The High Court has today rejected judicial review challenges brought by British Gas, Scottish Power and E.ON against the UK Government’s decision to approve the transfer of Bulb to Octopus.

Defending these challenges required a multi-disciplinary team with deep expertise of the energy sector, subsidy control and public law. Hogan Lovells, working alongside the Government Legal Department, advised the UK Government in navigating complex and emerging issues in the context of a new and untested UK subsidy control regime.

This advice helped the UK Government secure a successful outcome in precedent-setting proceedings.

The Hogan Lovells team was led by London partners Charles Brasted (Deputy Practice Group Leader – Global Regulatory and IPMT; head of public law and policy) and Ciara Kennedy-Loest (subsidy control).

The judgment can be found here.

Background

Bulb in administration

Hogan Lovells has been advising the UK Government since Bulb entered administration in November 2021, involving their leading restructuring, subsidy control and energy teams. Throughout 2022, the Administrators Teneo appointed to run Bulb conducted a marketing process to evaluate how the Administration could come to an end in line with their statutory duties. The Administrators recommended selling Bulb’s business to Octopus. The Secretary of State (Grant Shapps MP) approved the proposed transaction and the provision of Government funding in connection with it.

The challenges

British Gas, Scottish Power and E.ON challenged the Secretary of State’s decisions. They argued, among other things, that the Government had misdirected itself as to the fairness of the marketing process run by the Administrators and that the Government had unlawfully granted subsidies.

Hogan Lovells worked alongside Department for Energy Security and Net Zero (DESNZ) officials, the Government Legal Department, in-house legal advisers at DESNZ,  and leading counsel in building the Government’s defence to the challenges.

The result

The High Court dismissed the challenges on the basis that:

• the claimants had unduly delayed in bringing their claims
• the Secretary of State was reasonably entitled to found his decisions on the basis of the administrators’ advice
• the SoS was reasonably entitled to conclude that the marketing process had been conducted, as a matter of fact, in an open, non-discriminatory and competitive way, such that Octopus’s bid for Bulb was a fair reflection of market value and any subsidy granted in the UK Government’s decision was proportionate.

The High Court’s judgment provides key insight as to the approach the Court will take in considering whether the UK Government or other public body has granted a lawful subsidy.