Subsidy control: guidance

Commercial Market Operator Principle

A subsidy is where a public authority provides support to an enterprise that gives them an economic advantage, where equivalent support could not have been obtained on commercial terms. This means that  financial assistance which could reasonably be considered to have been given on the same terms as it could have been obtained on the market, will not confer an economic advantage and is unlikely to be a subsidy. This is known as the Commercial Market Operator (CMO) Principle.

Funding provided in accordance with the CMO Principle is not subject to the subsidy control regulations. However, Public authorities must obtain sufficient evidence to show that their decision to use the CMO Principle is in line with market terms; meaning it will not be considered more favourable than those that might be reasonably available on the market. For the purposes of the CMO principle, it is only a public authority’s commercial objectives that are relevant for the assessment. Any public policy objectives should not be included when assessing whether the financial assistance in question confers an economic advantage, on the basis that such objectives would not be applicable to private operators in the relevant market.

Further information can be found within the Statutory Guidance for the UK Subsidy Control Regime.