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PR(05)38: A Norwegian proposal for regionally differentiated rates of social security contributions is rejected

22.11.2005

The EFTA Surveillance Authority adopted today a negative decision regarding a Norwegian proposal for regionally differentiated rates of social security contributions for undertakings in certain sectors. In April 2004, the Norwegian authorities notified the Authority of their intention to apply reduced rates of contributions to the national social insurance scheme paid by undertakings active in certain sectors and located in certain geographical areas ("differensiert arbeidsgiveravgift"). The Authority has concluded that the proposal can not be considered compatible with the state aid rules of the EEA Agreement.

Today’s decision does not affect the Authority’s decision from 2003, which approved a gradual phasing out of the geographical differentiation until 1 January 2007. Nor does it affect the EFTA States' decision that continuation of a zero rate in Northern Troms and Finnmark was compatible with the EEA Agreement due to the exceptional circumstances in that area.

On previous occasions the Authority has concluded that reduced social security contributions amount to state aid. This view has been confirmed by the EFTA Court. For a measure to be state aid in the meaning of the EEA Agreement, one condition is that trade between EEA States is affected. In the present case Norwegian authorities assert that the notified scheme would not involve state aid since it would only benefit sectors which are not exposed to intra-EEA trade. The Authority does not agree with this position.

The Authority has assessed the notified proposal on the basis of the current Guidelines for Regional Aid which expire at the end of 2006. The notified proposal covers around 200 specified economic sectors ranging from construction of motorways to post and telecommunications, banking and insurance and television services, to name a few examples. Many of the sectors covered by the notification are clearly open to trade and competition and undertakings active in these sectors face EEA wide competition. The notified scheme, therefore, is liable to affect trade between the EEA States, and, hence, it constitutes state aid. In line with prior decisions, the Authority considers that the proposal for regionally differentiated rates of social security contributions is incompatible with the EEA Agreement.

For further information, please contact:
Mr. Amund Utne, Director, Competition and State Aid Department
tel (+32)(0)2 286 18 51; or
Ms. Maria Segura, Officer, Competition and State Aid Department
tel. (+32)(0)2 286 18 53.

22 November 2005




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