Subsidy Control Act 2022: CAT Must Decide for Itself Whether a Measure Is a “Subsidy Decision” (Including CMO/Economic Advantage)

Case: Weis v Greater Manchester Combined Authority [2026] EWCA Civ 825
Court: Court of Appeal (Civil Division)
Date: 29 June 2026
Appeal from: Competition Appeal Tribunal, [2025] CAT 41
Judges: Nugee LJ, Zacaroli LJ, Miles LJ

1. Introduction

This appeal concerned two large development loans made by Greater Manchester Combined Authority (“GMCA”) from the Greater Manchester Housing Investment Loan Fund, a central-government-backed fund aimed at increasing housing supply. The loans (approximately £120m in total) were advanced to two special purpose vehicles to finance high-rise residential tower blocks in Manchester.

A competing property developer (the appellant) challenged the loans under the Subsidy Control Act 2022 (“the 2022 Act”), contending that the loans were an unlawful “subsidy” because they conferred an “economic advantage” by being on more favourable terms than the market would offer. The CAT dismissed the challenge, and this appeal followed.

The case is significant because it is the first to reach the Court of Appeal under the 2022 Act. The central legal issue was jurisdictional and methodological: what, precisely, must the CAT decide for itself under the 2022 Act, and what is confined to judicial review principles?

Key issue

  • Whether the CAT must itself determine whether the impugned measure is a “subsidy decision” (i.e., whether the measure is a “subsidy” at all), including the contested “economic advantage” limb under the commercial market operator (“CMO”) principle; or whether the CAT is confined to reviewing the public authority’s assessment on judicial review grounds.

2. Summary of the Judgment

The Court of Appeal dismissed the appeal. It held that:

  • The CAT’s jurisdiction under s.70(1) depends on there being a “subsidy decision”, defined by s.70(7) as “a decision to give a subsidy”. Therefore, the CAT must first determine for itself whether the decision was to “give a subsidy” within s.2.
  • This necessarily includes deciding whether the financial assistance conferred an “economic advantage” under s.2(1)(b), as qualified by s.3(2) (the CMO principle).
  • The requirement in s.70(5) to apply judicial review principles governs the CAT’s review of a subsidy decision (e.g., compliance with subsidy control principles), not the prior jurisdictional question whether there is a subsidy at all.
  • Even if the CAT were limited to judicial review on the subsidy/non-subsidy question, the tribunal would still have to determine whether the public authority’s conclusion fell within the range of rational outcomes; that “range” question is for the reviewing tribunal.

Because the appellant accepted there was no appeal against the CAT’s substantive conclusion that the loans satisfied the CMO principle (and so were not a subsidy), all remaining “process” grounds became irrelevant to the CAT’s jurisdiction and thus fell away.

3. Analysis

3.1 The statutory architecture and the new precedent

The Court’s core construction is anchored in the interaction between:

  • s.70(1): the CAT may review a “subsidy decision”;
  • s.70(7): “subsidy decision” means “a decision to give a subsidy”;
  • s.2(1): defines “subsidy” by four cumulative criteria;
  • s.3(2): excludes “economic advantage” unless terms are more favourable than reasonably expected market terms (CMO principle);
  • s.70(5): the CAT applies judicial review principles when determining the application.

The precedent established is that the CAT must decide the existence of a subsidy as a jurisdictional precondition. Judicial review principles do not displace that jurisdictional fact-finding function.

Practical consequence: A challenge can fail at the threshold if the CAT concludes—on its own assessment—that the measure is not a subsidy. In that event, alleged failures of process (e.g., failure to consider guidance; reliance on post-decision materials) may be immaterial to CAT relief because the CAT’s statutory remit is engaged only for “subsidy decisions”.

3.2 Precedents cited (and how they were used)

(a) R (G) v Barnet London Borough Council [2003] UKHL 57; [2004] 2 AC 208

The appellant relied on R (G) v Barnet London Borough Council for the proposition that a statutory duty implies a duty to assess a condition precedent (here, whether assistance is a subsidy) before acting. The Court accepted the commonsense point that authorities must consider whether assistance might be a subsidy so they know whether to apply the subsidy control principles. But it rejected the leap from “must consider” to “only reviewable for rationality”: Barnet addressed duties to assess needs under the Children Act 1989, not the allocation of decision-making competence between a tribunal and a public authority under a specific review statute.

(b) R v Monopolies and Mergers Commission ex parte South Yorkshire Transport Ltd [1993] 1 WLR 23

The appellant invoked Lord Mustill’s discussion of evaluative criteria admitting a range of reasonable outcomes, arguing that where a criterion is imprecise (here, market-comparable loan terms), the reviewing body should not substitute its view. The Court used the same passage to reach the opposite conclusion on the key question: even where there is a permissible “field of judgment”, determining whether the decision falls within that field is still a matter for the reviewing tribunal to decide.

(c) Edwards v. Bairstow [1956] A.C. 14

Cited via Lord Mustill’s analysis, Edwards v. Bairstow underpinned the concept that appellate/review bodies decide whether a conclusion is one no reasonable decision-maker could reach—again supporting that the reviewing body must itself judge whether the outcome is within bounds.

(d) R (British Gas Trading and others) v Secretary of State for Energy and Security [2025] EWCA Civ 209; [2025] 1 WLR 3342

The Court addressed its own earlier treatment of the market economy operator test in R (British Gas Trading and others) v Secretary of State for Energy and Security, acknowledging that market-operator questions can be “objective” yet allow a range of reasonable answers. Crucially, that does not prevent a tribunal from deciding whether the answer lies within the permissible range; it simply affects the intensity of review when the task is to review another body’s evaluative judgment. Here, however, the Court characterised the CAT’s role as jurisdictional: establishing whether there is a subsidy at all.

(e) R (Sky Blue Sports & Leisure Limited) v Coventry City Council [2014] EWHC 2089 (Admin); [2016] EWCA Civ 453

This case was used to test whether state-aid-type questions are appropriate for determination by a reviewing court. The Court observed that Hickinbottom J did in fact determine the market operator question, undermining the appellant’s attempt to confine such questions to rationality review of the authority’s assessment. The appellant’s distinction (EU law vs the 2022 Act) did not persuade the Court that methodology should differ.

(f) R (007 Stratford Taxis Limited) v Stratford on Avon District Council [2011] EWCA Civ 160; [2012] RTR 5 and Kenyon v Secretary of State for Housing, Communities and Local Government [2020] EWC Civ 302; [2021] Env LR 8

These authorities were relied upon for orthodox judicial review propositions: legality is judged by the material before the decision-maker; post hoc rationalisations and materials not before the decision-maker cannot cure unlawfulness. The Court accepted their relevance if the CAT’s task were confined to process review of the GMCA’s decision. But because the CAT must determine subsidy existence for itself, these principles were at most of “limited, evidential relevance” to that threshold inquiry.

(g) Thomas v Durham City Council [2026] CAT 47

Mentioned as casting doubt on the CAT’s conclusion about the date of decision in this case, but the Court expressly did not consider it (no submissions; not relied upon).

(h) The New Lottery Company Limited v The Gambling Commission [2026] CAT 14

Cited as suggesting limited substantive difference between the EU-era market economy operator test and the 2022 Act’s CMO principle, reinforcing the Court’s skepticism that methodology should change because the label has changed.

3.3 Legal reasoning: why the CAT must decide subsidy existence

The reasoning proceeds in two linked steps:

  1. Jurisdictional logic: The CAT only has power to review “subsidy decisions”. It cannot know whether it has jurisdiction unless it decides whether the impugned act is a decision to give a subsidy, which requires application of s.2 (including s.2(1)(b) and s.3(2)).
  2. Function split: Judicial review principles under s.70(5) govern the review of policy-laden subsidy decisions (e.g., proportionality to policy objective under the Schedule 1 principles). By contrast, the subsidy/non-subsidy question is characterised as an objective, market-comparator inquiry rather than a political/policy judgment reserved to elected officials.

The Court also rejected the appellant’s “statutory purpose” argument derived from the UK’s obligations under the Trade and Cooperation Agreement (“TCA”). An “effective” subsidy control system is not undermined by the CAT deciding the threshold subsidy question; indeed, that allocation supports effectiveness by enabling a specialist tribunal to decide the gateway issue.

3.4 Guidance and public authority duties: acknowledged but jurisdictionally limited

The Court drew a careful distinction between:

  • what a public authority ought to do: where there is a real possibility that assistance might be a subsidy, it should have regard to statutory guidance on subsidy determination (the Court indicated this in discussing s.79(6) and guidance under s.79(2)(a));
  • what the CAT must decide: regardless of whether the authority complied with guidance, if the authority disputes that it granted a subsidy, the CAT must decide that question for itself.

The Court’s approach means that a public authority’s failure to document CMO analysis, or failure to cite guidance, may not secure relief under the 2022 Act if the tribunal is satisfied that the terms were market-comparable. The Court noted, however, that non-2022-Act public law challenges (e.g., for breach of the authority’s own policies) would lie outside the CAT’s subsidy jurisdiction and would need to be pursued (if at all) separately.

3.5 Obiter on the RR Communication (reference/discount rates)

Although not determinative of the outcome, the Court held the CAT was wrong to interpret the RR Communication’s statement that (for certain SPVs/start-ups without credit history) the base rate should be increased by “at least 400 basis points (depending on the available collateral)” as permitting a reduction below 400 bps depending on collateral. The Court read “depending on collateral” as affecting how much above 400 bps might be required.

The Court also expressed criticisms of treating the SPVs’ creditworthiness as supported by their ultimate beneficial owner absent recourse (e.g., a guarantee), noting that the owner’s wealth would then be irrelevant to the SPVs’ creditworthiness under that methodology—again, without consequences in this appeal because the CAT’s non-subsidy conclusion stood.

3.6 Impact

  • Threshold focus in litigation: Parties should expect CAT proceedings to turn first on a substantive determination of whether the measure is a subsidy at all—especially the CMO/economic advantage limb.
  • Process challenges may not bite if no subsidy: Alleged failures to follow guidance, to place analyses before the formal decision-maker, or to avoid post hoc rationalisations may not yield relief in CAT proceedings if the CAT concludes there was no subsidy (and thus no “subsidy decision” to review under s.70).
  • Public authorities still face incentives to evidence CMO compliance: Even though the CAT can decide the issue for itself, robust contemporaneous evidence (pari passu, benchmarking, profitability analysis) remains practically important to withstand scrutiny.
  • Relationship with wider public law: The judgment hints at a boundary: failures to follow internal policies or certain funding conditions may be challengeable outside the 2022 Act framework (e.g., in the Administrative Court), but that is not for the CAT if there is no subsidy decision.

4. Complex Concepts Simplified

  • “Subsidy” under the 2022 Act: Financial assistance by a public authority is a subsidy only if all four conditions in s.2(1) are met, including that it confers an “economic advantage”.
  • Economic advantage & the CMO principle (s.3(2)): There is no “advantage” if the assistance is on terms no more favourable than those reasonably expected to be available on the market to that enterprise at the time.
  • Judicial review principles (s.70(5)): The CAT reviews the legality of a subsidy decision using the same principles the High Court would apply in judicial review (legality, rationality, etc.). But this judgment holds that the CAT must first determine whether there is a subsidy decision at all.
  • “Range of reasonable answers”: Some evaluative questions do not have a single mathematically correct answer. The Court’s key point is that deciding whether an answer falls within the rational range is itself a matter for the reviewing tribunal/court.
  • Pari passu / benchmarking / profitability analysis: These are common ways to evidence market equivalence: investing alongside private capital on the same terms (pari passu), comparing to similar market deals (benchmarking), or showing expected returns are consistent with market risk/return expectations (profitability analysis).

5. Conclusion

Weis v Greater Manchester Combined Authority establishes a foundational principle for the 2022 Act: the CAT must determine for itself whether the impugned measure is a “subsidy decision”, including whether it confers an economic advantage under the CMO principle. Only once that gateway is passed do the judicial review constraints in s.70(5) govern the tribunal’s scrutiny of the public authority’s subsidy decision-making (including compliance with subsidy control principles).

The decision recalibrates litigation strategy under the 2022 Act toward the substantive market-comparator question at the jurisdictional threshold, and it clarifies that process criticisms—however forceful—may not be outcome-determinative in the CAT if the assistance is found not to be a subsidy.