Subsidy Control: The Competition Appeal Tribunal judgment in the case of Bristol Airport v Welsh Ministers.

Introduction

The Competition Appeal Tribunal (the CAT) has issued its judgment in the case of Bristol Airport v Welsh Ministers [2026] CAT 30 (Bristol Airport).

While Bristol Airport is the fourth decided case in relation to Subsidy Control brought in the CAT, it is the first decided case where the public authority had considered the financial assistance was a subsidy.

Further, the CAT clarified the definition of restructuring and rescue subsidies under s19 and s20 of the Subsidy Control Act (the Act) identifying that a subsidy to an ailing or insolvent enterprise isn’t automatically a rescue or restructuring subsidy.

Finally, the court also considered the Respondent’s application of the subsidy control principles and rejected the Applicant’s challenge to the application of the principles.

Background

On 31 March 2025, Rebecca Evans MS, Cabinet Secretary for Economy, Energy & Planning and Rt Hon Mark Drakeford MS, Cabinet Secretary for Finance & Welsh Language took a decision to award a £205 million subsidy to Cardiff International Airport Limited (CIAL). CIAL is owned by the Welsh Government.

The decision to award the £205 million was taken by the Welsh Ministers to address equity issues of social and economic disadvantage in South Wales, to grow economic activity in the area and in connection with the airport, and to maximise benefits linked to the growing aviation and aerospace sectors (the Decision).

Within the assessment of the subsidy, the Welsh Ministers noted that CIAL airport had operating losses which required previous subsidy and investment packages from the Welsh Ministers, but considered that CIAL remained a going concern, rather than being an ailing or insolvent enterprise.

Grounds of challenge

Bristol Airport Limited (the Applicant) brought a challenge under section 70(1) of the Act for review of the Decision.

The Applicant appealed on four main grounds of errors of law/fact:

The Respondent failed to determine that CIAL was ‘ailing or insolvent’ within section 24 of the Act. (Ground 1)
The Respondent failed to correctly determine that the subsidy was one of ‘rescue’ / and or ‘restructuring’ and accordingly, failed to categorise it as such to comply with sections 19 and 20 of the Act. (Ground 2)
The Respondent failed to lawfully apply the subsidy control principles in Schedule 1 of the Act. (Ground 3)
The Respondent failed to lawfully apply the provisions of Section 28 of the Act (the consideration of subsidy to air carriers for the operation of air routes). (Ground 4)

Law – subsidy control

Under s2(1) of the Act, subsidy is defined as financial assistance which: is given from public resources by a public authority; confers an economic advantage on an enterprise; is specific; and has, or is capable of having, an effect on competition or investment within the UK (or trade and investment between the UK and another country or territory).

Section 12 of the Act establishes that a public authority must consider the subsidy control principles before giving a subsidy, equally it must not provide subsidy unless it is of the view that the subsidy is consistent with these principles. Schedule 1 of the Act sets out the principles.

Sections 19 and 20 of the Act create a prohibition on providing rescue and restructuring subsidies to ailing or insolvent enterprises.

Under section 24(1) of the Act, an enterprise is ailing or insolvent if: it would almost certainly go out of business in the short to medium term without subsidies; it is unable to pay its debts as they fall due; or the value of its assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.

Law – judicial review principles

The standard of review in subsidy control challenges brought under section 70 of the Act, as set out in Weis v Greater Manchester Combined Authority [2025] CAT 41 at [120] to [125], is that of ordinary judicial review principles:

Decision makers must take into consideration only relevant matters, and must exclude irrelevant matters.
Decision makers must take reasonable steps to acquaint themselves with the relevant information to make the decision correctly.
The rationality of a decision may be challenged on the basis that the decision is outside the range of reasonable decisions open to the decision-maker.
The rationality of a decision may also be challenged on the basis there is a demonstrable flaw in relationing which led to the decision. Examples include, relying significantly on an irrelevant consideration, or the reasoning relying on a serious error.

Additionally, the reasons for public law decisions must be intelligible and adequate, reasons challenges can only succeed if the challenging party has been substantially prejudiced by the failure to provide adequate reasons (South Buckinghamshire District Council v Porter (No. 2) [2004] 1 WLR 1953 at [36]).

The CAT’S judgment – Grounds 1 and 2

Prohibited subsidy

The CAT concluded that sections 19 and 20 only apply when the proposed purpose of a subsidy is (1) to rescue or restructure an enterprise, where (2) the enterprise is ‘ailing or insolvent’ as defined within the Act. This is a cumulative test, and both limbs must be met for the subsidy to be a prohibited subsidy.

The CAT concluded that CIAL could be awarded subsidy provided it was not ailing or insolvent and the subsidy was not for rescue or restructuring.

Was CIAL ailing or insolvent?

Considering the evidence available to it, the CAT concluded that CIAL was not ailing or insolvent. An EY report highlighted CIAL to be a going concern (on the basis of available liquidity support), which meant that the test of being ailing or insolvent was not satisfied. Therefore, the CAT did not require to consider sections 19 and 20 of the Act.

The Applicant also raised a reasons challenge to the Welsh Ministers’ determination that CIAL was not ‘ailing or insolvent’. The CAT found no breach of the duty to give reasons; the Welsh Ministers’ decision was grounded in the understanding CIAL was a going concern.

Conclusion on Grounds 1 and 2

The CAT concluded it could not rationally be said that the Welsh Ministers acted irrationally by concluding that CIAL was not ailing or insolvent. It had taken all reasonable steps to satisfy itself regarding the solvency of CIAL.

It followed that the Welsh Ministers did not provide unlawful subsidy by failing to comply with sections 19 and 20, the CAT opined that it would also have been open to the Welsh Ministers to provide subsidy without meeting sections 19 and 20, where the subsidy is given for a purpose other than rescue or restructuring.

The CAT’s judgment – Ground 3

A difference of opinion does not equal irrationality

The Applicant advanced extensive detail and challenge to the Welsh Minister’s assessment of the subsidy control principles. The CAT considered that, largely, these arguments highlighted a difference of opinion in the importance of factors that were considered, rather than identifying irrationality.

The CAT reaffirmed the wide margin of discretion that public authorities have in assessing value for money.

Specifically, in relation to the balancing exercise Principle G requires, the CAT concluded the principle requires an ‘inherently judgemental exercise which involves a multifactorial assessment, including many uncertain elements.’ While the Applicant criticised the Respondent’s approach to this exercise, the CAT again considered this amounted to a ‘disagreement with the conclusions’ of the Welsh Ministers. The CAT stressed that this fell ‘well short of showing irrationality.’

Conclusion on Ground 3

The CAT concluded that the applicant failed in all of its arguments under ground 3. To be successful, the Applicant was required to show that no reasonable authority in the position of the Respondent would have made the same decision, not to highlight that there was ‘room for disagreement about some of the many issues that feed into the Decision.’

The CAT’s judgment – Ground 4

A subsidy to an airport is not a subsidy to an air carrier

The Appellant argued that the subsidy to CIAL may flow down to airlines for the purpose of operating a service. Section 28 of the Act regulates the ways in which subsidy can be provided to air carriers. The CAT considered this to be an argument of form, rather than substance.

Section 28 applies only where a subsidy is made to an air carrier, the Decision expressly related to an airport, namely CIAL. On an ordinary interpretation of the Act, there was no subsidy to an aircraft. The CAT therefore concluded the Applicant’s argument failed under Ground 4.

Comment

The judgment provides clarification in relation to when a subsidy constitutes a restructuring or rescue subsidy to an ailing or insolvent enterprise, highlighting that subsidies can be given to ailing or insolvent enterprises where the subsidy is for an alternative purpose.

The judgment emphasises the wide margin of discretion afforded to public authorities in their assessment of the principles. The CAT may intervene where a public authority has acted irrationality, reaching a decision that no reasonable public authority could reach, but will not intervene solely where there is room for disagreement with parts of the authority’s decision.

The case is the fourth decision under the Act, all of which have seen the awarding public body vindicated.

If you have any questions about the topics raised in this article, please contact a member of our Subsidy Control team.

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