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PR(04)32: EFTA Surveillance Authority adopts decision with regard to the Icelandic Housing Financing Fund

11.8.2004

The EFTA Surveillance Authority has today adopted a decision to declare the Icelandic Housing Financing Fund (“HFF”) compatible with the State aid rules.  

The objective of the HFF is to promote, through the granting of loans, access to affordable house financing on equal conditions throughout the country, along with the special allocation of funds to increase the possibility of acquiring or renting housing on manageable terms.     

The Authority concluded that the HFF system constitutes unlawful aid on procedural grounds, but decided that the HFF system as such, and as modified by a series of legislative acts which entered into force on 1 July 2004, can be declared compatible with the State aid rules according to Article 59(2) of the EEA Agreement.

The derogation in Article 59(2) of the EEA Agreement permits Contracting Parties to the EEA Agreement to confer on undertakings, to which they entrust the operation of services of general economic interest, exclusive rights or other privileges which may hinder the application of the rules of the EEA Agreement, in particular those on competition and State aid. However, such restrictions may not exceed what is necessary to ensure the performance of the particular tasks assigned to the undertakings concerned and should not affect the development of trade to an extent contrary to the interests of the Contracting Parties.

In this respect the Authority concluded that the HFF was entrusted with services of general economic interest, given their social and universal dimension, distinguishable from the economic interest of other economic activities. The Authority was also of the view that the HFF’s costs to render the service of general economic interest were not overcompensated and that the State support was limited to what was necessary for the HFF to perform the specific service in question. Finally, the Authority was of the opinion that the HFF’s financing mechanism did not affect the development of trade to an extent contrary to the interests of the Contracting Parties.

 

For further information, please contact Mr. Amund Utne, Director, Competition and State aid, tel.: (+32)(0)2 286 18 50 or Mr. Michael Sanchez Rydelski, Deputy Director, Legal & Executive Affairs, tel.: (+32)(0)2 286 18 34.




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