Divisional Court dismisses subsidy challenges to Bulb Energy transfer

31/03/23

The Divisional Court (Singh LJ and Foxton J) has this morning delivered judgment in three linked claims for judicial review brought by British Gas, E.On and Scottish Power in relation to the transfer of the business of Bulb Energy Limited (Bulb) to Octopus Energy Group Limited (Octopus).  Bulb was an energy supplier that was placed in energy supply company administration on 24 November 2021.  Its administration was funded by Government and conducted by Court-appointed Energy Administrators.

In February 2022, Bulb’s administrators commenced an M&A process for the sale of the business and assets of Bulb. The M&A Process was conducted by Lazard, a professional M&A advisor. At the outset of the M&A Process it was unclear whether government subsidy would be required in order to find a buyer for Bulb. The Secretary of State did not offer participants Government support or a particular level of Government support (as he considered that this would have inhibited Lazard’s ability to seek the most favourable terms available from the market).

In the event, the M&A process concluded with the Energy Administrators’ recommendation to progress the only binding offer received for Bulb’s business, from Octopus. This transaction could only proceed with financing support from the Secretary of State. It was this support which formed the subject of the challenge. In particular, the Claimants challenged two related decisions of the Secretary of State – the first was to provide Government funding to enable the sale of Bulb’s business and the second was to approve a statutory energy transfer scheme which, alongside a series of contracts between various parties, gave effect to that sale.

The Claimants contended that the Secretary of State’s decisions were unlawful both under conventional public law principles, and because they conferred unlawful subsidies contrary to the United Kingdom’s obligations under the EU-UK Trade and Cooperation Agreement (“TCA”).

The Court heard argument at a “rolled up” hearing, and its judgment addresses both the applications for permission to apply for judicial review and the substantive merits of the claim. In its judgment, the Court refused permission to apply for judicial review to all three claimants on all grounds. This was because the Claimants had unduly delayed bringing their claims and as such permission fell to be declined pursuant to section 31(6)(a) of the Senior Courts Act 1981.

The Court nonetheless went on to address the merits of the grounds on which judicial review was sought and concluded that:

a. Even if the Public Law grounds had been brought within time, permission would have been refused as the grounds raised were not reasonably arguable; and

b. That while the Court would (if they had been brought within time) have granted permission to proceed in respect of the Subsidy Control grounds under the TCA, those grounds in any event fell to be refused on their merits.

The judgment can be found here.