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State Aid

State Aid: No aid involved in lease of a NATO optical fibre in Iceland




The EFTA Surveillance Authority (ESA) concluded today that the Icelandic authorities' lease of an optical fibre to Vodafone is on market terms and consequently does not involve state aid.

ESA monitors  all state aid in the EFTA States to ensure that it is in line with EEA rules. The EFTA states are obligated to notify any planned state aid measures to ESA.

In April 2008, the Icelandic State Trading Centre organised a tender for the use and operation of two optical fibres. They had previously been reserved for defence purposes. The purpose of the tender was to lower the State's maintenance and operating costs, increase public broadband access and encourage competition in data transmission. Five offers were received from four independent undertakings. In February 2010, the Icelandic Defence Agency and Vodafone Iceland concluded a contract, based on the tender, for the use of one of the two fibres. At this time, other bidders were unwilling or unable to conclude agreements based on the tender from 2008 as conditions has changed considerably due to the financial crisis.

In 2010, ESA received a complaint alleging that the lease agreement involved unlawful state aid. In 2012, following a preliminary examination, ESA adopted a decision concluding that the lease, which was awarded following an open and well-publicised tender procedure, did not involve state aid. The decision was challenged before the EFTA Court, which annulled ESA's decision in January 2014.

In July 2014, ESA initiated an in-depth investigation, offering third parties with an interest in the case the opportunity to submit comments. At the same time, the Icelandic authorities were invited to provide any further relevant information.

Based on the information received, including an expert valuation of the lease right, ESA has concluded that the rental price in the lease agreement was not below market price. Accordingly, the measure does not involve state aid within the meaning of the EEA Agreement.

A non-confidential version of the decision to close the formal investigation will shortly be published on ESA's website and in the Official Journal of the European Union.


For further information, please contact:

Mr. Andreas Kjeldsberg Pihl
Press & Information Officer
tel. (+32)(0)2 286 18 66
mob. (+32)(0)492 900 187

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