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State Aid

State Aid: Formal investigation opened into the construction of a broadband network in Iceland



Today, the EFTA Surveillance Authority opened a formal investigation into potential state aid to Síminn for the construction of a broadband network in rural areas of Iceland.

The Authority began looking into this matter in 2011 following a complaint. The complainant alledged that Síminn had gained a considerable “first–mover” advantage on the broadband market, as well as being over-compensated for their construction services.

“The state aid rules do allow financial support from the EFTA States for the construction of high speed broadband networks in certain areas. However, such projects must be carefully designed, in particular by making use of a public tender procedure”, Ms Oda Helen Sletnes, president of the EFTA Surveillance Authority, said.

In 2008 the Icelandic authorities published a tender for the roll-out of broadband services to 1118 buildings. These were buildings that neither had, nor would receive, broadband services on market terms in the near future. Síminn was chosen as the supplier. After the construction phase, Síminn was to allow for wholesale access to other internet service providers (ISPs).

The scope of the project was later expanded to include 670 additional buildings. Due to the expansion the compensation was increased and the construction period prolonged. Furthermore, the payments were indexed on the basis of the exchange rate with a foreign currency instead of the general consumer price index, as was originally intended. 

After assessing the agreement and the tender documents, the Authority is not convinced that wholesale access for other ISPs was sufficiently guaranteed. Furthermore, the Icelandic authorities have not been able to explain the reasons behind the indexation of the payments to Síminn.

The Authority has therfore opened a case to investigate whether the agreement with Síminn entails state aid, and whether such aid may be considered to be justified under the EEA Agreement. The decision to open a formal investigation procedure is without prejudice to the final decision of the Authority.

The Authority will now call for further comments from the Icelandic authorities and third parties with an interest in the case. A non-confidential version of the Authority's Decision to open a formal investigation will shortly be published on the Authority's website and in the Official Journal of the European Union.

For further information, please contact:

Mr. Per Andreas Bjørgan
Director, Competition and State Aid Directorate
tel. (+32)(0)2 286 18 36

Other EEA Institutions

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