The judgment in Weis v Greater Manchester Combined Authority, which is only the second case brought challenging the award of a subsidy under the UK’s Subsidy Control Act 2022 (SCA), has provided some welcome clarity on the question of when a subsidy decision is made and on the application of the commercial market operator (CMO) principle.

Under the SCA, subsidy control decisions of UK public authorities can be challenged by bringing an action before Competition Appeal Tribunal (CAT). The Weis judgment was issued on 24 July 2025 and provides helpful guidance on how the concept of economic advantage (which is a key criteria in determining whether there is in fact a subsidy) should be assessed and how the granting body may determine whether its intervention reflects terms the private sector would impose or obtain. 

The alleged subsidy

Mr Weis, a local property developer, challenged the Greater Manchester Combined Authority’s (GMCA) decision to approve two loans of £70.8m and £69.2m to SPVs (the Renaker SPVs) controlled by another property developer – the Renaker Group (the Renaker Loans). 

The Renaker Loans were made by the GMCA out of the Greater Manchester Housing Investment Loans Fund (GMHILF), which receives central government funding through the Department for Levelling Up, Housing and Communities. Mr Weis disputed the GMCA’s conclusion that these loans were on granted on commercial terms and therefore did not constitute a subsidy.

The CAT’s judgment

When was the subsidy decision made? 

Before assessing whether the loans constituted a subsidy, the CAT first considered the question of when the decision to grant the Renaker Loans was made. In particular, should the relevant date be: that of the “in principle” approval to grant the loans, subject to further due diligence and finalisation of their terms (in this case March 2024); or when the loan documentation was completed and the right to draw down the loans became enforceable (November 2024)?  

The CAT ruled that the decision was made in March 2024, on the basis that the clear and ordinary meaning of a “subsidy decision” under the SCA is a decision to give the financial assistance that is alleged to be a subsidy. This is also consistent with the position under EU State aid law. 

This may seem like a relatively minor point. However, challenges to “no subsidy given” decisions must be brought within one month from when the challenger “first knew or ought to have known” that such a decision had been made. Accordingly, understanding which decisions of a public body constitute a “subsidy decision” is of vital importance.   

Were the loans a subsidy, or were they granted on commercial terms in accordance with the CMO principle?  

The CAT’s standard of review

The key factor as to whether the loans constituted subsidies in Weis was whether the financial assistance given by way of the loans conferred an economic advantage on Renaker. In approaching this question, the CAT reiterated that its standard of review when assessing the lawfulness of such decisions is that applied in UK judicial review proceedings. 

This means that a considerable degree of discretion is given to the public body in question, and a full merits review of the decision will not be undertaken. Instead, the CAT examines whether there has been a manifest error or procedural unfairness, and/or whether the decision was otherwise irrational (which could include situations where a decision is made that runs counter to or lacks any supporting evidence). 

Application of the CMO principle to the Renaker Loans

As noted above, the key issue in this case was whether the Renaker Loans conferred an economic advantage on Renaker, in particular because their terms were more favourable than those which might reasonably have been expected to be available on the market to the Renaker SPVs.

Both the UK’s SCA (through the CMO principle) and the EU’s State aid regime (through the equivalent Market Economy Operator Principle) recognise that it is possible for a public body to contract as a normal commercial investor would. Whether a transaction is based on terms that would have been available on the market and provided by a commercial third party is always a question of fact, and there are a variety of ways in which a public body can establish that the CMO principle is satisfied. 

The SCA Statutory Guidance (the Guidance) recognises that this can include, for example, where financial assistance is given at the same time and on the same terms as a significant investment by a private operator (i.e. on a “pari passu” basis).  Alternatives could involve the use of benchmarking or profitability analysis (e.g. looking at the expected rate of return on the investment). In some cases, third-party expert input may be appropriate. 

Although the CAT acknowledged that the GMCA had a duty to have regard to the Guidance, and to apply it unless there was a good reason to depart from it, the CAT ruled that the fact that the GMCA had chosen not to conduct benchmarking or a profitability analysis, or to commission a third-party expert to assess whether the loans could constitute a subsidy, did not mean the GMCA had failed to have regard to the Guidance. While acknowledging that the GMCA “could have done more”, the CAT concluded that the approach adopted by the GMCA was rational and the interest rates under the loans were justified, and “by no means appear to be low and unduly favourable rates outside those that other commercial lenders would most probably be willing to lend at.”

In arriving at this conclusion, the CAT placed a lot of weight on the robustness of the process of awarding loans under the GMHILF, and the experience of the relevant advisors. It noted that, not only was an experienced investment team responsible for setting the interest rates under the loans, but the process also involved the loans being assessed by a gateway panel and credit committee, whose members included finance experts.

Additionally, the CAT pointed to the fact that the calculation of the interest rates took account of relevant EU State aid guidance, with the Renaker Loans having been priced by reference to the minimum EU State aid rate, plus a margin reflecting the risk associated with the specific loan under consideration. That said, the CAT also noted that whether the rate complied with EU State aid guidance (and/or equivalent UK Regulations) was not in itself determinative of whether it was on market terms for SCA purposes. 

Significantly, the CAT ruled that there was no obligation on the GMCA to make enquiries of potential lenders or market participants as to what finance and terms may have been available to the Renaker Group as an alternative to the Renaker Loans. The CAT also considered that, in assessing the creditworthiness of the Renaker SPVs, it was legitimate to look at their associated entities and/or the wider commercial group of which they formed part, and to take account of their reputation, track record and ability to deliver projects. The CAT further noted that the low loan-to-value ratio, together with the covenants and security, meant that, even in the event of a default, the GMCA would probably recover the full amount of the loans plus interest.  

Looking at matters in the round, and considering the margin of discretion accorded to the GMCA in this type of case, the CAT concluded that the GMCA appeared to have made “an entirely rational investment decision” and the process it followed in reaching its decision was “a perfectly rational one and not inherently defective.” 

It is also notable that the CAT does not appear to have considered that the public purpose justifications for the transaction (such as redeveloping brownfield sites, delivering homes, and local employment opportunities) called into question the Renaker Loans’ satisfaction of the CMO principle. 

Concluding thoughts 

The CAT’s decision brings some welcome clarity as to the practical steps a public body can take to assess whether the CMO principle has been satisfied – although this will of course turn on the specific facts of each transaction. Further, the wide margin of discretion accorded to public bodies, coupled with the limited timescales potential challengers must meet, suggest that challenges under the SCA will continue to be rare. 

It remains to be seen whether Mr Weis will appeal the CAT’s decision. If he chooses to do so, and permission to appeal is granted, subsidy control practitioners and public authorities alike should keep a close eye on how the situation develops.

Trainee Callum Gill contributed to this article.