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PR(98)21: Norway to recover State aid to the Arcus Group


The EFTA Surveillance Authority has concluded in a decision today that a Norwegian group of companies engaged in production and trade of alcoholic beverages, the Arcus Group, has received illegal State aid.  The Arcus Group is wholly owned by the Norwegian State and was established as a result of a demerger of a former State monopoly for production and trade in alcoholic beverages.  The Arcus Group, which took up its activities as of 1 January 1996, produces spirits and is active in imports, exports, wholesale and distribution of alcoholic beverages to retail outlets. 

At the start of operations, production facilities and other assets were transferred from the State monopoly to the Arcus Group. The Authority has found that the transferred assets were undervalued by an amount of NOK 264 million (ECU 30.5 million).  As a consequence, the State, which received shares in Arcus as a compensation for the handover of the assets, was undercompensated by the same amount. The transaction implies that the Arcus Group received State aid of the same order.

The Arcus Group also received a financial transfer of NOK 226 million (ECU 26 million) to cover restructuring costs and NOK 30 million (ECU 3.5 million) to cover costs related to a possible clean-up of contaminated ground at one of its production sites.

The restructuring provision has partly been used to cover personnel related restructuring measures related to the former monopoly's contractual obligations towards its employees and partly to cover justified start-up costs for the new companies.  This part of the provision does not constitute State aid.  On the other hand, NOK 100 million (ECU 11.5 million) of this provision have been recorded as extra-ordinary income for the Arcus Group and is found to constitute State aid.  Similarly, the unused part of the restructuring provision, which at the end of 1997 stood at NOK 57 million (ECU 6.5 million), is deemed to be State aid except for means used up to today's decision to cover personnel related measures as described.

As to the clean-up provision, the Authority has noted that it was, and still is highly uncertain when a requirement to clean up possibly might materialize and also what the costs of that would amount to.  In light of this, the Authority has concluded that the provision of NOK 30 million (ECU 3.5 million) in financial means constitute State aid.

Interest accrued on restructuring means not used for eligible restructuring purposes and on the clean-up provision also constitutes State aid.

The aid measures have not been notified to the Authority and have been put into effect without its approval.  As they have been found to be unlawful, they are to be recovered.  Recovery of aid related to the undervaluation of fixed assets may be in the form of the State receiving increased share capital.  Financial transfers constituting aid shall be paid back to the State, together with accrued interest.

The Norwegian Government is required to keep the Authority informed on a regular basis of its financial relations with Arcus, including statements of its dividend policies.

The Norwegian Government shall inform the Authority within two months of the measures taken to comply with the decision.

For further information please contact Mr. Knut Almestad on tel. 286 18 20 or Mr. Amund Utne on tel. 286 18 50.

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