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PR(95)08: Aid to Norwegian producer of glass packaging rejected by EFTA Surveillance Authority

18.10.2002

 The EFTA Surveillance Authority decided today not to authorize aid in the form of an exemption for glass containers from a basic tax on non‑refillable beverage packaging, which would have benefited a Norwegian producer. This decision follows the Authority's decision of 13 April 1995 to open an investigation procedure, based on doubts regarding the compatibility of the proposed aid measure with the EEA Agreement. Comments received from interested parties have supported these concerns.

The Authority found the tax exemption for glass packaging to constitute state aid in the meaning of Article 61(1) EEA as it would primarily benefit the only Norwegian glass producer and the aid threatened to distort competition and trade as the company is facing competition from close substitutes ill other packaging materials within the EEA. The aid would primarily improve the financial performance of the producer and/or allow it.to hold a higher market share in the packaging market. As the aid would not be linked to initial investment, job creation or any other project limited in time it would constitute aid of all operating nature.

The Authority will normally not approve operating aid which relieves firms of costs resulting from the pollution or nuisance they cause. However, the Authority may make an exception to this principle in well‑defined circumstances which comprise i.a. the fields of waste management and relief from environmental taxes. Such aid must only compensate for extra production costs by comparison with traditional costs and may be authorized where it is necessary to off‑set losses in competitiveness particularly at the international level. The aid should be temporary and degressive, so as to provide an incentive to reduce pollution or to introduce a more efficient use of resources more quickly. Furthermore, the aid must not conflict with other provisions of the EEA Agreement and in particular those relating to the free movement of goods and services.

The Authority concluded that the aid, in the form proposed, would neither be temporary nor degressive. In addition, the Authority found that to exempt glass from the basic tax, Would lead to a different tax burden, as far as the basic tax is concerned, for recyclable glass containers as compared to other recyclable containers such as containers made of PET or metal. Some of those containers which would continue to be subject to the basic tax, such as aluminium calls, are widely used for non‑domestic products while those products exempt from the basic tax, would typically be used for domestic products. Thus tile proposed exemption would lead to imposing a tax burden oil certain imported products ill excess of that imposed on similar or competing domestic products. Therefore, the Authority could not conclude that the proposed tax exemption would result in a tax system which would be compatible with Article 14 EEA. On these grounds the aid could not be permitted under Article 61(3)(c) EEA.

Norway must therefore not put the proposed aid measure into effect.

For further information contact Morten Sandberg (Competion and State aid Directorate) on tel. 2861853 or Jorma Pihlatie on tel. 2861850.

 




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