Annual Report 2004
2004 witnessed the 10th anniversary of the entry into force of the EEA Agreement. For the citizens throughout Europe, however, the most significant event this year was the enlargement of the EU from 15 to 25 States, and the corresponding expansion of the European Economic Area to 28 States. Through the EEA Agreement the three EFTA States, Iceland, Liechtenstein and Norway, take part in the largest Single Market in the world, covering more than 455 million people.
The EFTA Surveillance Authority's challenges remain largely unchanged by the EEA enlargement. Together with the European Commission, the Authority continues to facilitate the smooth functioning of the Internal Market by ensuring that the EFTA States comply with their obligations under the EEA Agreement, and by monitoring compliance with competition rules by private undertakings.
Some of the cases examined by the Authority during 2004 deserve particular mention.
A decision by Norway to introduce a monopoly on the operation of gaming machines received wide public attention in 2004. In the Authority's view, such a monopoly constitutes an unlawful restriction of the freedom of establishment and the freedom to provide services. The Authority did not oppose measures aimed at curbing gambling. However, in the Authority's view the Norwegian Government did not show that its gaming policy was sufficiently systematic and consistent to justify restrictions on the basic freedoms provided for by the EEA Agreement. Moreover, the new legislation would have been disproportionate to the policy objectives Norway wished to achieve; gaming machine ownership as such would not appear to affect the problem of gambling addiction.
In Iceland, veterinary inspections carried out by the Authority have shown a need for continued efforts to ensure that facilities meet the food safety requirements set out in the EEA Agreement.
In 2004, the Authority decided to bring Liechtenstein before the EFTA Court because of residence requirements in its legislation governing the banking sector. The Authority believes that these measures are discriminatory and an unlawful restriction of the freedom of establishment. The EFTA Court has, on two previous occasions, addressed the impact of Liechtenstein residence requirements.
In the field of state aid two decisions to request recovery of unlawful aid have provoked particular attention in the EFTA States. One decision related to a tax scheme in favour of International Trading Companies in Iceland. At the time of writing, this decision had not been followed by appropriate action by Iceland. The Authority has, therefore, brought the matter before the EFTA Court. Another decision on recovery of aid concerned derogations from environmental taxes in Norway. The Norwegian Government and two private parties have appealed this Decision to the EFTA Court. Recovery of aid is fundamental if the state aid rules are to function. The Authority is awaiting the EFTA Court's rulings on these matters.
In 2004, the antitrust reform entered into force in the EU. Parallel rules for the EEA have been delayed due to the failure by the EFTA side to ensure parliamentary approval of the new rules in time. For the moment, the EU and EFTA pillars of the EEA are operating under different competition law regimes. Hence, ensuring equal conditions of competition for businesses in the two pillars is difficult.
Finally, the introduction of new EEA aviation security rules in 2004 means that, in the coming year, the Authority will commence airport inspections in the EFTA States.
The Authority will continue to contribute to a homogenous EEA that will benefit consumers and businesses alike.
Hannes Hafstein, President
Annex:
- Open cases within the Internal Market Affairs Directorate at the end of 2004;
- Cases within the Internal Market Affairs Directorate that were closed by the Authority during 2004
