Lights out for Bulb claim

05/03/25

The Court of Appeal has today given judgment in R (British Gas Trading and E.ON) v Secretary of State for Energy Security and Net Zero [2025] EWCA Civ 209.

The Appellants – British Gas and E.ON – challenged the decision of the then Secretary of State for Business Energy and Industrial Strategy, Grant Shapps, to approve the sale of Bulb Energy Limited (in Government-funded administration) to Octopus Energy Limited in November 2022; and to provide funding to enable the completion of the sale.

Bulb was an energy supply company placed in special administration in 2021. Its administration was funded by the Government. The sale of Bulb to Octopus was completed in December 2022, against the backdrop of stark increases in energy prices following the invasion of Ukraine. Under the terms of the deal, the Government provided loan funding to Octopus (which Octopus has since repaid). 

The central issue in the appeal was whether the funding was compatible with the subsidy control chapter of the EU-UK Trade and Cooperation Agreement (‘TCA’). The Court of Appeal held that the Divisional Court had been wrong to refuse permission for judicial review on grounds of delay, but went on to dismiss the appeal on its merits. The Court held that: 

1. The decision to grant subsidies was reviewable on conventional domestic law principles of judicial review, namely, rationality, procedural fairness and error of law ([89]-[90]). The fact that the subsidy control provisions in the TCA require that subsidies must be proportionate to their objective(s) did not imply that the Court is required to determine for itself whether a subsidy is proportionate. The court’s task is to review, on rationality grounds, whether the decision-maker was entitled to conclude that the subsidy was proportionate to its objective(s) ([67], [91]). 
2. The Divisional Court had not erred in holding that the decision to grant subsidy in this case was lawful. In particular, the Secretary of State was entitled to conclude that the sales process which had been carried out to find a buyer for Bulb was open, non-discriminatory, transparent and competitive, such that the process could properly be regarded as having achieved the “best bid available in the circumstances at the time” ([116], [147]).

The judgment is available here.