Judgment

Judgment of the Tribunal on the first application for the review of a subsidy decision under section 70 of the Subsidy Control Act 2022 (the “2022 Act”).

The Respondent, Durham County Council (the “Council”), is the unitary authority for the non-metropolitan county of Durham (“County Durham”). The Council is the sole “Waste Collection Authority” and sole “Waste Disposal Authority” for County Durham. The Council has various duties in relation to waste, namely:

1. The household waste collection duty. The Council is under a duty (pursuant to section 45(1)(a) of the Environmental Protection Act 1990) to arrange for the collection of household waste in County Durham. The Council may not charge for the collection of household waste, save in certain limited circumstances.
2. The commercial waste collection duty. The Council is under a duty to arrange for the collection of commercial waste if requested by the occupier of premises in its area to collect any commercial waste from the premises.

The Council does not collect any type of waste outside County Durham. So far as the collection and disposal of household and commercial waste is concerned:

1. The Council performs the function of the collection of household and commercial waste itself and does not outsource this function. The Council uses the same vehicles and the same employees to collect all household waste and the majority of commercial waste collected by it. The Council is generally not entitled to charge for the former service, but is obliged to charge for the latter.
2. The disposal of waste so collected is not done by the Council itself. These functions are carried out by third parties, and the Council pays for these services on a per tonne basis.

The Council charges for its commercial waste collection services as follows:

1. It seeks to recover the actual cost of employing staff that deal with only commercial waste.
2. It seeks to recover proportions of the actual cost of costs common to household and commercial waste (namely, staff, disposal costs and overheads) in accordance with a “formula” based upon an approximation of the total commercial waste as a proportion of the total (household plus commercial) waste.
3. Charges are set to individual businesses “based on bin size and number of lifts”. Charges are not set by reference to the weight of the refuse collected and are charged annually. The level of commercial charges is set annually by the Council and was last done on 31 March 2023.

The Applicant, the Durham Company Limited, trades under the name “Max Recycle”. Max Recycle is a provider of waste collection services in North East England, North West England, Southern Lakes and Southern Scotland. It is active in County Durham and competes with the Council in regard to the services provided by the Council as described above.

Max Recycle contended that a subsidy decision was made on 31 March 2023 and that, contrary to their duties under section 12 of the 2022 Act, the Council failed to consider the subsidy control principles before making that decision.

The Council accepted that if a subsidy decision was made on 31 March 2023, then they did not consider the subsidy control principles. However, the Council contended that there was no subsidy decision on 31 March 2023. Rather, the Council made what would have been a decision to put in place a subsidy scheme, had that decision been made when the 2022 Act was in force.

The main hearing took place on 3 and 4 July 2023 and was confined to three stages:

1. Whether the decision under review was capable in law of amounting to a “decision” within the meaning of section 70 of the 2022 Act.
2. Whether the decision under review constituted a “subsidy” within the meaning of section 70 of the 2022 Act.
3. Whether the subsidy control principles, to which section 12 of the 2022 Act refers, were satisfied.

Max Recycle contended that the Council was subsidising as between its household waste and commercial waste collection operations. The essence of the point was that the Council were permitting the household waste collection operation to subsidise their commercial waste collection operation, thereby permitting the Council to charge individual businesses at less than the rate that they would or could have charged had they run the commercial waste collection operation as an altogether separate, self-standing and independent operation. The point was one of economies of scale.

The Tribunal noted that it was not possible for Max Recycle to identify any person, other than the Council itself, implicated in the provision of waste collection or waste disposal services. As a result, the giver of the subsidy was the same person as the person on whom the subsidy was conferred. Accordingly, there was no “subsidy” within the meaning of s.2 of the 2022 Act: (i) the advantage did not involve subsidisation, because the “economic benefit” simply circulates within one entity; (ii) the natural reading of the definitions of “public authority” and “enterprise” mean that when a person has been designated a “public authority” that person cannot also be an enterprise in relation to the advantage under consideration; and (iii) the language of the 2022 Act supported the Tribunal’s conclusion.

The Tribunal noted that there is no use of the term “undertaking” in the 2022 Act, and so there was a clear difference between the EU and UK regimes.

The Tribunal concluded that there was a “decision” within the meaning of the 2022 Act: the Council made a series of decisions, culminating in the decision of 31 March 2023, which were “decisions” within the meaning of the 2022 Act.