The Court of Appeal has dismissed the appeal in R (British Gas Trading and E.ON) v Secretary of State for Energy Security and Net Zero [2025] EWCA Civ 209.
Bulb, an energy supplier to 1.5 million domestic customers, went into special administration in 2021, requiring Government support. It was eventually sold to Octopus, another energy supplier. The sale was supported by a Government subsidy, granted against the backdrop of steep increases in energy prices following the invasion of Ukraine.
Claims were brought by British Gas, E.On and Scottish Power. They challenged the Government’s subsidisation of Bulb’s sale, alleging that it was unlawful under the EU-UK Trade and Cooperation Agreement (TCA), as implemented in domestic law.
The Divisional Court (Singh LJ and Foxton J) dismissed the claims, refusing permission for judicial review on grounds of delay, but also deciding that the claims would have failed on their substantive merits.
British Gas and E.On appealed. The Court of Appeal (Underhill LJ, Dingemans LJ and Zacaroli LJ) held that the Divisional Court had been wrong to refuse permission on grounds of delay, but dismissed the appeal on the substantive merits. Its key conclusions were as follows.
(1) In reviewing a public body’s decision that a subsidy is consistent with the ‘subsidy control principles’, the ‘standard of review’ is ‘rationality’ rather than ‘proportionality’. It is for the public body to decide whether the subsidy is proportionate. The Court’s function is to decide whether that decision was rational, or unlawful on any other conventional domestic grounds for judicial review.
(2) On the facts, the Secretary of State had been entitled to conclude that the subsidy was proportionate, because the process leading to Bulb’s sale had been open, transparent, non-discriminatory and competitive. He had therefore been entitled to treat Octopus’s bid (which required Government financial support) as representing the best terms available from the market at the time of the sale.
This is the first judgment of the Court of Appeal to address subsidy control in the UK post-Brexit.
Jason Coppel KC and Patrick Halliday acted for the Secretary of State for Energy Security and Net Zero, instructed by the Government Legal Department and Hogan Lovells International LLP.
