counterpoint and state aid law, Kiran Desai


The opinion expressed by the CEO of Stellantis on political interference is relatively rare. Prompting his point are the challenges that Jeep, one of Stellantis’ key brands, faces in setting up manufacturing in China. Huawei is said to have a complaint about political interference in its ability to do business in Europe by the UK and several EU member states. SoftBank may also have this view in light of UK interference in its initial plans to list its Arm subsidiary in the US. Beijing Kunlun Tech Co. Ltd., a Chinese company, would also likely have shared this view when the US government asked it to divest the Grindr app, three years after its acquisition.

Political interference in business is increasing. At the international level, this is usually based on national security reasons – a term not then defined in the legislation – linked to foreign ownership of national companies. Nationally, this is based on a diverse set of issues, although recently – as in the energy sector in particular, but also in the broader utility sector – interference has been due to regulatory failures recognized. The announcement by the French government to nationalize EDF, a major multi-energy producer, is a recent example.

Why aren’t companies more vocal against political interference? The reason could well be money. Corporations don’t like political interference, but they do like big money and other sweeteners that governments are willing to hand out. As an example, Britishvolt, the UK start-up that plans to build the UK’s first large-scale battery production plant, is said to have received £100m from the UK government.

State aid laws are the discipline that ensures governments don’t give aid to companies that help some but seem unfair to others in the same industry. The EU state aid regime is sophisticated and the European Commission often disciplines EU governments, ensuring a level playing field. The UK’s new regime under the Subsidy Control Act 2022 will need to be tested by adjudicative practice (Competition and Markets Authority advisory reports submitted to any licensing authority) and by the courts (under of judicial review). On the face of it, the UK regime is similar to the EU regime in terms of the principles under which state aid can legitimately be granted. How far the UK government will go to grant funds to encourage companies to invest in the UK on the argument that it is for the greater good is an ongoing topic of discussion among political commentators.


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