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State Aid

PR(09)53: Iceland asked to amend rules on unlimited state guarantees to the National Power Company (Landsvirkjun) and Reykjavík Energy (Orkuveita Reykjavíkur)


Today, the Authority has decided to propose to Iceland that it should take the appropriate measures to eliminate any state aid resulting from the unlimited state guarantees enjoyed by two publicly owned electricity utilities in Iceland; Landsvirkjun and Orkuveita Reykjavíkur.

Following a complaint, the Authority investigated a series of measures directed at publicly owned electricity undertakings active in Iceland. All the utilities benefited from tax exemptions and state guarantees. Since then, all tax exemptions have been abolished. Moreover, most of the utilities have become limited liability companies, and they are therefore no longer able to benefit from unlimited state guarantees.    

However, the utilities mentioned above still enjoy an unlimited state guarantee which is not compatible with the state aid rules of the EEA Agreement. The unlimited state guarantee places the utilities in a more favourable position compared to potential competitors. In an EEA-wide liberalised electricity sector, measures favouring certain competitors distort competition and have an effect on trade.      

This decision implies that, as from 1 January 2010, the utilities should no longer benefit from state guarantees which do not comply with the EEA Agreement.

For further information, please contact:       

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


Brussels, 8 July 2009

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