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State Aid

PR(08)80: The EFTA Surveillance Authority closes case concerning the Icelandic State’s participation in the Danice project


The Authority has concluded that the Icelandic State’s participation in the share capital increase in E-Farice in connection with the so-called Danice project has been made in accordance with the market economy investor principle. Therefore, the measure does not constitute state aid within the meaning of the EEA Agreement and the Authority has decided to close the case.

In November 2007, the Icelandic authorities notified the Icelandic State’s participation in a share capital increase in E-Farice (a limited company) necessary to carry out the so-called Danice project. The project refers to a telecommunications cable that should link Iceland with the rest of the EEA through Denmark. The Danice cable will be operated as one system with the existing Farice 1 cable, which links Iceland with the Faroe Islands and Scotland. According to the information provided by the Icelandic authorities, this will be a technically safe system with seamless redundant connectivity if failure to one cable occurs.

The Authority has based its assessment on the State Aid Guidelines on Public authorities’ holdings. According to these guidelines, no state aid is involved where fresh capital is contributed to an undertaking in circumstances that would be acceptable to a private investor operating under normal market conditions. Despite the increase in capital provided by the Icelandic State, its shareholding in the company decreases. This is so because the existing shareholder Og fjarskipti (Vodafone), as well as three new shareholders (the three Energy Companies Landsvirkjun, Orkuveita Reykjavíkur and Hitaveita Sudurnesja) participate in the capital increase with higher contributions than the Icelandic State.

With this decision, the Authority also closes a complaint from a competitor which concerns the alleged grant of alleged state aid to E-Farice in relation to the above-mentioned share capital increase.


For further information, please contact:

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

Ms. Maria J. Segura Catalán,
SeniorOfficer, Competition and State Aid Directorate,
Tel. (+32)(0)2 286 18 53.


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