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PR(97)01: EFTA Surveillance Authority decides on state aid for docking constructions for ships in Iceland

11.10.2002

The EFTA Surveillance Authority today decided not to raise objections to State aid which the Icelandic authorities have provided in support of an investment in a floating dock and other docking facilities for ship repairs in the harbour of Akureyri, Iceland. The case was examined as a result of complaints which the Authority received from interested parties.

In May 1994 the Akureyri Harbour decided to purchase a floating dock for ship repairs and undertake certain related investments in docking facilities for ships. The project was found to be eligible for a grant from the State Treasury under the Icelandic Harbour Act, and funding for the project has subsequently been pledged by the central authorities. In September 1995 the Akureyri Harbour decided to lease the facilities to the shipyard Slippstöðin Oddi hf.

The EFTA Surveillance Authority concluded that the terms of the lease between the Akureyri Harbour and the shipyard Slippstöðin Oddi hf. involve State aid to the shipyard estimated to amount to IKR 75 million (approx. ECU 0,9 million), which corresponds to 22,4 % (net) of the relevant investment costs.

As neither the Harbour Act (enacted in 1994), the investment project in the Akureyri harbour and the related State grant nor the lease with Slippstöðin Oddi hf. were notified to the EFTA Surveillance Authority, the aid was granted in breach of the obligation to notify in advance and await the Authority's approval of all new State aid.

The Authority has nevertheless assessed the aid in relation to the relevant State aid rules under the EEA Agreement, in particular the rules on aid to the shipbuilding industry and on regional aid. The Authority concluded that the conditions for investment aid to ship repair yards, as set out in Article 6 of Council Directive 90/684/EEC on aid to shipbuilding, were fulfilled in the present case. It also concluded that the level of the aid was within the relevant ceiling on regional aid in the respective area. as determined by the Authority's decision from August 1996 on the map of assisted areas in Iceland. Under these circumstances the Authority decided not to raise any objection to the aid.

In a separate decision the EFTA Surveillance Authority has examined certain provisions of the Icelandic Harbour Act relating to State grants for the financing of docking constructions for ships. The Authority considered that the legislation gives room for an application, which may involve State aid incompatible with the relevant rules under the EEA Agreement. It consequently decided to propose to the Icelandic Government, as an appropriate measure under the review procedure for existing State aid, that any financing under the Harbour Act of docking constructions for ships or related aid measures by municipal harbour authorities in Iceland be notified in advance to the EFTA Surveillance Authority. This will allow the Authority to examine such measures carefully on a case-by-case basis, to ensure their compatibility with the relevant State aid rules.

For further information please contact Gudlaugur Stefánsson (Competition and State Aid Directorate) on tel. 286.18.52 or Amund Utne on tel. 286.18.50.

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