Hold the bus! Scotland’s first case under the Subsidy Control Act 2022

McGill’s Bus Service Limited (“McGill’s”) is seeking a review by the Competition Appeal Tribunal under the Subsidy Control Act 2022 of the Scottish Ministers’ decision to grant funding to five recipients through the Scottish Zero Emission Bus Challenge Fund subsidy scheme (the “ScotZEB” subsidy scheme). 

In the first appeal to the CAT dealing with an alleged subsidy in Scotland, the key issue to be examined is whether the third ‘phase’ of the ScotZEB subsidy scheme can be regarded as a permitted modification of a legacy scheme under section 81(3) of the Subsidy Control Act 2022 or whether it should be treated as a new subsidy scheme (and, indeed, one which is a subsidy scheme of particular interest).

ScotZEB was established in 2021 to support the rollout of zero emission buses and the associated charging and/or refuelling infrastructure needed to run them.

“Phase 1” of the ScotZEB scheme focussed on supporting operators to replace their diesel vehicles with zero-emission fleets, with awards of £62m granted to various operators, including McGill’s. 

“Phase 2” was intended to support “bus operators, manufacturers, local authorities, financiers and the energy sector to make the market for zero-emission vehicles and infrastructure commercially self-sustaining”. One award of £41.7 million was made to the Zenobe Energy consortium, of which McGill’s was a consortium member. 

“Phase 3” – the phase in question – focused on operators of registered bus services and awarded £45m to various operators. The Scottish Ministers have asserted that Phase 3 constituted a permitted modification of a legacy scheme in accordance with section 81 of the Subsidy Control Act. McGill’s is seeking a declarator that Phase 3 was not a permitted modification and should have been treated as the making of a new subsidy scheme, as well as a reduction of the Phase 3 decision.

The CAT’s notice of its receipt of an appeal was published on 9 July 2026 and summarises the issues to be reviewed: 1775/12/13/26 McGill's Bus Service Limited v The Scottish Ministers - Summary of Appeal | 09 Jul 2026

McGill’s appeal has caught the attention of the national press and no doubt there will be a great deal of interest as the matter progresses through the CAT. We’ll provide updates as things develop.

Related News, Insights & Events