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PR(03)12: The EFTA Surveillance Authority opens a formal investigation procedure with regard to the proposed State guarantee in favour of deCODE Genetics in relation to the establishment of a drug development department in Iceland

16.7.2003

In May 2002, the Icelandic Government notified the EFTA Surveillance Authority of the intention to give a guarantee to deCODE Genetics Inc. (US) in relation to a bond amounting to USD 200 million. The proceeds from the bond would be used by deCODE efðagreining ehf. (Iceland) to establish a new drug development department in Reykjavik. The proposed State aid should enable deCODE Genetics to finance several drug development programmes in parallel during a period of five years.

Subsequently, the Authority also received a complaint against the proposed State guarantee to deCODE Genetics.

Having assessed the information submitted to it, the Authority has doubts regarding the compatibility of the proposed State aid with the functioning of the EEA Agreement. Therefore, the Authority decided today to open the formal investigation procedure.

The main doubt stems from the fact that the proposed State aid is intended to be granted with respect to R&D projects which have not been clearly identified by the Icelandic authorities. The Authority also questions the exact number of R&D projects which could be regarded as eligible for State support. State aid, not linked to a specific R&D project, bears the risk of constituting operating aid.

Furthermore, the Authority considers that the information submitted by the Icelandic authorities has not always been sufficient to assess the compatibility of the proposed State aid with the State aid provisions of the EEA Agreement, in combination with the Authority’s guidelines on State aid for R&D (in particular as regards the determination of the eligible costs and, consequently, the permissible aid amount).

In addition, the Authority has doubts regarding the qualification of certain R&D activities as “industrial research” as claimed by the Icelandic authorities, as well as the distortive effects of the proposed aid.

The Authority will inform interested parties by publication of the decision in the EEA Section of the Official Journal of the European Union and the EEA Supplement thereto. Interested parties will be invited to submit their comments within one month of the date of such publication.

For further information, please contact Mr. Amund Utne on tel. +32 2 286 18 50.

16 July 2003




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