The proposed new regulations would not affect the rights and obligations of violations of EU state aid rules that would have been implemented before the end of the Brexit transition period, which would still apply in national courts, or legal actions taken before the end of the transition period. However, Mr Kotsonis said that the bill set out the prospect that, at the end of the transition period, the UK might not take into account all the conditions associated with existing decisions on the Commission`s authorisation of state aid. At the same time, the Commission and EU courts would retain certain powers over aid granted to the UK before the transition period expires as a result of the withdrawal agreement. Nevertheless, both sides must compromise: some of them, according to reports, are in the British government who want to avoid any major commitment to subsidies or state aid – and it is hard to imagine the EU agreeing to it. The United Kingdom, as an EU member state, is bound by state aid rules. They essentially prohibit Member States from granting aid in any form when they “distort or threaten to distort competition” by favouring certain enterprises. A new strategy paper from the Institute for Government sets out a “path to compromise” on state aid that could be “beneficial” to the UK and reveal the Brexit stalemate. Talks on a free trade agreement between the UK and the EU resumed in London this week, with state aid proved to be a major stumbling block. The rules are enforced by the European Commission and the Commission and Member States have adopted a mass of laws on secondary state aid on issues such as regional development. In practice, many issues relating to state aid are dealt with in the courts, either directly before the EU Court of Justice or through national courts, which ask questions about the law in the EU court. The UK remains subject to EU state aid rules during the transition period of the withdrawal agreement, which runs until the end of the year. Subsequently, if no other agreement has been reached in the ongoing trade negotiations, the UK will no longer be subject to EU state aid rules, while the European Commission will retain jurisdiction over EU aid cases opened before 31 December 2020 and it also has four years to investigate all other EU state aid to date.
Britain and the EU have yet to agree on an anti-subsidy regulation after Brexit. This is one of the main stumbling blocks in their current regime for negotiating a free trade agreement. It has also proved politically controversial because the UK government introduced legislation in September (the UK Internal Market Act) that would allow it to implement the provisions of the UK-EU withdrawal agreement that provide for the continuation of the application of EU state aid rules to trade between Northern Ireland and the EU (the most important interface being, of course, Northern Ireland`s border with the Republic of Ireland). repeal effectively.