Public subsidies

January 2007

The OFT and HM Treasury have issued guidance that assists providers of subsidies to assess the potential effects of these on competition.

Download new guidance (pdf 192 kb)
 
The Green Book requires that all costs and benefits of any new government policy programme or project be comprehensively but proportionately assessed. The guidance above explains how impacts on competition should be assessed when a government department or agency undertakes an appraisal of a subsidy, in line with Green Book guidance (which can be found at the HM Treasury website.

The introduction of this guidance as a supplement to the Green Book follows the OFT recommendations made in January 2006. The following reports provide the background to these recommendations:

Download Public subsidies (pdf 730 kb)
Download Annexe C (pdf 271 kb)

Publication of first stage report - see press release

Announcement of study - see press release

Download Case studies of public subsidies (239 kb)

State aid - Recommendations to the European Commission

The OFT presents to the European Commission proposals for reforming state aid controls, so that the impact on competition is taken into account.

Download European state aid control (pdf 894 kb)
Download Annexe C (pdf 102 kb)

The proposals set out how the state aid controls could be changed to introduce a more effects-based approach to state aid approval. This should reduce the risk that state aid that distorts competition significantly is permitted while less distorting aid is prohibited or subjected to lengthy scrutiny. The approach is based on the OFT's first stage of work (see below) and took into account the results of a set of case studies on actual UK subsidies. The OFT also recommended a formal advisory role for national competition authorities in helping the Commission to decide whether to approve state aid.

The work is to contribute to the Commission's reforms that were set out in its road map in June 2005.

The OFT welcomed the road map and responded to the high level proposals set out for consultation (OFT response (pdf 131 kb)) in October 2005.

See John Vickers' speech to the state aid conference

24 November 2004

The OFT completes stage one of its investigation into the effects of public subsidies on competition (see above). In this stage it has developed a framework for considering the competition effects of subsidies (full framework is provided at Annexe C of the report).

It has used this framework to assess the extent to which European and national rules and guidance limit the potential for distortions to arise. Although existing rules do prevent many distorting subsidies, there are gaps which would permit potentially distorting subsidies to be given without full consideration of their costs to competition.

Back to: Completed market studies