The EU does not cap the amount any Member State can give, for example as a portion of GDP, but just the rules within which aid is given on a case-by-case basis. That the UK has not given out more historically has been its choice. The EU might take some comfort from that too."

Further Reading