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PR(01)08: Restrictions on the acquisition of waterfalls in Norway questioned by the EFTA Surveillance Authority

1.10.2002

On 27 June 2001, the EFTA Surveillance Authority decided to send a letter of formal notice to Norway questioning its compliance with EEA rules on the freedom of establishment and the free movement of capital in respect of the acquisition of waterfalls for the production of energy.

According to the Norwegian Act No. 16 of 14 December 1917, the acquisition of waterfalls by other persons than the State is subject to a concession. In principle, concessions are granted for a limited period of time up to a maximum of 60 years. At the end of that period, undertakings are obliged to return all installations to the State without compensation. However, this rule does not apply to municipalities, counties or State-owned undertakings, as defined by the Norwegian Act, including limited liability companies where the State owns 2/3 or more. Such undertakings have the right to unlimited concessions.

In the Authority’s opinion, the very existence of the difference in treatment between Norwegian public undertakings which enjoy concessions for an unlimited period of time, and private undertakings which are only granted concessions for a maximum of 60 years and which must return all installations to the State without compensation at the end of the period, only favours undertakings of Norwegian nationality. This rule is contrary to freedom of establishment provided by Article 31 of the EEA Agreement. Moreover, the fact that the Norwegian Act allows situations where private undertakings may only, in some circumstances, run the concession for a limited period of time may deter investors from acquiring shares in those undertakings, contrary to the provisions on the free movement of capital (Article 40 of the EEA Agreement).

In the Authority’s opinion, Norway has not demonstrated that these restrictions are justified for objective reasons.  

The Norwegian Government has been invited to submit its observations to the content of the letter of formal notice within three months of its receipt. In light of these observations the Authority will consider whether to proceed with the case.

For further information please contact Mr. Peter Dyrberg (Director of Legal & Executive Affairs), telephone (32)-02-286-1830. 

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