# Official Journal C 277/10 N

| | ISSN 1725-2423 |
| --- | --- |
| Official Journal
  of the European Union | C 277 |
| | |
| English edition | Information and Notices | Volume 4810 November 2005 |

ISSN 1725-2423

Official Journal

of the European Union

C 277

English edition

Information and Notices

Volume 4810 November 2005

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| Notice No | Contents | page |
| --- | --- | --- |
| | I   Information |
| | Council |
| 2005/C 277/1 | Notification by Denmark concerning visa reciprocity | 1 |
| 2005/C 277/2 | Notification by Sweden concerning visa reciprocity | 1 |
| 2005/C 277/3 | Notification by the Republic of Austria concerning visa reciprocity | 2 |
| | Commission |
| 2005/C 277/4 | Euro exchange rates | 3 |
| 2005/C 277/5 | Summary communicated by Member States regarding State aid granted under Commission Regulation (EC) No 1/2004 of 23 December 2003 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of agricultural products | 4 |
| 2005/C 277/6 | Prior notification of a concentration (Case COMP/M.3997 — Sun Capital/Sara Lee) — Candidate case for simplified procedure (
  1
  ) | 11 |
| 2005/C 277/7 | Administrative Commission of the European Communities on social security for migrant workers — Rates for conversion of currencies pursuant to Council Regulation (EEC) No 574/72 | 12 |
| | EUROPEAN ECONOMIC AREA |
| | EFTA Surveillance Authority |
| 2005/C 277/8 | Invitation to submit comments pursuant to Article 1(2) in Part I of Protocol 3 to the Surveillance and Court Agreement on State aid regarding the Icelandic submarine cable project (Farice) | 14 |
| 2005/C 277/9 | State aid — Iceland — Notice by the EFTA Surveillance Authority to EFTA States, EU Member States and other interested parties — State aid measure 47901 (former SAM 030.02.006) — Proposed aid in the form of a State guarantee in favour of deCODE Genetics in relation to the establishment of a drug development department | 29 |
| | European Central Bank |
| 2005/C 277/0 | Recommendation of the European Central Bank of 26 October 2005 to the Council of the European Union on the external auditors of the Central Bank and Financial Services Authority of Ireland (ECB/2005/10) | 30 |

Notice No

Contents

page

I   Information

Council

2005/C 277/1

Notification by Denmark concerning visa reciprocity

1

2005/C 277/2

Notification by Sweden concerning visa reciprocity

1

2005/C 277/3

Notification by the Republic of Austria concerning visa reciprocity

2

Commission

2005/C 277/4

Euro exchange rates

3

2005/C 277/5

Summary communicated by Member States regarding State aid granted under Commission Regulation (EC) No 1/2004 of 23 December 2003 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of agricultural products

4

2005/C 277/6

Prior notification of a concentration (Case COMP/M.3997 — Sun Capital/Sara Lee) — Candidate case for simplified procedure (
  1
  )

1

11

2005/C 277/7

Administrative Commission of the European Communities on social security for migrant workers — Rates for conversion of currencies pursuant to Council Regulation (EEC) No 574/72

12

EUROPEAN ECONOMIC AREA

EFTA Surveillance Authority

2005/C 277/8

Invitation to submit comments pursuant to Article 1(2) in Part I of Protocol 3 to the Surveillance and Court Agreement on State aid regarding the Icelandic submarine cable project (Farice)

14

2005/C 277/9

State aid — Iceland — Notice by the EFTA Surveillance Authority to EFTA States, EU Member States and other interested parties — State aid measure 47901 (former SAM 030.02.006) — Proposed aid in the form of a State guarantee in favour of deCODE Genetics in relation to the establishment of a drug development department

29

European Central Bank

2005/C 277/0

Recommendation of the European Central Bank of 26 October 2005 to the Council of the European Union on the external auditors of the Central Bank and Financial Services Authority of Ireland (ECB/2005/10)

30

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| --- | --- |
| | (1)   Text with EEA relevance |

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(1)   Text with EEA relevance

1

| EN | |
| --- | --- |

EN

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I Information

Council

| 10.11.2005 | EN | Official Journal of the European Union | C 277/1 |
| --- | --- | --- | --- |

10.11.2005

EN

Official Journal of the European Union

C 277/1

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Notification by Denmark concerning visa reciprocity (1)

(2005/C 277/01)

In accordance with Article 2 of Council Regulation (EC) No 851/2005 of 2 June 2005 amending Regulation (EC) No 539/2001 listing the third countries whose nationals must be in possession of visas when crossing the external borders and those whose nationals are exempt from that requirement as regards the reciprocity mechanism, Denmark hereby informs you that Danish nationals are subject to a visa requirement when entering Australia.

A copy of this letter is being sent to the Directorate-General for Freedom, Security and Justice at the Commission.

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(1)  This notification is published in conformity with Article 2 of Council Regulation (EC) No 851/2005 of 2 June 2005 (OJ L 141, 4.6.2005, p. 3) amending Regulation (EC) No 539/2001 of 15 March 2001 (OJ L 81, 21.3.2001, p. 1).

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| 10.11.2005 | EN | Official Journal of the European Union | C 277/1 |
| --- | --- | --- | --- |

10.11.2005

EN

Official Journal of the European Union

C 277/1

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Notification by Sweden concerning visa reciprocity (1)

(2005/C 277/02)

In accordance with Article 2 of Council Regulation (EC) No 851/2005 of 2 June 2005 amending Regulation (EC) No 539/2001, I wish to inform you that as of today nationals of the Kingdom of Sweden are subject to a visa requirement in the following third countries listed in Annex II to Regulation (EC) No 539/2001:

| — | Australia, |
| --- | --- |

—

Australia,

| — | Brunei Darussalam (for a stay exceeding 14 days; in the case of a shorter stay, visa will be issued at entry point), |
| --- | --- |

—

Brunei Darussalam (for a stay exceeding 14 days; in the case of a shorter stay, visa will be issued at entry point),

| — | Venezuela (tourist card, issued by Venezuelan consular representation abroad, is required and has a validity of 90 days). |
| --- | --- |

—

Venezuela (tourist card, issued by Venezuelan consular representation abroad, is required and has a validity of 90 days).

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(1)  This notification is published in conformity with Article 2 of Council Regulation (EC) No 851/2005 of 2 June 2005 (OJ L 141, 4.6.2005, p. 3) amending Regulation (EC) No 539/2001 of 15 March 2001 (OJ L 81, 21.3.2001, p. 1).

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| 10.11.2005 | EN | Official Journal of the European Union | C 277/2 |
| --- | --- | --- | --- |

10.11.2005

EN

Official Journal of the European Union

C 277/2

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Notification by the Republic of Austria concerning visa reciprocity (1)

(2005/C 277/03)

In accordance with Council Regulation (EC) No 851/2005 of 2 June 2005 amending Regulation (EC) No 539/2001 listing the third countries whose nationals must be in possession of visas when crossing the external borders and those whose nationals are exempt from that requirement as regards the reciprocity mechanism (OJ L 141 of 4.6.2005), the Republic of Austria hereby informs you that Austrian nationals are subject to a visa requirement in the following third countries:

| — | Australia, |
| --- | --- |

—

Australia,

| — | Brazil (visa waiver for tourism purposes only, visa requirement for business trips), |
| --- | --- |

—

Brazil (visa waiver for tourism purposes only, visa requirement for business trips),

| — | Brunei (visa waiver for stays of up to 30 days only), |
| --- | --- |

—

Brunei (visa waiver for stays of up to 30 days only),

| — | Nicaragua (visa waiver for stays of up to one month only), |
| --- | --- |

—

Nicaragua (visa waiver for stays of up to one month only),

| — | Venezuela (visa waiver for stays of up to 60 days only). |
| --- | --- |

—

Venezuela (visa waiver for stays of up to 60 days only).

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(1)  This notification is published in conformity with Article 2 of Council Regulation (EC) No 851/2005 of 2 June 2005 (OJ L 141, 4.6.2005, p. 3) amending Regulation (EC) No 539/2001 of 15 March 2001 (OJ L 81, 21.3.2001, p. 1).

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Commission

| 10.11.2005 | EN | Official Journal of the European Union | C 277/3 |
| --- | --- | --- | --- |

10.11.2005

EN

Official Journal of the European Union

C 277/3

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Euro exchange rates (1)

9 November 2005

(2005/C 277/04)

1 euro=

| | Currency | Exchange rate |
| --- | --- | --- |
| USD | US dollar | 1,1738 |
| JPY | Japanese yen | 137,68 |
| DKK | Danish krone | 7,4613 |
| GBP | Pound sterling | 0,67530 |
| SEK | Swedish krona | 9,5645 |
| CHF | Swiss franc | 1,5431 |
| ISK | Iceland króna | 72,47 |
| NOK | Norwegian krone | 7,7485 |
| BGN | Bulgarian lev | 1,9557 |
| CYP | Cyprus pound | 0,5734 |
| CZK | Czech koruna | 29,278 |
| EEK | Estonian kroon | 15,6466 |
| HUF | Hungarian forint | 248,85 |
| LTL | Lithuanian litas | 3,4528 |
| LVL | Latvian lats | 0,6964 |
| MTL | Maltese lira | 0,4293 |
| PLN | Polish zloty | 3,9978 |
| RON | Romanian leu | 3,6660 |
| SIT | Slovenian tolar | 239,48 |
| SKK | Slovak koruna | 38,921 |
| TRY | Turkish lira | 1,5990 |
| AUD | Australian dollar | 1,5995 |
| CAD | Canadian dollar | 1,3951 |
| HKD | Hong Kong dollar | 9,1054 |
| NZD | New Zealand dollar | 1,7167 |
| SGD | Singapore dollar | 1,9968 |
| KRW | South Korean won | 1 227,91 |
| ZAR | South African rand | 7,9217 |
| CNY | Chinese yuan renminbi | 9,4910 |
| HRK | Croatian kuna | 7,3645 |
| IDR | Indonesian rupiah | 11 667,57 |
| MYR | Malaysian ringgit | 4,434 |
| PHP | Philippine peso | 64,242 |
| RUB | Russian rouble | 33,8630 |
| THB | Thai baht | 48,366 |

Currency

Exchange rate

USD

US dollar

1,1738

JPY

Japanese yen

137,68

DKK

Danish krone

7,4613

GBP

Pound sterling

0,67530

SEK

Swedish krona

9,5645

CHF

Swiss franc

1,5431

ISK

Iceland króna

72,47

NOK

Norwegian krone

7,7485

BGN

Bulgarian lev

1,9557

CYP

Cyprus pound

0,5734

CZK

Czech koruna

29,278

EEK

Estonian kroon

15,6466

HUF

Hungarian forint

248,85

LTL

Lithuanian litas

3,4528

LVL

Latvian lats

0,6964

MTL

Maltese lira

0,4293

PLN

Polish zloty

3,9978

RON

Romanian leu

3,6660

SIT

Slovenian tolar

239,48

SKK

Slovak koruna

38,921

TRY

Turkish lira

1,5990

AUD

Australian dollar

1,5995

CAD

Canadian dollar

1,3951

HKD

Hong Kong dollar

9,1054

NZD

New Zealand dollar

1,7167

SGD

Singapore dollar

1,9968

KRW

South Korean won

1 227,91

ZAR

South African rand

7,9217

CNY

Chinese yuan renminbi

9,4910

HRK

Croatian kuna

7,3645

IDR

Indonesian rupiah

11 667,57

MYR

Malaysian ringgit

4,434

PHP

Philippine peso

64,242

RUB

Russian rouble

33,8630

THB

Thai baht

48,366

---

(1)

Source: reference exchange rate published by the ECB.

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| 10.11.2005 | EN | Official Journal of the European Union | C 277/4 |
| --- | --- | --- | --- |

10.11.2005

EN

Official Journal of the European Union

C 277/4

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Summary communicated by Member States regarding State aid granted under Commission Regulation (EC) No 1/2004 of 23 December 2003 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of agricultural products

(2005/C 277/05)

Aid No: XA 63/05

Member State: France

Region: Provence-Alpes-Côte d'Azur (PACA)

Title of aid scheme: Aid for material investment aimed at preserving the environment.

Legal basis:

| — | Article 4 du règlement (CE) no 1/2004 de la Commission européenne |
| --- | --- |

—

Article 4 du règlement (CE) no 1/2004 de la Commission européenne

| — | Articles L 1511-1 et suivants du code général des collectivités territoriales |
| --- | --- |

—

Articles L 1511-1 et suivants du code général des collectivités territoriales

| — | Délibérations no 03-177 du 17/10/2003, no 03-250 du 5/12/2003 et no 04-44 du 24/06/2004 du Conseil régional de la région PACA |
| --- | --- |

—

Délibérations no 03-177 du 17/10/2003, no 03-250 du 5/12/2003 et no 04-44 du 24/06/2004 du Conseil régional de la région PACA

Annual expenditure planned under the scheme: EUR 400 000

Maximum aid intensity: The aid will take the form of a grant at a rate of 20-27,5 % of eligible investments before tax, depending on the nature of the beneficiaries and the areas concerned. There will be an aid ceiling of EUR 7 700 per beneficiary.

Date of implementation: As soon as the aid has been registered and receipt has been acknowledged by the European Commission.

Duration of scheme: Until 31.12.2006.

Purpose of the aid: This measure falls within the scope of Article 4(3)(b), (c) and (d) of Commission Regulation (EC) No 1/2004 of 23 December 2003. By promoting investments which encourage the use of environmentally-friendly farming practices, this programme meets the need to reconcile the maintenance of agricultural activities with quality improvements, food safety and the preservation of natural resources.

It will enable the following types of investment to be funded:

| — | winders for retrieving plastic mulch and greenhouse covers |
| --- | --- |

—

winders for retrieving plastic mulch and greenhouse covers

| — | waste compactors |
| --- | --- |

—

waste compactors

| — | vegetable-waste shredders |
| --- | --- |

—

vegetable-waste shredders

| — | windrow turners |
| --- | --- |

—

windrow turners

| — | stationary effluent–spreading systems |
| --- | --- |

—

stationary effluent–spreading systems

| — | equipment and investments required for the treatment or recycling of liquid waste |
| --- | --- |

—

equipment and investments required for the treatment or recycling of liquid waste

| — | non-chemical weed-control equipment |
| --- | --- |

—

non-chemical weed-control equipment

| — | new-generation sprayers with rinse-water tank and rate control |
| --- | --- |

—

new-generation sprayers with rinse-water tank and rate control

| — | soil disinfection using steam |
| --- | --- |

—

soil disinfection using steam

| — | equipment for retrieving pesticides and weedkillers from the bottom of sprayer tanks |
| --- | --- |

—

equipment for retrieving pesticides and weedkillers from the bottom of sprayer tanks

| — | collection-retrieval panels for plant-care products |
| --- | --- |

—

collection-retrieval panels for plant-care products

| — | enhanced security for storage of hazardous products |
| --- | --- |

—

enhanced security for storage of hazardous products

| — | supply of electricity to isolated buildings using photovoltaic or wind-energy batteries |
| --- | --- |

—

supply of electricity to isolated buildings using photovoltaic or wind-energy batteries

| — | compost spreaders |
| --- | --- |

—

compost spreaders

| — | liquid-manure tanks. |
| --- | --- |

—

liquid-manure tanks.

Sectors concerned: All enterprises subject to VAT which are engaged in production and managed by a person who operates chiefly as a farmer and is registered with the Mutualité sociale agricole (MSA) and Assurance maladie des exploitants agricoles (AMEXA) social- and health-insurance bodies.

Name and address of the granting authority:

| Monsieur le Président du Conseil régional de la région PACA |
| --- |
| Hôtel de région |
| 27, place Jules Guesde |
| FR-13481 Marseille Cedex 20 |

Monsieur le Président du Conseil régional de la région PACA

Hôtel de région

27, place Jules Guesde

FR-13481 Marseille Cedex 20

Internet address: www.cr-paca.fr

Aid No: XA 23/05

Member State: United Kingdom

Region: Cheshire (including the county of Cheshire and the boroughs of Halton and Warrington)

Title of aid scheme or name of company receiving an individual aid: Cheshire Rural Recovery Programme — P& M Grant Initiative (Revised)

Legal basis: Section 5 of the Regional Development Agencies Act 1998

Annual expenditure planned under the scheme or overall amount of individual aid granted to the company: Total allocation to the scheme during its lifetime will be GBP 190 000. This breaks down as:

Year 1: 2005/06 — GBP 70 000

Year 2: 2006/07 — GBP 70 000

Year 3: (1 April to 30 June 2007) — GBP 50 000

Maximum aid intensity: The maximum aid intensity will be 40 % with an additional ceiling of GBP 62 500 per individual grant.

Date of implementation:

Duration of scheme or individual aid award: The scheme will be open to new applicants until 31 December 2006, but payments (which are only made on completion of the work) will continue to be made until 30 June 2007.

Objective of aid: The scheme is intended to aid the long term development of the Cheshire rural economy. It will do this by helping agricultural businesses become more competitive, improve business efficiency, respond to consumer demand and add more value to their produce.

The aid will be paid in compliance with Article 7 of Commission Regulation (EC) No 1/2004. The eligible costs will be a) the construction, acquisition or improvement of immovable property, b) the purchase of new or used capital equipment and c) general costs, such as architects, engineers and consultation fees, feasibility studies and the acquisition of patents and licences (up to 12 % of the expenditure referred to in a) and b)).

Sector(s) concerned: The scheme provides grants for processing and marketing activities only, but is open to all types of Annex 1 product with the exception of forestry, fisheries and sugar products. Aids for the manufacture and marketing of products which imitate or substitute for milk and milk products are also excluded.

Name and address of the granting authority:

| Cheshire Rural Recovery |
| --- |
| Philip Leverhulme Centre |
| Reaseheath College |
| UK-Nantwich |
| CW5 6DF |

Cheshire Rural Recovery

Philip Leverhulme Centre

Reaseheath College

UK-Nantwich

CW5 6DF

Web-address: www.defra.gov.uk/farm/state-aid/setup/exist-exempt.htm.

Click on ‘Cheshire Rural Recovery Programme — P& M Grant Initiative’. Alternatively, you can go to http://www.defra.gov.uk/farm/state-aid/setup/schemes/cheshire-pandm.pdf.

Other information: This scheme was originally set up in accordance with Regulation (EC) No 1/2004 as aid XA 34/2004. This document amends XA 34/2004 by including the construction, acquisition and improvement of immovable property and general costs as eligible costs. The revised scheme replaces XA 34/2004 and the budget of XA 34/2004 is transferred to this scheme.

Aid No: XA 34/05

Member State: United Kingdom

Region: Northern Ireland

Title of Aid scheme or name of company receiving an individual aid: Financial Assistance for Young Farmers Scheme for Northern Ireland (also known as the New Entrants Scheme).

Legal basis: Financial Assistance for Young Farmers Scheme Order (Northern Ireland) 2005.

Annual expenditure planned under the scheme or overall amount of individual aid granted to the company:

| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Scheme participants | 100 | 200 | 300 | 0 | 0 | 0 | 0 | 0 |
| Totals | 100 | 300 | 600 | 600 | 600 | 500 | 400 | 300 |
| Average interest subsidy GBP | 6 800 | 6 800 | 6 800 | 6 800 | 6 800 | 6 800 | 6 800 | 6 800 |
| Budget GBP | 680 000 | 2 040 000 | 4 080 000 | 4 080 000 | 4 080 000 | 3 400 000 | 2 720 000 | 2 040 000 |

Year

1

2

3

4

5

6

7

8

Scheme participants

100

200

300

0

0

0

0

0

Totals

100

300

600

600

600

500

400

300

Average interest subsidy GBP

6 800

6 800

6 800

6 800

6 800

6 800

6 800

6 800

Budget GBP

680 000

2 040 000

4 080 000

4 080 000

4 080 000

3 400 000

2 720 000

2 040 000

Maximum aid intensity: The scheme allows for an interest rate subsidy on loans taken out by young farmers. The maximum amount of aid available is GBP 17 000 over 5 years. The interest rate for which subsidy is payable is capped at 3,5 % above the Bank of England Base Rate (approximately 2,5 % above the Base Rate of local lending institutions). Applicants who secure loans above this rate are liable for the excess interest payment.

Date of implementation: The scheme will open to new applicants on 6 June 2005

Duration of scheme or individual aid award: The scheme will run for three years from June 2005 to 31 May 2008. The maximum duration of subsidised interest payment is 5 years, so the final payments will be made no later than 31 May 2013. There is no restriction on the amount of loan or on the term of the loan, but the scheme will be closed by 31 May 2008, or sooner if all available funds have been committed. Since Regulation (EC) No 1/2004 only provides for exemption for aid schemes until 30 June 2007, further State aid cover will be sought for the remaining duration of the scheme nearer the time.

Objective of aid: Sectoral development. In line with Article 8 of Regulation (EC) No 1/2004, the eligible costs will be an interest rate subsidy on a loan for new entrant farmers under 40 years of age setting up as the head of holding for the first time. This will promote additional farm investment which will generate new activities or add value to farming in Northern Ireland.

Sector(s) concerned: The scheme applies to young farmers who will predominately be involved in production, although processing and marketing could make up part of the farm business. The scheme applies to all types of production.

Name and address of the granting authority.:

| Department of Agriculture and Rural Development |
| --- |
| Dundonald House |
| Upper Newtownards Road |
| UK-Belfast |
| BT4 3SB |

Department of Agriculture and Rural Development

Dundonald House

Upper Newtownards Road

UK-Belfast

BT4 3SB

Web-address: www.defra.gov.uk/farm/state-aid/setup/exist-exempt.htm.

Click on ‘Financial Assistance for Young Farmers Scheme for Northern Ireland’. Alternatively, you can go direct to www.defra.gov.uk/farm/state-aid/setup/schemes/financialassist-farmersni.pdf.

Aid No: XA 43/05

Member State: United Kingdom

Region: Kent Downs Area of Outstanding Natural Beauty

Title of Aid scheme or name of company receiving an individual aid: The Kent Downs Rural Advice Service

Legal basis: Sections 84 and 85 of The Countryside and Rights of Way Act 2000

Annual expenditure planned under the scheme or overall amount of individual aid granted to the company: 1 September 2005 — 31 July 2006: GBP 15 000

Maximum aid intensity: 100 % payments will last for one year only, but there may be a possibility that the time limit may be extended due to unforeseen circumstances. This will not go beyond 30 September 2006 and will not result in an increase of expenditure.

Date of implementation:

Duration of scheme or individual aid award: The scheme will close to new applicants on 31 July. Aid will be paid until 30 September 2006.

Objective of aid: Sectoral Development

The objective of the aid is to provide timely advice which will lead to diversification changes that are financially viable, environmentally sound and acceptable in planning terms. The aid is being implemented under Article 14 of Regulation (EC) No 1/2004. The eligible costs are consultancy services.

Sector(s) concerned: Farmers and land based rural businesses are defined as those growing and harvesting combinable crops, field vegetables, salad crops, ornamentals (including nursery stock, flowers and bulbs), herbage seeds and turf, beef sheep, pigs, dairy products, poultry and eggs, serviced tourist accommodation on farms (bed and breakfast) self catering tourist accommodation, provision of horse livery and riding stables or farm-based visitor attractions.

Name and address of the granting authority:

| Kent County Council |
| --- |
| Invicta House |
| County Hall |
| Maidstone |
| UK-Kent ME 14 1XX |

Kent County Council

Invicta House

County Hall

Maidstone

UK-Kent ME 14 1XX

The organisation operating the scheme is

| The Kent Downs Rural Advice Service (KDAS) |
| --- |
| Kent Downs Unit |
| West Barn |
| Penstock Hall Farm |
| Canterbury Road |
| East Brabourne |
| Ashford |
| UK-Kent TN25 5LL |

The Kent Downs Rural Advice Service (KDAS)

Kent Downs Unit

West Barn

Penstock Hall Farm

Canterbury Road

East Brabourne

Ashford

UK-Kent TN25 5LL

Web address: http://www.defra.gov.uk/farm/state-aid/setup/exist-exempt.htm.

Click on The Kent Downs Rural Advice Service. Alternatively you can go direct to www.defra.gov.uk/farm/state-aid/setup/schemes (the Kent Downs Rural Advice Service

Other information: The Scheme will be made available to all land managers, not just farmers. Aid for non-agricultural activities will be paid with regard to Commission Regulation (EC) No 69/2001 on de minimis aid. Aid will also be available in connection with diversification from farming into non-agricultural activities.

Beneficiaries will not be able to choose the service provider. The service provider will be The Kent Downs Rural Advice Service (KDAS) who will provide consultants who were selected using a tendering exercise.

Aid No: XA 44/05

Member State: France

Title of aid scheme: Aid for technical support for projects concerning the raising of sheep and cattle for slaughter.

Legal basis: Code rural, partie législative: articles L 621-1 à 621-11

Arrêté du ministre de l'agriculture, de l'alimentation, de la pêche et de la ruralité du 25 mai 2005

Annual expenditure planned under the scheme: The planned budget for the aid in 2005 is EUR 1 500 000.

Provided funding is available, the same budget will be made available for the next two years and for subsequent years if required up to a maximum of five years.

Maximum aid intensity: Up to 40 % of eligible expenditure, up to the following maximum amounts:

EUR 100 000 per beneficiary over three years,

EUR 100 000 per programme presented by a producer organisation or EUR 150 000 per producer organisation where a programme is presented by more than one producer organisation.

Implementation date: The scheme will be implemented from the date of acknowledgment of receipt by the European Commission, subject to the funding being made available and publication of the scheme on the OFIVAL website.

Duration of the scheme: Subject to the funding being made available, three years, extended if required to five years.

Purpose of aid: The scheme is being implemented under Articles 13 and 14 of Commission Regulation (EC) No 1/2004 of 23 December 2003.

It has three main aims:

to identify and characterise markets for quality products in specific niches with sales potential,

to reinforce the contractual basis of relations between livestock farmers and other operators in the beef and sheepmeat sector, including slaughterhouses, with a view to increasing the value of production and adapting to changing demand,

to ensure the technical support necessary for adapting production to identified demand.

The scheme provides funding for technical support and consultants (studies, expenditure on implementing and monitoring projects) to ensure that projects presented by the sector that meet the above aims are implemented efficiently, the cost of quality control and auditing, promotional and information measures and market studies and surveys.

Economic sectors concerned: Stockfarming sector — sheep and cattle for slaughter.

Name and address of granting authority:

| Office national interprofessionnel des viandes, de l'élevage et de l'aviculture (OFIVAL), 80, avenue des terroirs de France |
| --- |
| FR-75607 Paris Cedex 12 |

Office national interprofessionnel des viandes, de l'élevage et de l'aviculture (OFIVAL), 80, avenue des terroirs de France

FR-75607 Paris Cedex 12

Website: www.legifrance.gouv.fr

heading ‘droit français’, ‘les autres textes législatifs’, search ‘JO n
  o
  124 du 29 mai 2005 texte n
  o
  72’

www.ofival.fr

Aid No: XA 46/05

Member State: United Kingdom

Region: North West England

Name of company receiving individual aid: Homebred Limited

Legal basis: Section 5 of the Regional Development Agencies Act 1998.

Annual expenditure planned under the scheme or overall amount of individual aid granted to the company: 1.8.2005 — 31.3.2006: GBP 20 000

1.4.2006 — 31.7.2006: GBP 45 000

Maximum aid intensity: 100 % payments will last for one year only, but there may be a possibility that the time limit may be extended due to unforeseen circumstances. This will not go beyond March 2007 and will not result in an increase of expenditure.

Date of implementation: The first payment will be made after 1 August 2005. (NB see Maximum Aid Intensity)

Duration of individual aid award: Until 30.6.2006.

Objective of aid: Sectoral and regional Development

The Northwest Regional Development Agency is providing funding to establish a regional red meat marketing co-operative. This should return additional value and opportunities through a more streamlined supply chain linking farming production more effectively to the market. This should lead to a more sustainable future.

The aid comprises

Aid for the formation of a producer group in line with Article 10 of Regulation (EC) No 1/2004. The eligible costs will be administrative costs, legal and administrative fees.

Sector(s) concerned: Production and marketing of red meat.

Name and address of the granting authority:

| Northwest Regional Development Agency |
| --- |
| Renaissance House |
| Centre Park |
| UK-Warrington |
| WA1 1HA |

Northwest Regional Development Agency

Renaissance House

Centre Park

UK-Warrington

WA1 1HA

Web address: http://www.defra.gov.uk/farm/state-aid/setup/exist-exempt.htm.

Click on ‘Homebred Programme’. Alternatively you can go direct to www.defra.gov.uk/farm/state-aid/setup/schemes/(Homebred Programme.pdf)

Aid No: XA 49/05

Member State: Greece

Region: All regions

Title of aid scheme or name of company receiving an individual aid: Investment projects concerning the production and processing of agricultural products and falling under Law 3299/2004 on incentives for private investment in economic development and regional convergence.

Legal basis: α) Νόμος 3299/2004 ‘Κίνητρα Ιδιωτικών επενδύσεων για την Οικονομική Ανάπτυξη και την Περιφερειακή Σύγκλιση’ και β) Κοινή Υπουργική Απόφαση των Υπουργών Οικονομίας και Οικονομικών και Αγροτικής Ανάπτυξης και Τροφίμων 24935/30.6.2005 (υπό δημοσίευση)

Annual expenditure planned under the scheme or overall amount of individual aid granted to the company: Annual amount of budget appropriations (commitments): EUR 150 million.

Estimated annual tax loss: EUR 20 million (the tax-free reserve fund can be set up within ten years of carrying out the investment)

Maximum aid intensity: In accordance with the maximum limits laid down in Regulation (EC) No 1/2004 (Articles 4 and 7).

Date of implementation: Once the Joint Ministerial Decision has been published in the Government Gazette.

Duration of scheme or individual aid award: Duration of scheme: until 31.12.2006.

Objective of aid: The aid is granted under Article 4 (Investments in agricultural holdings) and Article 7 (Investments in processing and marketing) of Regulation (EC) No 1/2004.

Eligible expenditure includes: (a) the construction, purchase or improvement of real estate, (b) the purchase or financial leasing of equipment, up to the purchase value of the asset, (c) general intangible expenditure on amortisable assets (expenditure on importation, development, technology transfer, acquisition of patents and licences, studies relating to the investment project and architects', engineers' and consultants' fees) up 8 % of the total cost of the investment plan.

Sector(s) concerned: The aid scheme concerns the production and processing of both livestock and plant production, on condition that it is compatible with Community legislation and, more specifically, restrictions under the common organisation of the market.

Name and address of the granting authority:

| Ministry of Economy and Finance |
| --- |
| Nikis 5, |
| EL-10180, Athens |

Ministry of Economy and Finance

Nikis 5,

EL-10180, Athens

| Ministry of Development |
| --- |
| Mesogion 119 |
| EL-10192, Athens |

Ministry of Development

Mesogion 119

EL-10192, Athens

Planning and Development Directorates of the 13 regions

Web address: http://www.mnec.gr/anaptyksiakos_nomos_3299_2004_main.aspx

Other information: The Joint Ministerial Decision of the Ministers of Economy and Finance and Rural Development and Food No 24935/30-7-2005 will also be available on the web site once it has been published in the Government Gazette, at which time it will enter into force.

Aid No: XA 53/05

Member State: France

Region: Picardy

Title of aid scheme: Aid for investment in agricultural diversification

Legal basis:

| — | Article 4 du règlement (CE) no 1/2004 du 23 décembre 2003 de la Commission |
| --- | --- |

—

Article 4 du règlement (CE) no 1/2004 du 23 décembre 2003 de la Commission

| — | Article L. 1511-1 et L. 1511-2 du code général des collectivités territoriales |
| --- | --- |

—

Article L. 1511-1 et L. 1511-2 du code général des collectivités territoriales

| — | Délibération no ECO 103-2 de la commission permanente du conseil régional du 29 octobre 2004 |
| --- | --- |

—

Délibération no ECO 103-2 de la commission permanente du conseil régional du 29 octobre 2004

Annual expenditure planned under the scheme: EUR 300 000

Maximum aid intensity:

| — | 25 % in general cases |
| --- | --- |

—

25 % in general cases

| — | 35 % for farmers who have been in farming for less than 5 years. |
| --- | --- |

—

35 % for farmers who have been in farming for less than 5 years.

Ceiling for eligible investment: EUR 40 000 per project, or ceilings of EUR 10 000 in general cases and EUR 14 000 for farmers in farming for less than 5 years.

These ceilings can be increased to 40 % and the ceilings for eligible investment doubled where there are agreements with other authorities (départements, joint municipal structures, municipalities, etc.) to support projects in particular geographical areas (e.g. farming close to urban areas).

For associations with several members that are farmers, the ceilings for eligible investment — and thus the corresponding maximum aid rates as indicated above — can be doubled.

Implementation date: After the receipt advice slip has been received from the European Commission.

Duration of scheme: Indefinite, subject to budget availability

Purpose of the aid: To encourage the establishment of production diversification workshops in Picardy, to make farms more profitable.

Economic sectors concerned: All sectors involved in producing, processing and marketing agricultural produce.

The aid will cover all farms seeking to invest in diversification projects for processing and marketing agricultural produce, the development of services for local people and bodies, farm accommodation schemes, launching or developing new products and developing horse riding activities.

Name and address of granting authority:

| Conseil régional de Picardie |
| --- |
| 11, mail Albert 1er |
| BP 2616 |
| FR-80026 Amiens cedex 1 |

Conseil régional de Picardie

11, mail Albert 1er

BP 2616

FR-80026 Amiens cedex 1

Website: http://www.picardie.fr/fr/page.cfm?pageref=guidedesaidagri

Aid No: XA 54/05

Member State: France

Region: Limousin.

Title of aid scheme: Aid for the maintenance of organic farming certification.

Legal basis:

| — | Article 13 du règlement (CE) no 1/2004 du 23 décembre 2003 de la Commission |
| --- | --- |

—

Article 13 du règlement (CE) no 1/2004 du 23 décembre 2003 de la Commission

| — | Articles L. 1511-1 et L. 1511-2 du code général des collectivités territoriales |
| --- | --- |

—

Articles L. 1511-1 et L. 1511-2 du code général des collectivités territoriales

| — | Décision du Conseil régional du Limousin du 23 juin 2005 |
| --- | --- |

—

Décision du Conseil régional du Limousin du 23 juin 2005

Annual expenditure planned under the scheme: EUR 85 000.

Maximum aid intensity: Non-tangible investments. The Regional Council will bear part of the cost of certification, i.e. a subsidy of 80 % of the unit cost, excluding tax, of certification, between EUR 200 and EUR 800 for 2005.

Implementation date: As soon as acknowledgement of receipt has been received from the European Commission

Duration of scheme: Up to 31.12.2005

Purpose of the aid: Council Regulation (EEC) No 2092/91 requires all operators in the organic farming sector to have themselves inspected and certified by certification bodies authorised by the Ministry of Agriculture under standard EN 45011. The purpose of the aid is to support the development of organic farming by bearing the costs of farm certification

Sector(s) concerned: All organic farmers whose farm is situated in Limousin who notified their organic farming activity (1) or conversion in 2005 and who were not receiving conversion aid (CTE-CAB (2) or CAD (3)-CAB) on 1 July 2005 or whose combined CTE or CAD/CAB aid (over the five years) (4) and certification aid applied for is less than EUR 15 000.

Name and address of granting authority:

| Monsieur le Président du Conseil Régional du Limousin. |
| --- |
| 27 boulevard de la Corderie |
| FR-87031 Limoges cedex |

Monsieur le Président du Conseil Régional du Limousin.

27 boulevard de la Corderie

FR-87031 Limoges cedex

Internet address: http://www.cr-limousin.fr rubrique ‘guide des aides’

Aid No: XA 56/05

Member State: Federal Republic of Germany

Region: Bavaria

Title of aid scheme or name of company receiving individual aid: Florapharm Pflanzliche Naturprodukte GmbH, DE-96110 Scheßlitz

Legal basis: Richtlinie zur Durchführung der bayerischen regionalen Förderungsprogramme für die gewerbliche Wirtschaft (veröffentlicht im Allgemeinen Ministerialblatt AllMBl. 2002 S. 168; Beihilfe Nr. XS 29/02)

Im Rahmen des Programms können Investitionen von KMU branchenunabhängig und ohne Beschränkung auf bestimmte Produkte gefördert werden. Zweck dieser Beihilferegelungen ist die Stärkung der Wettbewerbs- und Anpassungsfähigkeit der Wirtschaft und die Schaffung bzw. Sicherung von Arbeitsplätzen insbesondere in strukturschwachen und ländlichen Räumen. Gefördert werden Investitionen von förderungswürdigen Unternehmen der Industrie, des Handwerks, des Handels, des Fremdenverkehrsgewerbes und des sonstigen Dienstleistungsgewerbes.

Annual expenditure planned/overall amount of individual aid granted to company: EUR 330 000

Maximum aid intensity: grant equivalent of the project: 14,96 %

Implementation date: (expected) 1.9.2005

Duration of scheme or period during which individual aid is paid: Aid planned to be paid by the end of 2005

Purpose of the aid: Aid for investment pursuant to Regulation (EC) No 1/2004 (see above). Firms will be assisted by the planned extension work (building of storage and production facilities as well as the acquisition of new machines and equipment). The aid scheme will help secure 38 long-term jobs and create a further 19, of which 10 will be trainee places.

Economic sectors concerned: Processing and marketing; production of tea

Name and address of granting authority:

| Regierung von Oberfranken |
| --- |
| Ludwigstraße 20 |
| DE-95444 Bayreuth |

Regierung von Oberfranken

Ludwigstraße 20

DE-95444 Bayreuth

Website: At www.regierung.oberfranken.bayern.de\brf you can find the criteria and conditions for the granting of the aid following the decision to grant aid.

Aid No: XA 58/05

Member State: Italy

Region: Veneto

Title of aid scheme or name of company receiving individual aid: Annual training plan 2005. training programmes in the primary sector. Deliberazione di Giunta della Regione Veneto No 1101 of 18 March 2005

Legal basis: L. 845/1978 ‘Legge quadro in materia di formazione professionale’

L.R. n. 10 del 30.1.1990. ‘Ordinamento del sistema della formazione professionale e organizzazione delle politiche regionali del lavoro’

Annual expenditure planned under the scheme: Under the scheme a total of EUR 2 000 000 may be granted to training bodies approved by the Veneto Region's Training Unit for the provision of training programmes in the primary sector

The eligible schemes are training programmes aimed at existing workers as defined in the legal basis

In accordance with Article 17(1)(a) of Regulation (EC) No 1/2004, the resources available from the relevant regional budget to carry out the scheme total:

Chapter 72040 — financial contribution of EUR 2 000 000

Maximum aid intensity: Aid is granted on the basis of the hourly cost of training, currently EUR 110

Date of implementation: Aid is granted after the scheme is authorised by a Decreto del Dirigente Regionale and published in the Veneto Region's Official Gazette

Duration of scheme or individual aid award: The aid scheme ceases when the balance is paid to each training body, after the report is checked and approved

Objective of aid: Each year, the Veneto Region allocates resources for implementing continuing vocational training programmes that support farmers and their assistants, technical support staff and other tradesmen working in the agricultural sector (Regional Law No 32 of 9 August 2003) with the aim of:

promoting a culture of entrepreneurship;

improving the occupational qualifications of agricultural workers;

raising awareness of technological innovations.

Regional Law No 1101/2005 refers to Article 14 of Regulation (EC) No 1/2004. In particular, the eligible costs covered by the aid scheme are those of organising the training programme.

Sector(s) concerned: The scheme applies to vocational training for individuals who qualify for education and training under Law 53/2003.

Name and address of granting authority:

| Regione Veneto |
| --- |
| Segreteria Formazione e Lavoro |
| Direzione regionale Formazione |
| Via G. Allegri n. 29 30174 Mestre |
| Venice (Italy) |

Regione Veneto

Segreteria Formazione e Lavoro

Direzione regionale Formazione

Via G. Allegri n. 29 30174 Mestre

Venice (Italy)

Website: www.regione.veneto.it /servizi alla persona/formazione e lavoro/formazione continua e permanente

Other information: For further details, please contact the

Training Unit:

Tel. (39) 412 79 50 30 — 5029

Fax (39) 412 79 50 85

---

(1)  Organic notification must be made to the ‘Agence Bio’ and is compulsory.

(2)  Contrat Territorial d'Exploitation (CTE), Land Use Contract, Conversion Agriculture Biologique (CAB, Organic Farming Conversion.

(3)  Contrat Agriculture Durable (CAD), Sustainable Farming Contract.

(4)  This amount will be verified by means of the copy of the CTE/CAD/CAB contract.

---

| 10.11.2005 | EN | Official Journal of the European Union | C 277/11 |
| --- | --- | --- | --- |

10.11.2005

EN

Official Journal of the European Union

C 277/11

---

Prior notification of a concentration

(Case COMP/M.3997 — Sun Capital/Sara Lee)

Candidate case for simplified procedure

(2005/C 277/06)

(Text with EEA relevance)

| 1. | On 26 October 2005, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) by which the undertaking Sun Capital Partners IV, LP, belonging to the Sun Group (‘Sun’, USA), acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the European Branded Apparel division (‘The Business’) of Sara Lee Corporation (USA), by way of purchase of shares. |
| --- | --- |

1.

On 26 October 2005, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) by which the undertaking Sun Capital Partners IV, LP, belonging to the Sun Group (‘Sun’, USA), acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the European Branded Apparel division (‘The Business’) of Sara Lee Corporation (USA), by way of purchase of shares.

| 2. | The business activities of the undertakings concerned are:






  — | for Sun: group of private equity investment funds; |
| --- | --- | --- |

2.

The business activities of the undertakings concerned are:

—

for Sun: group of private equity investment funds;

| — | for The Business: design, manufacture, distribution and sale in Europe of branded apparel products, such as women's intimates, men's underwear, hosiery and socks. |
| --- | --- |

—

for The Business: design, manufacture, distribution and sale in Europe of branded apparel products, such as women's intimates, men's underwear, hosiery and socks.

| 3. | On preliminary examination, the Commission finds that the notified transaction could fall within the scope of Regulation (EC) No 139/2004. However, the final decision on this point is reserved. Pursuant to the Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No 139/2004 (2) it should be noted that this case is a candidate for treatment under the procedure set out in the Notice. |
| --- | --- |

3.

On preliminary examination, the Commission finds that the notified transaction could fall within the scope of Regulation (EC) No 139/2004. However, the final decision on this point is reserved. Pursuant to the Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No 139/2004 (2) it should be noted that this case is a candidate for treatment under the procedure set out in the Notice.

| 4. | The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.
  Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (No (32-2) 296 43 01 or 296 72 44) or by post, under reference number COMP/M.3997 — Sun Capital/Sara Lee, to the following address:





  European Commission |
| --- | --- |
| Directorate-General for Competition |
| Merger Registry |
| J-70 |
| BE-1049 Brussels |

4.

The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.

Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (No (32-2) 296 43 01 or 296 72 44) or by post, under reference number COMP/M.3997 — Sun Capital/Sara Lee, to the following address:

European Commission

Directorate-General for Competition

Merger Registry

J-70

BE-1049 Brussels

---

(1)  OJ L 24, 29.1.2004, p. 1.

(2)  OJ C 56, 5.3.2005, p. 32.

---

| 10.11.2005 | EN | Official Journal of the European Union | C 277/12 |
| --- | --- | --- | --- |

10.11.2005

EN

Official Journal of the European Union

C 277/12

---

ADMINISTRATIVE COMMISSION OF THE EUROPEAN COMMUNITIES ON SOCIAL SECURITY FOR MIGRANT WORKERS

Rates for conversion of currencies pursuant to Council Regulation (EEC) No 574/72

(2005/C 277/07)

Article 107(1), (2), (3) and (4) of Regulation (EEC) No 574/72

Reference period: October 2005

Application period: January, February and March 2006

| | EUR | CZK | DKK | EEK | CYP | LVL | LTL | HUF | MTL | PLN | SIT | SKK | SEK | GBP | NOK | ISK | CHF |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 1 EUR = | 1 | 29,6747 | 7,46196 | 15,6466 | 0,573186 | 0,696519 | 3,45280 | 251,847 | 0,429300 | 3,92287 | 239,525 | 38,9233 | 9,42225 | 0,681367 | 7,83471 | 73,2914 | 1,54897 |
| 1 CZK = | 0,0336987 | 1 | 0,251459 | 0,527270 | 0,0193156 | 0,0234718 | 0,116355 | 8,48691 | 0,0144669 | 0,132196 | 8,07169 | 1,31167 | 0,317518 | 0,0229612 | 0,264020 | 2,46983 | 0,0521984 |
| 1 DKK = | 0,134013 | 3,97680 | 1 | 2,09685 | 0,0768143 | 0,0933426 | 0,462720 | 33,7507 | 0,0575318 | 0,525715 | 32,0995 | 5,21623 | 1,26270 | 0,0913120 | 1,04995 | 9,82201 | 0,207582 |
| 1 EEK = | 0,0639116 | 1,89656 | 0,476906 | 1 | 0,0366332 | 0,0445157 | 0,220674 | 16,0959 | 0,0274373 | 0,250717 | 15,3085 | 2,48765 | 0,602192 | 0,0435473 | 0,500730 | 4,68418 | 0,0989973 |
| 1 CYP = | 1,74464 | 51,7716 | 13,0184 | 27,2976 | 1 | 1,21517 | 6,02388 | 439,381 | 0,748972 | 6,84397 | 417,884 | 67,9069 | 16,4384 | 1,18874 | 13,6687 | 127,867 | 2,70239 |
| 1 LVL = | 1,43571 | 42,6043 | 10,7132 | 22,4640 | 0,822929 | 1 | 4,95722 | 361,579 | 0,616351 | 5,63210 | 343,889 | 55,8826 | 13,5276 | 0,978246 | 11,2484 | 105,225 | 2,22388 |
| 1 LTL = | 0,289620 | 8,59439 | 2,16113 | 4,53157 | 0,166006 | 0,201726 | 1 | 72,9398 | 0,124334 | 1,13614 | 69,3713 | 11,2730 | 2,72887 | 0,197337 | 2,26909 | 21,2267 | 0,448613 |
| 1 HUF = | 0,00397067 | 0,117828 | 0,0296290 | 0,0621275 | 0,00227593 | 0,00276565 | 0,0137099 | 1 | 0,00170461 | 0,0155764 | 0,951076 | 0,154552 | 0,0374127 | 0,00270548 | 0,0311091 | 0,291016 | 0,00615045 |
| 1 MTL = | 2,32937 | 69,1235 | 17,3817 | 36,4468 | 1,33516 | 1,62245 | 8,04286 | 586,645 | 1 | 9,13782 | 557,944 | 90,6669 | 21,9479 | 1,58716 | 18,2500 | 170,723 | 3,60813 |
| 1 PLN = | 0,254916 | 7,56455 | 1,90217 | 3,98856 | 0,146114 | 0,177554 | 0,880173 | 64,1996 | 0,109435 | 1 | 61,0587 | 9,92215 | 2,40188 | 0,173691 | 1,99719 | 18,6831 | 0,394857 |
| 1 SIT = | 0,00417493 | 0,123890 | 0,0311531 | 0,0653234 | 0,00239301 | 0,00290792 | 0,0144152 | 1,05144 | 0,0017923 | 0,0163777 | 1 | 0,162502 | 0,0393372 | 0,00284466 | 0,0327093 | 0,305986 | 0,00646684 |
| 1 SKK = | 0,0256916 | 0,762390 | 0,191709 | 0,401986 | 0,0147260 | 0,0178947 | 0,0887078 | 6,47033 | 0,0110294 | 0,100785 | 6,15378 | 1 | 0,242072 | 0,0175054 | 0,201286 | 1,88297 | 0,0397955 |
| 1 SEK = | 0,106132 | 3,14943 | 0,791951 | 1,66060 | 0,0608332 | 0,0739228 | 0,366452 | 26,7289 | 0,0455624 | 0,416341 | 25,4212 | 4,13100 | 1 | 0,0723146 | 0,831512 | 7,77855 | 0,164395 |
| 1 GBP = | 1,46764 | 43,5518 | 10,9515 | 22,9636 | 0,841229 | 1,022240 | 5,06746 | 369,620 | 0,630057 | 5,75735 | 351,536 | 57,1253 | 13,8285 | 1 | 11,4985 | 107,565 | 2,27333 |
| 1 NOK = | 0,127637 | 3,78759 | 0,952423 | 1,99709 | 0,0731597 | 0,0889017 | 0,440705 | 32,1450 | 0,0547946 | 0,500703 | 30,5723 | 4,96805 | 1,20263 | 0,0869676 | 1 | 9,35470 | 0,197706 |
| 1 ISK = | 0,0136442 | 0,404887 | 0,101812 | 0,213485 | 0,00782064 | 0,00950342 | 0,0471106 | 3,43624 | 0,00585744 | 0,0535242 | 3,26812 | 0,531076 | 0,128559 | 0,00929668 | 0,106898 | 1 | 0,0211344 |
| 1 CHF = | 0,645590 | 19,1577 | 4,81737 | 10,1013 | 0,370043 | 0,449666 | 2,22909 | 162,590 | 0,277152 | 2,53256 | 154,635 | 25,1285 | 6,08291 | 0,439883 | 5,05801 | 47,3162 | 1 |

EUR

CZK

DKK

EEK

CYP

LVL

LTL

HUF

MTL

PLN

SIT

SKK

SEK

GBP

NOK

ISK

CHF

1 EUR =

1

29,6747

7,46196

15,6466

0,573186

0,696519

3,45280

251,847

0,429300

3,92287

239,525

38,9233

9,42225

0,681367

7,83471

73,2914

1,54897

1 CZK =

0,0336987

1

0,251459

0,527270

0,0193156

0,0234718

0,116355

8,48691

0,0144669

0,132196

8,07169

1,31167

0,317518

0,0229612

0,264020

2,46983

0,0521984

1 DKK =

0,134013

3,97680

1

2,09685

0,0768143

0,0933426

0,462720

33,7507

0,0575318

0,525715

32,0995

5,21623

1,26270

0,0913120

1,04995

9,82201

0,207582

1 EEK =

0,0639116

1,89656

0,476906

1

0,0366332

0,0445157

0,220674

16,0959

0,0274373

0,250717

15,3085

2,48765

0,602192

0,0435473

0,500730

4,68418

0,0989973

1 CYP =

1,74464

51,7716

13,0184

27,2976

1

1,21517

6,02388

439,381

0,748972

6,84397

417,884

67,9069

16,4384

1,18874

13,6687

127,867

2,70239

1 LVL =

1,43571

42,6043

10,7132

22,4640

0,822929

1

4,95722

361,579

0,616351

5,63210

343,889

55,8826

13,5276

0,978246

11,2484

105,225

2,22388

1 LTL =

0,289620

8,59439

2,16113

4,53157

0,166006

0,201726

1

72,9398

0,124334

1,13614

69,3713

11,2730

2,72887

0,197337

2,26909

21,2267

0,448613

1 HUF =

0,00397067

0,117828

0,0296290

0,0621275

0,00227593

0,00276565

0,0137099

1

0,00170461

0,0155764

0,951076

0,154552

0,0374127

0,00270548

0,0311091

0,291016

0,00615045

1 MTL =

2,32937

69,1235

17,3817

36,4468

1,33516

1,62245

8,04286

586,645

1

9,13782

557,944

90,6669

21,9479

1,58716

18,2500

170,723

3,60813

1 PLN =

0,254916

7,56455

1,90217

3,98856

0,146114

0,177554

0,880173

64,1996

0,109435

1

61,0587

9,92215

2,40188

0,173691

1,99719

18,6831

0,394857

1 SIT =

0,00417493

0,123890

0,0311531

0,0653234

0,00239301

0,00290792

0,0144152

1,05144

0,0017923

0,0163777

1

0,162502

0,0393372

0,00284466

0,0327093

0,305986

0,00646684

1 SKK =

0,0256916

0,762390

0,191709

0,401986

0,0147260

0,0178947

0,0887078

6,47033

0,0110294

0,100785

6,15378

1

0,242072

0,0175054

0,201286

1,88297

0,0397955

1 SEK =

0,106132

3,14943

0,791951

1,66060

0,0608332

0,0739228

0,366452

26,7289

0,0455624

0,416341

25,4212

4,13100

1

0,0723146

0,831512

7,77855

0,164395

1 GBP =

1,46764

43,5518

10,9515

22,9636

0,841229

1,022240

5,06746

369,620

0,630057

5,75735

351,536

57,1253

13,8285

1

11,4985

107,565

2,27333

1 NOK =

0,127637

3,78759

0,952423

1,99709

0,0731597

0,0889017

0,440705

32,1450

0,0547946

0,500703

30,5723

4,96805

1,20263

0,0869676

1

9,35470

0,197706

1 ISK =

0,0136442

0,404887

0,101812

0,213485

0,00782064

0,00950342

0,0471106

3,43624

0,00585744

0,0535242

3,26812

0,531076

0,128559

0,00929668

0,106898

1

0,0211344

1 CHF =

0,645590

19,1577

4,81737

10,1013

0,370043

0,449666

2,22909

162,590

0,277152

2,53256

154,635

25,1285

6,08291

0,439883

5,05801

47,3162

1

| 1. | Regulation (EEC) No 574/72 determines that the rate for the conversion into a currency of amounts denominated in another currency shall be the rate calculated by the Commission and based on the monthly average, during the reference period specified in paragraph 2, of reference rates of exchange of currencies published by the European Central Bank. |
| --- | --- |

1.

Regulation (EEC) No 574/72 determines that the rate for the conversion into a currency of amounts denominated in another currency shall be the rate calculated by the Commission and based on the monthly average, during the reference period specified in paragraph 2, of reference rates of exchange of currencies published by the European Central Bank.

| 2. | The reference period shall be:






  — | the month of January for rates of conversion applicable from 1 April following, |
| --- | --- | --- |

2.

The reference period shall be:

—

the month of January for rates of conversion applicable from 1 April following,

| — | the month of April for rates of conversion applicable from 1 July following, |
| --- | --- |

—

the month of April for rates of conversion applicable from 1 July following,

| — | the month of July for rates of conversion applicable from 1 October following, |
| --- | --- |

—

the month of July for rates of conversion applicable from 1 October following,

| — | the month of October for rates of conversion applicable from 1 January following. |
| --- | --- |

—

the month of October for rates of conversion applicable from 1 January following.

The rates for the conversion of currencies shall be published in the second Official Journal of the European Union (‘C’ series) of the months of February, May, August and November.

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EUROPEAN ECONOMIC AREA

EFTA Surveillance Authority

| 10.11.2005 | EN | Official Journal of the European Union | C 277/14 |
| --- | --- | --- | --- |

10.11.2005

EN

Official Journal of the European Union

C 277/14

---

Invitation to submit comments pursuant to Article 1(2) in Part I of Protocol 3 to the Surveillance and Court Agreement on State aid regarding the Icelandic submarine cable project (Farice)

(2005/C 277/08)

By means of Decision No 125/05/COL of 26 May 2005, reproduced in the authentic language on the pages following this summary, the EFTA Surveillance Authority initiated proceedings pursuant to Article 1(2) in Part I of Protocol 3 of the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (Surveillance and Court Agreement). The Icelandic Government has been informed by means of a copy of the decision.

The EFTA Surveillance Authority hereby gives the EFTA States, EU Member States and interested parties notice to submit their comments on the measure in question within one month from the publication of this notice to:

| EFTA Surveillance Authority |
| --- |
| 35, Rue Belliard |
| BE-1040 Brussels |

EFTA Surveillance Authority

35, Rue Belliard

BE-1040 Brussels

The comments will be communicated to the Government of Iceland. Confidential treatment of the identity of the interested party submitting the comments may be requested in writing, stating the reasons for the request.

SUMMARY

Procedure

By letter dated 27 February 2004, the Icelandic authorities notified the EFTA Surveillance Authority (hereinafter ‘the Authority’) of a State guarantee in favour of a submarine cable project in Iceland. However, the project was implemented before the Authority had a chance to give its comments. The Authority had also, under separate proceedings in the field of competition, requested information from Farice hf., to enable it to carry out an analysis according to Article 53 and/or 54 of the EEA Agreement.

Description of the aid measure

The Farice project concerned the construction and management of an undersea telecommunications cable connecting Iceland and the Faeroe Islands with Scotland.

Since 1994, Iceland and the Faeroe Islands were internationally connected with the undersea telecommunications cable CANTAT-3. CANTAT-3 was set up as a consortium cable with international and Icelandic parties (Og Vodafone and Landssími Islands hf — hereinafter Síminn). No other fibre cable system has ever reached Iceland. As CANTAT-3 had technical limitations and satellites were not economically viable, other transmission alternatives ensuring reliable connectivity were sought.

The Farice project came about by an initiative by the almost 100 % State owned Icelandic telecom operator Síminn and the incumbent telecom operator in the Faeroe Islands, Føroya Tele. In 2002 it became clear that the Farice project would not gain momentum as a purely commercial business case. Therefore, it was decided that the Icelandic State would have to contribute actively to the project. Secondly, the participation of Og Vodafone in the project was sought. A holding company E-Farice, which holds all the Icelandic shares in Farice hf (E-Farice holds 80 % in Farice hf), bought Og Vodafone's and Síminn's shares in CANTAT-3. Further negotiations were envisaged to lease additional CANTAT-3 capacity from the CANTAT-3 consortium member Teleglobe. According to the notification, E-Farice should handle all international connectivity for Iceland.

The notification concerns a State guarantee for a loan of EUR 9,4 million in favour of Farice hf. This loan forms part of a broader long-term loan package (comprising three other loans, granted by different banks) for a maximum amount of EUR 34,5 million. Farice hf. has paid an annually calculated market premium in advance. Two of the other loans were guaranteed by Síminn and Føroya Tele; the fourth loan did not have a guarantee. The loan secured by the guarantee from the Icelandic State had the best market conditions, i.e. Euribor [...] (1) p.a. (compared to Euribor [...] p.a. for the non-secured loan).

In January 2003, the Icelandic State increased — during an increase of Farice hf.'s total share capital — its shares from initially 27 % to 46,5 %. As stated by the Icelandic authorities, private operators did not want to provide more share capital. Síminn, which formerly held 47 % of the shares, decreased its share capital to 33,33 %.

State aid within the meaning of Article 61(1) of the EEA Agreement

The Authority notes that by notifying the Authority belatedly of the two support measures, the Icelandic authorities have not respected the stand-still obligation, with the consequence that if the measures were found to be State aid within the meaning of Article 61(1) of the EEA Agreement, they would constitute ‘new aid’ within the meaning of Article 1(f) in Part II of Protocol 3 to the Surveillance and Court Agreement.

The Authority does not consider the loan guarantee and the share capital increase of the Icelandic State in favour of the Farice project to be given to a general infrastructure project, which might not classify as State aid. Rather than an infrastructure project open on a non-discriminatory basis to all users, the Authority considers that the project benefits certain targeted business operators, i.e. telecom services providers. These operators formed a private initiative to which the State responded. Further, Farice hf., as the body managing the infrastructure, provides a service against remuneration. According to the Commission's case practice, in such a situation an advantage to an individual company cannot be denied.

The Authority bases its State aid assessment of the loan guarantee on Chapter 17.4(2) of the Authority's State Aid Guidelines, which lists the conditions under which a guarantee might not fall under Article 61(1) of the EEA Agreement. The Authority notes that the State intervention has led to better interest rates. The Icelandic authorities do not deny that, but argue that a State guarantee always results in better market conditions and that the only relevant consideration is whether an adequate premium is paid. The Authority has doubts, whether — without the State guarantee — Farice hf. would have been able to negotiate a loan of EUR 9,4 million at all, given that it had already taken up other loans to finance the project. The Authority considers that the four loans must be considered separately, as they are granted by different banks, have different repayment mechanisms and interest rates and are guaranteed by different guarantors. In this respect, the Authority also considers that the Icelandic State guarantees 100 % of the EUR 9,4 million loan. The Authority further considers that the premium paid does not take away any advantage resulting from the State intervention. In the Authority's initial view, Farice hf. should not profit from financial conditions, which it — without State intervention — would not have been able to obtain in the market. It considers that, in particular when compared to the loan not secured by a guarantee, Farice hf. profits from better financing conditions, which it does not adequately remunerate.

The Authority assessed the share capital increase by the Icelandic State according to Chapter 19 of the Authority's State Aid Guidelines. It notes that while the total share capital of Farice hf. was substantially increased and also comprised share capital increases by private operators, the Icelandic State's participation rose disproportionately compared to those of the private shareholders, by 20 percentage points. As the Icelandic authorities have stated that Síminn regarded the project as a financially risky undertaking, the Authority takes the preliminary view that private operators disengaged in relative terms from the project because of its poor profit outlook.

In the Authority's preliminary view, the measures strengthen Farice hf. in relation to competitors who cannot rely on State participation or loan guarantees and thereby distort or threaten to distort competition. As the provision of telecom services is a tradable activity, this also affects trade between the Contracting Parties.

Compatibility under Article 61(3)(c) of the EEA Agreement

The Authority assessed the measures directly under Article 61(3)(c) of the EEA Agreement, as no Guidelines or block exemptions exist under which the measures could be justified.

As to the necessity of the aid measures, the Authority acknowledges that the new submarine cable, which is to become the primary transmission connection to Iceland, has greater capacities, is more reliable and — together with the backup by CANTAT-3 — is able to secure the provision of telecommunication services to Iceland. The availability of broadband is a legitimate objective and is the type of service which is, by its nature, capable of positively affecting the productivity and growth of a large number of sectors and activities. Without the State participation, the project would either have been delayed or not undertaken at all, as the project was not commercially viable as such.

Under the proportionality assessment, the Authority has to weigh the advantages in terms of guaranteeing a reliable provision of telecommunication services to Iceland and the disadvantages of the distortion of competition in comparison to competitors, which do not have access to public funding when realizing similar projects. In this respect, the Authority will investigate inter alia the following points in the formal investigation procedure:

| — | The Authority first notes that neither the construction nor the management of the cable were given to Farice hf. after an open tender. |
| --- | --- |

—

The Authority first notes that neither the construction nor the management of the cable were given to Farice hf. after an open tender.

| — | The Authority notes that the shareholders' agreement provides for a non-discriminatory, transparent pricing on market terms. While the shareholder agreement is in general open to new entrants, the Authority will consider that the shareholders' agreement stipulates that the founding parties always have the possibility to maintain their equity position, which puts them in a better position than new entrants. |
| --- | --- |

—

The Authority notes that the shareholders' agreement provides for a non-discriminatory, transparent pricing on market terms. While the shareholder agreement is in general open to new entrants, the Authority will consider that the shareholders' agreement stipulates that the founding parties always have the possibility to maintain their equity position, which puts them in a better position than new entrants.

| — | The Authority will consider the total amount of aid which is limited as far as the guarantee is concerned. As to the State's share increase, the Authority notes that in June 2003 the State's share capital already decreased to 41 %, whereas Síminn's participation rose to 29 %. |
| --- | --- |

—

The Authority will consider the total amount of aid which is limited as far as the guarantee is concerned. As to the State's share increase, the Authority notes that in June 2003 the State's share capital already decreased to 41 %, whereas Síminn's participation rose to 29 %.

| — | The Authority has certain competition concerns. The European Court of Justice has established that a compatibility assessment under the State aid provisions should not produce a result which is contrary to other treaty provisions, which also includes Article 53 and/or 54 of the EEA Agreement. In this regard, the Authority inter alia notes that although the existing infrastructure CANTAT-3 still remains in place there is a concern that in the future, all CANTAT-3 connectivity to Iceland will be channeled through E-Farice hf, which holds the majority of shares in Farice hf. Hence, there is a risk that competition in connectivity to Iceland would be eliminated, as only one supplier would remain on the market. |
| --- | --- |

—

The Authority has certain competition concerns. The European Court of Justice has established that a compatibility assessment under the State aid provisions should not produce a result which is contrary to other treaty provisions, which also includes Article 53 and/or 54 of the EEA Agreement. In this regard, the Authority inter alia notes that although the existing infrastructure CANTAT-3 still remains in place there is a concern that in the future, all CANTAT-3 connectivity to Iceland will be channeled through E-Farice hf, which holds the majority of shares in Farice hf. Hence, there is a risk that competition in connectivity to Iceland would be eliminated, as only one supplier would remain on the market.

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(1)  Brackets indicate figures which have been deleted because they are covered by the obligation of professional secrecy.

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EFTA SURVEILLANCE AUTHORITY DECISION

No 125/05/COL

of 26 May 2005

to initiate the procedure provided for in Article 1(2) in Part I of Protocol 3 to the Surveillance and Court Agreement with regard to State aid in favour of Farice hf.

THE EFTA SURVEILLANCE AUTHORITY,

Having regard to the Agreement on the European Economic Area (1), in particular to Articles 61 to 63 and Protocol 26 thereof,

Having regard to the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (2), in particular to Article 24 as well as Article 1(2) in Part I and Articles 4(4) and 10 in Part II of Protocol 3 thereof,

Having regard to the Authority's Guidelines (3) on the application and interpretation of Articles 61 and 62 of the EEA Agreement, and in particular Chapter 17 on State guarantees and Chapter 19 on public authorities' holdings,

Whereas:

I.   FACTS

1.   Procedure

By letter dated 27 February 2004 of the Icelandic Mission to the European Union, forwarding a letter from the Ministry of Finance dated 26 February 2004, the Icelandic authorities notified the EFTA Surveillance Authority (hereinafter ‘the Authority’) of a State guarantee in favour of a submarine cable project in Iceland, i.e. the Farice project. The letter was received and registered on 1 March 2004 (Event No: 257593).

Supplementary information was submitted by letter from the Icelandic Mission dated 14 May 2004, forwarding a letter by the Icelandic Ministry of Finance dated 13 May 2004. The letter was received and registered by the Authority on 14 May 2004 (Event No: 281472).

The Authority requested further information on the notification by letter dated 22 April 2004 (Event No: 261084). The Icelandic authorities responded by letter dated 25 June from the Icelandic Mission, forwarding a letter from the Ministry of Finance. The letter was received and registered by the Authority on 28 June 2004 (Event No: 285971).

The Authority requested further information by letter dated 10 August (Event No: 286427), to which the Icelandic Mission responded by letter dated 8 September 2004, forwarding a letter from the Ministry of Finance dated 7 September 2004 (Event No: 291944).

By letter dated 16 December 2004, the Authority informed the Icelandic authorities about its doubts concerning the compatibility with the EEA Agreement of the notified guarantee and of the increase of the Icelandic State's share capital in Farice hf. (Event No: 299813). The Icelandic authorities reacted to that by letter dated 21 January 2005 from the Icelandic Mission, forwarding a letter from the Ministry of Finance dated 21 January 2005. The letter was received and registered by the Authority on 24 January 2004 (Event No: 306 312).

In addition, under separate competition proceedings, the Authority had, by letter to Farice hf. dated 31 January 2003, expressed certain competition concerns and requested information concerning the FARICE project in order to enable the Authority to facilitate the assessment of the project's competitive impact. By letter dated 6 May 2004 the Authority addressed a formal request for information to Farice hf. (4). Farice hf.'s reply was received by the Authority on 21 October 2004.

2.   Description of the Farice project

The Farice project concerns the construction and management of an undersea telecommunications cable connecting Iceland and the Faeroe Islands with Scotland.

Since 1994, Iceland and the Faeroe Islands were internationally connected with the undersea telecommunication cable CANTAT-3. CANTAT-3 was set up as a consortium cable. Access to CANTAT-3 was secured via membership of the consortium (5), by defeasible rights of use and by leasing capacity from the consortium member Teleglobe. CANTAT-3 has connection points in Canada, Iceland, the Faeroe Islands, Denmark, the United Kingdom and Germany. With the build-up of trans-Atlantic cable systems competing with CANTAT-3, the founders of CANTAT-3 had access to other, more economical connections. The Icelandic and the Faeroe parties, however, still had to rely on the CANTAT-3 connection. That was one consideration for these parties to consider the development of a new connectivity. Besides, the CANTAT-3 cable had certain technical limitations, as it was an older generation cable which is not always reliable and has limited capacity. No other single international fibre network project has reached these two countries since 1994, despite a general capacity growth of international and interregional telecommunications routes. According to information by the Icelandic authorities, the geographically isolated location of the two countries and the limited market size prevented this.

Satellite connections which serve as a second connectivity are expected to rise in costs and are, in any event, not considered appropriate for transmitting delay sensitive internet traffic. In order to handle the increased telecommunication traffic, an alternative had to be developed.

The Farice project came about from an initiative by the almost 100 % State owned Icelandic telecom operator Landssími Íslands hf (hereinafter Síminn) and the incumbent telecom operator in the Faeroe Islands, Føroya Tele, which were considering the development of a submarine cable linking Reykjavík, Tórshavn and Edinburgh. However, in 2002 it became clear that the FARICE project seemed unable to gain momentum as a purely commercial business case (6). A feasibility study conducted in March 2002 concluded that it would not be possible to fund the project through conventional project financing. A broad alliance behind the project was sought in order to secure its realisation. This resulted in two decisions:

Firstly, the communication authorities of Iceland and the Faeroe Islands became involved in the preparation of the project. In particular the largest sponsors, Síminn and Føroya Tele, made it clear that they were not interested in providing the necessary loan guarantees on behalf of the whole telecom market (7). The State would therefore have to participate and contribute actively in the project.

Secondly, it was considered important that Og Vodafone, a major player in the Icelandic telecom market, should participate actively in the project. It was decided that besides the establishment of Farice hf, a holding company Eignarhaldsfélagið Farice ehf. (hereinafter ‘E-Farice’) (8) should be established. This company, while holding all the Icelandic shares in Farice, should buy Og Vodafone's capacity in CANTAT-3. A similar offer was made to Síminn which, according to the IBM report submitted by the Icelandic authorities, resulted in E-Farice handling all international connectivity for Iceland. As stated in the notification, CANTAT-3 capacity will consequently be operated and sold by E-Farice (9).

In 2002 the new limited company, Farice hf, was established with the purpose of preparing, constructing and operating a submarine communication cable system to transfer telecommunications and internet traffic between Iceland, the Faeroe Islands and the UK. The shareholders of this company were Síminn (47,33 %), Og Vodafone (1,33 %), the Government of Iceland (27,33 %), three other Icelandic operators which held together 3,99 %, Føroya Tele (17,33 %), and two other Faeroe telecom operators, which each held 1,33 % (10). The new Farice cable includes an Iceland backhaul (Reykjavík to Seyðisfjörður), a submarine section (Seyðisfjörður to Dunnet Bay), a Faeroese backhaul (from Funningsfjörður to Tórshavn) and a UK backhaul (Dunnet Bay to Edinburgh). No public tender was carried out to entrust the management of the cable, which was granted to Farice hf.

A shareholders' agreement dated 12 September 2002 provided that the pricing policy of Farice should be based on the principles of cost orientation, transparency and non-discrimination.

The Icelandic authorities have further pointed out that the use of the Farice cable is open to foreign and domestic operators alike, on equal terms and prices. The shareholders' agreement is also open to new shareholders. It stipulates, however, that the existing shareholders will always be offered the possibility of maintaining their equity position in the company if the share capital is increased.

The formal opening of the Farice submarine transmission cable was in February 2004. While it will constitute the primary transmission line for Iceland's telecommunications, the CANTAT-3 capacities will be used as a back-up.

3.   Description of the aid measure

a.   The loan guarantee

The object of the notification concerns the grant by the State of a guarantee for a loan of EUR 9,4 million in favour of Farice (hereinafter: the A Term Loan). This loan forms part of a broader long-term loan package for a maximum amount of EUR 34,5 million.

According to the information provided by the Icelandic authorities, in particular the Agreement between Farice hf, Íslandsbanki hf, other financial institutions and other guarantors, on 27 February 2004 signed loans (hereinafter: the loan agreement) for a maximum amount of EUR 34,5 million, break down as follows:

| Loan | Million EUR | Lender | Interest rate (11) | Interest periods | Repayment | Guarantor |
| --- | --- | --- | --- | --- | --- | --- |
| Number of instalments | Start of repayment |
| A | 9,4 | The Nordic Investment Bank | [...] (12) | 6 months | 8 semi-annual payments | Sept. 2011 | Government of Iceland |
| B | 4,7 | The Nordic Investment Bank | [...] | 6 months | 5 semi-annual payments | Sept. 2009 | Landssími Íslands hf (Síminn) |
| 4,7 | Íslandsbanki hf |
| C | 4,7 | Føroya banki | [...] | 3 months | 10 quarterly payments | Sept. 2009 | Telefon verkið P/F |
| D | 11 | Íslandsbanki hf | [...] | 1 month | 48 monthly payments | Sept. 2005 | None |

Loan

Million EUR

Lender

Interest rate (11)

Interest periods

Repayment

Guarantor

Number of instalments

Start of repayment

A

9,4

The Nordic Investment Bank

[...] (12)

6 months

8 semi-annual payments

Sept. 2011

Government of Iceland

B

4,7

The Nordic Investment Bank

[...]

6 months

5 semi-annual payments

Sept. 2009

Landssími Íslands hf (Síminn)

4,7

Íslandsbanki hf

C

4,7

Føroya banki

[...]

3 months

10 quarterly payments

Sept. 2009

Telefon verkið P/F

D

11

Íslandsbanki hf

[...]

1 month

48 monthly payments

Sept. 2005

None

The State guarantee for the A term loan is a guarantee of collection, i.e. Farice hf.will be fully liable for payment of the loan and the creditor will need to exhaust the recourses for collection from the company before the State guarantee can take effect. Farice hf. was obliged to pay an annual market premium of [...] (established by the Icelandic National Debt Management) and a fee of [...] ISK. The payment was done in advance [...].

An earlier guarantee of collection was signed in July 2003 in relation to a bridge loan of EUR 16 million. The guarantee of collection covered EUR 6,4 million, i.e. 40 % of that loan. The bridge loan was paid up upon the release of the long-term loan of EUR 34,5 million and the guarantee of collection for the bridge loan ceased to exist the same day. Farice hf. paid a [...] guarantee fee and a guarantee charge of [...] ISK for that guarantee.

b.   The Icelandic government's increase in share capital

In the beginning of January 2003, the State participation in Farice hf increased from an initial share of 27 % up to 46,5 %. Following the explanation given by the Icelandic authorities in their reply of June 2004,

‘As the business plan evolved, the funding needs of the company became clearer and it was decided to increase the company's share capital. All operators in Iceland and Faeroe Islands were invited to buy shares in the share capital increase. As Síminn made it clear that the company would not want to provide more than 33,33 % of the share capital, Telefonverkið would provide necessary share capital from the Faroese site (19,93 %), the Icelandic government had to provide 46,53 % of the necessary share capital as other operators in Iceland did not have the financial capacity to buy more than 1,2 % of the share capital.’

As stated by the Icelandic authorities, the total share capital of Farice hf was increased from EUR 337 000 to EUR 14 million. Details on the share capital contribution of the different shareholders can be seen from the table below:

| | |
| --- | --- |

4.   Comments by the Icelandic authorities

The Icelandic government first states that the measures cannot constitute State aid within the meaning of Article 61(1) of the EEA Agreement, as the Farice project constitutes infrastructure, which is open to all potential users on a non-discriminatory basis.

Further, the Icelandic authorities argue that the State guarantee fulfils all the conditions set out in Chapter 17.4 of the Authority's State Aid Guidelines. The Icelandic authorities point out that — as can be seen from the three other tranches of the loan — Farice would have been able to secure a loan on market conditions. It is, however, clear that interest rates will always be more favourable in the case of a State guaranteed loan and that, therefore, these conditions should not be expected to be the same as normal conditions on the financial market. As long as the market price paid for the guarantee is correct, there is no room for State aid. The banks were asked to provide a non indicative bid for a loan up to EUR 32 million. Four offers varying in form and cost offered interest rates ranging from [...].

The authorities further point out that the EUR 34,5 million loan should be seen as one loan subdivided into four tranches. In that respect, the Farice project is financed to a large extent independently of the State guarantee, which only covers 27,25 % of the full loan.

one

As to the share capital increase, the Icelandic authorities point out that the increase in share capital took place in January 2003, i.e. only four months after the establishment of Farice hf. The Icelandic State's share increase should therefore not be seen as an injection of fresh capital, but rather as the initial setting up of a company. In this respect it should be noted that the private investors provided for almost 60 % of the total share capital increase or EUR 8,1 million compared to the government share of EUR 5,5 million (13). According to the Icelandic authorities, this does not only show that the private share holders were willing to participate in the company, but also that they were willing to participate to a significant degree.

13

In any event, given the size of the Farice project, the project would qualify as aid to small and medium sized undertakings.

In any event, given its significant importance for securing the necessary connectivity of Iceland to the world, the support should be allowed under Article 61(3)(b) or (c) of the EEA Agreement.

II.   APPRECIATION

1.   Obligation to notify

According to Article 2(1) read together with Article 3 in Part II of Protocol 3 to the Surveillance and Court Agreement, ‘any plans to grant new aid shall be notified to the Authority in sufficient time by the EFTA State concerned and shall not be put into effect before the Authority has taken, or is deemed to have taken, a decision authorising such aid.’

any plans to grant new aid shall be notified to the Authority in sufficient time by the EFTA State concerned and shall not be put into effect before the Authority has taken, or is deemed to have taken, a decision authorising such aid.

Farice hf. was established in 2002 and the construction work started already in June 2003. The cable was officially opened in February 2004 (14). The share capital increase took place in January 2003 and the guarantee of collection by the Icelandic authorities dates to 27 February 2004, i.e. before the Authority had a chance to express a view on the notification of the measures on 27 February 2004.

14

The Authority therefore notes that the Icelandic government has not respected the stand-still obligation, with the consequence that if the measures were found to be State aid within the meaning of Article 61(1) of the EEA Agreement, they would constitute ‘new aid’ within the meaning of Article 1(f) in Part II of Protocol 3 to the Surveillance and Court Agreement, subject to potential recovery, if declared incompatible with the EEA Agreement.

2.   State aid within the meaning of Article 61(1) of the EEA Agreement

Article 61(1) of the EEA Agreement reads as follows: ‘...any aid granted by EC Member States, EFTA States or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods, shall, in so far as it affects trade between Contracting Parties, be incompatible with the functioning of this Agreement.’

any aid granted by EC Member States, EFTA States or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods, shall, in so far as it affects trade between Contracting Parties, be incompatible with the functioning of this Agreement.

The Authority will therefore assess whether:

| — | there is an intervention by the State or through State resources; |
| --- | --- |

—

there is an intervention by the State or through State resources;

| — | which confers an advantage on the recipient; |
| --- | --- |

—

which confers an advantage on the recipient;

| — | distorts or threatens to distort competition; and |
| --- | --- |

—

distorts or threatens to distort competition; and

| — | which is liable to affect trade between the Contracting Parties. |
| --- | --- |

—

which is liable to affect trade between the Contracting Parties.

2.1   The Farice project as an infrastructure project

The Icelandic authorities argue that the support to the Farice project does not comprise any State aid, given that the submarine cable qualifies as infrastructure and support in its favour therefore constitutes a ‘general’ and not a selective measure. As stated in the European Commission Communication COM (2001) 35 final, ‘Reinforcing quality service in sea ports: a key for European transport’ (15), the criterion of selectivity is an important benchmark for deciding whether a concrete financing measure constitutes State aid.

15

In Commission practice State funding for the construction or management of infrastructure is not to be regarded as aid, if the infrastructure is directly managed by the State (which is not the case in the present project) or if there is a public tender for the selection of the manager and if access to the infrastructure is open to all potential users on a non-discriminatory basis (16).

16

The Authority notes that while wide participation might have been sought within the project, neither the construction nor the management of the company was organised by a public tender. The government participation rather responded to a private initiative, started by the two incumbent telecommunication operators (17).

17

The Authority also has doubts concerning the non-discriminatory access. While the participation in the company according to the shareholders' agreement is not restricted, the Authority notes that the founding shareholders keep certain pre-emptive rights (see section I.2 of this Decision), which seems to place them in a better position than new shareholders.

Regardless of this, in line with Commission practice, a measure in any event constitutes aid and not a general measure, if the body managing the infrastructure is pursuing an economic activity, as this may provide a potential advantage to the beneficiary (18) in relation to competing operators. In this respect it suffices to note that the State support benefits Farice hf. which manages the cable and sells users' rights to interested parties against remuneration. According to the case law of the European Court of First Instance, the management of infrastructure constitutes an economic activity within the meaning of Article 61(1) of the EEA Agreement (19). Farice hf. is able to profit from an infrastructure construction secured with a State guarantee and with government participation in a situation in which private parties were not willing to ensure the full financing of the project, whereas other operators might have to finance 100 % of it on their own.

18

19

In addition, for State aid purposes, it should be noted that the participation in the company is mainly geared towards telecommunication operators. Connectivity via the Farice cable is currently only sold in large units to business operators who resell the service on the downstream market to end users. It was these business operators who took the initiative to which the State responded. The type of service is therefore targeted at commercial operators and not at the general public. The Authority therefore, at this stage of the proceedings, considers that the project should be looked at rather as being a dedicated facility for undertakings, which is within the scope of State aid control, rather than a general infrastructure (20).

20

2.2.   The loan guarantee by the Icelandic State

In general, a State guarantee enables its beneficiary to obtain better financial terms for a loan than those normally available on the financial markets. Therefore, guarantees given by the State may fall within the scope of Article 61(1) of the EEA Agreement.

However, on the basis of the provisions of Chapter 17.4 (2) of the Authority's State Aid Guidelines on State Guarantees (hereinafter: the Guidelines), the Authority considers that an individual State guarantee does not constitute State aid under Article 61(1) of the EEA Agreement if it fulfils all the following conditions:

| (a) | The borrower is not in financial difficulty; |
| --- | --- |

(a)

The borrower is not in financial difficulty;

| (b) | The borrower would, in principle, be able to obtain a loan on market conditions from the financial markets without any intervention by the State; |
| --- | --- |

(b)

The borrower would, in principle, be able to obtain a loan on market conditions from the financial markets without any intervention by the State;

| (c) | The guarantee is linked to a specific financial transaction, is for a fixed maximum amount, does not cover more than 80 % of the outstanding loan and is not open-ended; |
| --- | --- |

(c)

The guarantee is linked to a specific financial transaction, is for a fixed maximum amount, does not cover more than 80 % of the outstanding loan and is not open-ended;

| (d) | The market price for the guarantee is paid (which reflects, amongst other things, the amount and duration of the guarantee, the security given by the borrower, the borrower's financial position, the sector of activity and the prospects, the rates of default, and other economic conditions). |
| --- | --- |

(d)

The market price for the guarantee is paid (which reflects, amongst other things, the amount and duration of the guarantee, the security given by the borrower, the borrower's financial position, the sector of activity and the prospects, the rates of default, and other economic conditions).

According to the information provided by the Icelandic authorities, the project could not gain momentum as a purely commercial business case and required the involvement of the State. Although the borrower was not technically in financial difficulty, the fact that the banks did not only require a guarantee of the State for the A Term Loan but also of the two former State telecommunication monopolists (Síminn for the B Term Loan and Telefonverkið P/F for the C Term Loan), which are still owned by the respective States, shows that Farice was not in the position to obtain a loan on market conditions without any intervention by the State. For this reason, it is questionable whether the second condition is fulfilled.

The Icelandic authorities however argue that the second condition should be understood to be that the borrower was able to obtain ‘a’ loan, not necessarily ‘the loan on the same conditions’. In particular the D tranche loan shows that it was possible for Farice hf. to obtain a loan ‘as such’. Furthermore, the Icelandic authorities argue that it is evident that, backed up with the State guarantee, the loan would be granted at more favourable conditions. The decisive factor therefore is only whether the price for the guarantee is a market price.

The Authority agrees that the first condition only states that the borrower would ‘in principle’ be able to obtain a loan on market conditions. However, it still needs to be considered that point 17.1(1) of the Guidelines describes State guarantees as normally enabling the borrower to obtain better financial terms than those normally available on the financial markets, which leads to distortions of competition and the potential classification as ‘aid’. It is exactly that advantage resulting from the State intervention which raises a State aid concern. Against this background, there would be no aid element involved if the State backed-up loan did not lead to any advantages in the interest rate. However, if the State intervention leads to ‘better’ market conditions, this must be taken into account for the assessment under the State aid provisions. The Authority does not exclude, at this stage of the proceedings, that the distortive effect resulting from better market conditions can be adequately — but then also would have to be — considered in the assessment of the adequacy of the market premium (fourth condition), and will investigate that further in the formal investigation procedure.

better

However, the Authority notes, that while Farice hf. was able to secure an EUR 11 million loan on market conditions (D loan), it is not clear whether the banks would have granted any further loans to the project without any intervention from the State. This aspect would have to be assessed under the first condition. The Authority is therefore not entirely certain about the relevance of the argument that Farice hf. was able to negotiate the EUR 11 million loan.

further

This

The overall loan package is made up of four (or five) different loan amounts with different borrowing conditions, different lenders and different guarantees. Therefore, the Authority is of the preliminary opinion that each part of the overall loan amount constitutes an independent loan as such. For this reason, the Authority initially considers that the guarantee of the State covers 100 % of the guaranteed A Term Loan for a maximum amount of EUR 9,4 million. Hence, the third condition laid down in Chapter 17.4(2) of the Guidelines to exclude the existence of State aid does not seem to be fulfilled.

The Icelandic authorities argue that there is only one loan at stake, at EUR 34,5 million. However, as can be seen from the loan agreement, while granted for the same collateral, the four loans are granted by different banks which assume the responsibility for their loan amount only. None of the banks would take over — in case of a failure of Farice hf. — the liability for any of the other loans. The different loans do not only have different repayment periods and a different number of instalments, but also different guarantors. Against this background, the combination of the loans in one joint document does not appear to be of significant relevance.

their

It should further be noted that the 80 % rule should ensure that the creditor still has an incentive to reflect on the risk which he is willing to assume. Against this background, it does not seem correct to take into account — in relation to the business decision made by the Nordic Investment bank and in order to establish the loan basis to which the 80 % rule applies — that other loans are granted by Íslandsbanki. The Nordic investment bank has not assumed any responsibility for these loans and would not consider them in its decision to support Farice.

If anything, the A loan could be considered together with the second loan granted by the Nordic Investment bank, i.e. the first part of the B loan. However, the Authority still has doubts on this perspective, as the B loan is secured by the 100 % State owned company Síminn. The incentive for Nordic investment bank to assume an ordinary risk assessment, the same as it would undertake for a borrower who cannot rely on the State or State owned companies, is therefore considerably reduced.

Regarding the fourth condition, the Authority notes that the Icelandic State Guarantee Fund assessed the appropriate guarantee fee and guarantee charge for a State guarantee in relation to the A Term Loan. It charged a fee of ISK [...] plus a proportional fee of [...] p.a. on the balance of the loan at the beginning of each period. The total charge amounted to [...] and was already paid in advance.

Assuming only that the State Guarantee Fund took into account, in the assessment of the premium, the concrete characteristics of the guaranteed loan, in particular the conditions for repayment (21) and that it followed for its assessment the so-called market investor principle, would the fourth condition laid down in Chapter 17.4(2) of the Guidelines be fulfilled. However, despite being invited to prove that this is a market rate, the Icelandic authorities have not substantiated this point, but mainly limited themselves to repeat the relevant provisions of the State Guarantee Fund Act. The Authority notes that while taking into account that the guarantee in question is a guarantee of collection with a lesser risk, the premium charged to Farice is at the very low end of the spectrum of interest rates to be fixed by the National Debt Management Agency [...], which has not been reasoned by the Icelandic authorities.

21

Further indication of the appropriate market rate can be derived from point 17.1(2) of the Guidelines which identifies the amount of aid, i.e. the cash grant equivalent, for an individual guarantee, as the difference between the market rate and the rate obtained thanks to the State guarantee after any premiums have been deducted. This is based on the understanding that if the borrower profits from a favourable interest rate, which he would not have gotten without State intervention, the aid element is the amount which remains in comparison to the market rate and after the premium has been deducted. If the premium does not fully remove this advantage, the State guarantee would still benefit the recipient and thus distort the market. In such circumstances the advantage resulting from the guarantee has not been clawed away by the premium and would have to be classified as aid (22).

after

22

The Authority notes that the difference between the A tranche loan of [...] points compared to [...] of the B loan, is [...], which is not fully compensated by the [...] premium paid by the State. However, the Authority still considers comparing the interest rate of the A tranche with the D tranche of the loan, which is the only tranche not backed up by the State or a State owned company, which results in a remaining aid element of [...]. Firstly, the Authority assumes that the guarantee given by the 100 % owned telecom operators Síminn is also imputable to the State, but will investigate that point further during the investigation. In any event, operators in similar projects might not be able to secure such guarantees — and the favourable market conditions resulting therefrom — so that in the Authority's preliminary view the comparison with the D loan seems to be the valid comparison (23).

23

The intervention of the State strengthens the position of Farice hf. in securing the project financing versus competitors who do not profit from such a guarantee and would have to make the investment solely on market terms. The guarantee is given for a project which is carried out by multinational business operators and constitutes an activity which is subject to trade between the Contracting Parties.

2.3   The increase in the participation of the State as shareholder of Farice hf.

Between the time of the establishment of the company in September 2002 and the time of the notification at the beginning of 2004, the State participation in Farice hf increased from an initial share of 27 % up to 46,5 %. Following the explanation given by the Icelandic authorities in their reply of June 2004, Síminn made it clear that it did not intend to provide more than 33,33 % of the share capital (24).

24

For State aid purposes, it has to be established whether the capital increase at Farice engaged by the State is directly in conformity with the market investor principle. Chapter 19 of the Guidelines establishes the general approach of the Authority with regard to the acquisition of share holdings by public authorities.

According to Chapter 19.6.(b) of the 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 economy conditions. This can apply when public holdings in a company are to be increased, provided that the capital injected is proportionate to the number of shares held by the authorities and goes together with the injection of capital by a private shareholder. The private investor's holding must have real economic significance.

On the other hand, there is State aid where fresh capital is contributed in circumstances that would not be acceptable to a private investor operating under normal market economy conditions. Following Chapter 19.6.(c) of the Guidelines, this is, amongst others, the case where the injection of capital into companies whose capital is divided between private and public shareholders makes the public holding reach a significantly higher level than it was originally and the relative disengagement of private shareholders is largely due to the companies' poor profit outlook.

The Icelandic authorities point out that the Icelandic's State share capital increase should not be looked at as an injection of fresh capital, but rather as the initial setting up of the company. The Authority points out that the State Aid Guidelines consider the share capital increase, regardless of at what point in time it takes place, as a subcategory of the injection of fresh capital. As the Guidelines reflect the general principle of private market investor behaviour, the share capital increase must be analysed on its merits. Even if the Government had assumed the higher share already during the preparation phase, this still would have made the increase subject to an analysis under the State aid provisions. For that assessment it is therefore only relevant whether the share capital increase reflects the rationale of a private market investor.

The Authority does not deny that in real terms the private operators' holdings occurred at the same time of the capital increase by the State. However, the Authority takes the (preliminary view) that the share increase of the private operators was not proportionate to the share capital increase by the State.

As can be seen from the table above (see section I.3.b. of this Decision) Farice hf.'s capital rose from EUR 337 000 to EUR 14 646 000 in January 2003. The share of the Icelandic State grew from 27,33 % (EUR 92 000) to 46,5 % (EUR 6 206 000), i.e. by almost 20 percentage points. While it is correctly stated by the Icelandic authorities that the share of Síminn grew from EUR 160 000 to EUR 4 446 000, in relative terms the share of Síminn fell from 47,33 % to 33,33 % (14 percentage points). Except for Telefonverkið, the shares of all other participants also fell (from 1,33 % to 0,33 %), which shows that in relative terms the private operators disengaged from the project.

This is likely to result from the poor outlook of the company's profit. In their letter of September 2004, the Icelandic authorities have submitted that:

‘Síminn felt that increasing the capacity to meet foreseeable demand, as well as providing an alternate route for emergencies, was a financially risky undertaking, providing little return on investment (especially for a limited company in line for privatisation). In order to facilitate the necessary upgrade in capacity, particularly in view of the short time frame available until capacity would be outstripped by the demand, the Government stepped in.’

The Icelandic authorities further state that the market's reluctance towards the project was indicated in the preparatory phase when Síminn and Telefonverkið engaged IBM Consulting to advise them on the economic viability of the project and its financing possibilities. The findings strongly suggested that the funding could not be done via traditional means (25).

market's reluctance

25

It seems from this that the initial lack of engagement from private investors was the reason for the subscription of the necessary capital increase by the Government in early 2003 (26), which raised the State participation in Farice hf.

26

The increase in the State's share of Farice was further accompanied by the grant of a State guarantee to cover the A Term Loan of EUR 9,4 million. It is thus the preliminary opinion of the Authority that State aid can be presumed in the capital injection subscribed by the Icelandic authorities in Farice which led to an increase in the State share in the company from 27 % to up to 46,5 %. Additionally, according to Chapter 19.6(d) of the Guidelines, there is a presumption that there is State aid where the authorities' intervention takes the form of acquisition of a holding combined with other types of interventions which need to be notified pursuant to Article 1(3) in Part I of Protocol 3 to the Surveillance and Court Agreement.

The intervention of the State strengthens the position of Farice hf. in securing the project financing versus competitors who do not profit from such a State participation in a situation in which private operators are not willing to raise additional funds. The share increase concerns a project which is carried out by multinational business operators and constitutes an activity which is subject to trade between the Contracting Parties.

a.   Conclusion

In the Authority's preliminary view, the State guarantee and the capital share increase by the Icelandic State constitute State aid within the meaning of Article 61(1) of the EEA Agreement.

3.   Compatibility

In the Authority's view, the aid measures do not comply with any of the exemptions provided for under Article 59(2) (27) and Article 61(2) or (3)(a) and (d) of the EEA Agreement. In the Authority's preliminary view, the State support also cannot be justified under Article 61(3)(b) of the EEA Agreement. Despite the fact that the project is transnational, the aid in question presents itself in the form of sector aid, benefiting an individual company (Farice hf) and brought about by a private initiative of a group of business operators. It is therefore questionable that this can be regarded as a project which is of common European interest.

27

It needs to be assessed whether the aid could be justified under Article 61(3)(c) of the EEA Agreement. Under this provision aid may be declared compatible if ‘it facilitates the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest’.

it facilitates the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest

However, the Authority finds that none of the Authority's State Aid Guidelines can be applied to assess aid measures that target this objective. The Authority in particular does not share the Icelandic authorities' view that the measure falls under the Act mentioned in point 1 f) of the EEA Agreement concerning aid to small and medium sized undertakings (28). In order to fall under the block exemption, Farice would have to be an independent enterprise in the meaning of Article 1(3) in conjunction with Article 1(1) in Annex I of the Act. However, more than 25 % of the capital is owned by operators which fall outside the SME definition (this goes both for the State owned Síminn and the share ownership of the Icelandic State).

28

The Authority therefore considers that the compatibility assessment is to be based directly on Article 61(3)(c) of the EEA Agreement.

In this respect, the Authority will have to investigate the necessity and the proportionality of the measure. The Authority, however, notes that the Icelandic authorities have not yet provided sufficient information to enable the Authority to carry out a full analysis of this issue. On the basis of the information available, the Authority has come to the preliminary conclusions below.

3.1   The necessity of the aid measures

The Authority notes that the project intends to secure internet connectivity to Iceland by having a reliable transmission method to which the former CANTAT-3 connection will serve as a back-up. Because of its geographic location, Iceland is particularly dependent on having access to economic and reliable telecom connectivity. As can be seen from section I.2 of this Decision, alternatives in the form of the existing CANTAT-3 cable or satellites were no longer options, either because of their technical limitations or dependencies on other consortium shareholders (CANTAT-3 (29)) or their rising costs (satellites). The new submarine cable, which is to become the primary transmission connection to Iceland, has greater capacities, is more reliable and — together with the backup by CANTAT-3 — is able to secure the provision of telecommunication services to Iceland. The availability of broadband (30) has been acknowledged in Commission policy and State aid decisions (31) as a legitimate objective and type of service which is by its nature capable of positively affecting the productivity and growth of a large number of sectors and activities.

29

30

31

As can be seem from its history (in particular the feasibility study of March 2002), the Farice project was not able to emerge as a purely private initiative. Both, State guarantees and share capital increases resulted from the need of a greater State participation to make the project economically viable. Without State participation, the project would either have been delayed or not undertaken at all, so that the Authority takes the preliminary view that the State support was necessary.

3.2   The proportionality of the aid measures

In order for the aid measures to be compatible with Article 61(3)(c) of the EEA Agreement, it must be proportionate to the objective and not distort competition to an extent contrary to the common interest. The trade-off between the advantages in terms of guaranteeing a reliable provision of telecommunication services to Iceland must be weighed against the disadvantages of the distortion of competition in comparison to competitors, which do not have access to public funding when realising similar projects.

The Authority cannot yet make a final assessment of that question on the basis of the available information. However, it will — in the formal investigation procedure — consider the following aspects:

| — | The Authority first notes that neither the construction nor the management of the cable were given to Farice hf. after an open tender. The Authority is not yet convinced that the widespread information on this project as claimed by the Icelandic authorities can replace a formal tender procedure, in particular as the desirable widespread participation was limited to Icelandic and Faeroe parties (32). The Authority points out that the open tender was considered a positive, although not necessarily mandatory, element for the approval of broadband projects in Commission practice (33). In these decisions it was, in particular, stressed that the tendering out of the management of the cable to an independent asset manager secured the neutrality of the infrastructure manager better than in a situation in which the service provider has control over the infrastructure, as is the case here. |
| --- | --- |

—

The Authority first notes that neither the construction nor the management of the cable were given to Farice hf. after an open tender. The Authority is not yet convinced that the widespread information on this project as claimed by the Icelandic authorities can replace a formal tender procedure, in particular as the desirable widespread participation was limited to Icelandic and Faeroe parties (32). The Authority points out that the open tender was considered a positive, although not necessarily mandatory, element for the approval of broadband projects in Commission practice (33). In these decisions it was, in particular, stressed that the tendering out of the management of the cable to an independent asset manager secured the neutrality of the infrastructure manager better than in a situation in which the service provider has control over the infrastructure, as is the case here.

32

33

| — | The Authority notes that the shareholders' agreement provides for a non-discriminatory, transparent pricing on market terms. |
| --- | --- |

—

The Authority notes that the shareholders' agreement provides for a non-discriminatory, transparent pricing on market terms.

| — | The Authority will also consider that the shareholders' agreement is in principle open to new entrants. The Authority has however doubts on the position of new entrants in relation to the founding parties, as section 7 of the Shareholders agreements protects the founders' position by giving them the possibility to maintain their equity position. |
| --- | --- |

—

The Authority will also consider that the shareholders' agreement is in principle open to new entrants. The Authority has however doubts on the position of new entrants in relation to the founding parties, as section 7 of the Shareholders agreements protects the founders' position by giving them the possibility to maintain their equity position.

| — | The total amount of aid is, with regard to the State guarantee, rather limited. As to the State's share increase, the Authority notes that in June 2003 the State's share capital has already decreased to 41 %, whereas Síminn's participation rose to 29 %. The Authority also notes that while the State disproportionately increased its share capital in January 2003, the private operators showed willingness to multiply their support. |
| --- | --- |

—

The total amount of aid is, with regard to the State guarantee, rather limited. As to the State's share increase, the Authority notes that in June 2003 the State's share capital has already decreased to 41 %, whereas Síminn's participation rose to 29 %. The Authority also notes that while the State disproportionately increased its share capital in January 2003, the private operators showed willingness to multiply their support.

| — | The Authority has, in its correspondence with Farice hf. under the competition proceedings, raised certain competition concerns. The European Court of Justice has established that a compatibility assessment under the State aid provisions should not produce a result which is contrary to other treaty provisions. Consequently, for the assessment under the State aid provisions, it is also relevant whether State support is given to a project which might raise competition concerns under the application of Article 53 and/or 54 of the EEA Agreement (34). In this regard, the Authority inter alia notes that although the existing infrastructure CANTAT-3 still remains in place (35), there is a concern that in the future, all CANTAT-3 connectivity to Iceland will be channelled through E-Farice hf, which holds the majority of shares in Farice hf. (36). Hence, there is a risk that competition in connectivity to Iceland would be eliminated, as only one supplier would remain on the market. |
| --- | --- |

—

The Authority has, in its correspondence with Farice hf. under the competition proceedings, raised certain competition concerns. The European Court of Justice has established that a compatibility assessment under the State aid provisions should not produce a result which is contrary to other treaty provisions. Consequently, for the assessment under the State aid provisions, it is also relevant whether State support is given to a project which might raise competition concerns under the application of Article 53 and/or 54 of the EEA Agreement (34). In this regard, the Authority inter alia notes that although the existing infrastructure CANTAT-3 still remains in place (35), there is a concern that in the future, all CANTAT-3 connectivity to Iceland will be channelled through E-Farice hf, which holds the majority of shares in Farice hf. (36). Hence, there is a risk that competition in connectivity to Iceland would be eliminated, as only one supplier would remain on the market.

34

inter alia

35

36

4.   Conclusion

The Authority therefore concludes that it has doubts as to whether the support in favour of Farice hf. is compatible with the functioning of the EEA Agreement, in particular with Article 61(3)(c) of the EEA Agreement.

Consequently, and in accordance Article 4(4) in Part II of Protocol 3 to the Surveillance and Court Agreement, the Authority is obliged to open the procedure provided for in Article 1(2) in Part I of Protocol 3 of the Surveillance and Court Agreement. The decision to open proceedings is without prejudice to the final decision of the Authority. The Authority may conclude that the measures in question would be compatible with the functioning of the EEA Agreement, if they were necessary and proportionate and thus would fulfil the requirements for being exempted from the prohibition against State aid as laid down in Article 61(1) of the EEA Agreement.

In light of the foregoing considerations, the Authority, acting under the procedure laid down in Article 1(2) in Part I of Protocol 3 to the Surveillance and Court Agreement, requests the Icelandic authorities to submit its comments within one month of the date of receipt of this Decision.

In light of the foregoing considerations, the Authority requires the Icelandic government, within one month of receipt of this Decision, to provide all documents, information and data needed for the assessment of the compatibility of the support measures in favour of Farice hf.,

HAS ADOPTED THIS DECISION:

| 1. | The Authority has decided to open the formal investigation procedure provided for in Article 1(2) in Part I of Protocol 3 to the Surveillance and Court Agreement with regard to the support measures in favour of Farice hf. |
| --- | --- |

1.

The Authority has decided to open the formal investigation procedure provided for in Article 1(2) in Part I of Protocol 3 to the Surveillance and Court Agreement with regard to the support measures in favour of Farice hf.

| 2. | The Icelandic government is requested, pursuant to Article 6(1) in Part II of Protocol 3 to the Surveillance and Court Agreement, to submit its comments on the opening of the formal investigation procedure within one month from the notification of this Decision and to provide all such information as may help to assess the aid measure. |
| --- | --- |

2.

The Icelandic government is requested, pursuant to Article 6(1) in Part II of Protocol 3 to the Surveillance and Court Agreement, to submit its comments on the opening of the formal investigation procedure within one month from the notification of this Decision and to provide all such information as may help to assess the aid measure.

one month

| 3. | The Icelandic government shall be informed by means of a letter containing a copy of this Decision. |
| --- | --- |

3.

The Icelandic government shall be informed by means of a letter containing a copy of this Decision.

| 4. | The Icelandic Government is invited to notify without delay the potential aid beneficiary of the initiation of the proceedings. |
| --- | --- |

4.

The Icelandic Government is invited to notify without delay the potential aid beneficiary of the initiation of the proceedings.

| 5. | The EC Commission shall be informed, in accordance with Protocol 27(d) of the EEA Agreement, by means of a copy of this Decision. |
| --- | --- |

5.

The EC Commission shall be informed, in accordance with Protocol 27(d) of the EEA Agreement, by means of a copy of this Decision.

| 6. | Other EFTA States, EU Member States, and interested parties shall be informed by the publishing of this Decision in its authentic language version, accompanied by a meaningful summary in languages other than the authentic language version, in the EEA Section of the Official Journal of the European Union and the EEA Supplement thereto, inviting them to submit comments within one month from the date of publication. |
| --- | --- |

6.

Other EFTA States, EU Member States, and interested parties shall be informed by the publishing of this Decision in its authentic language version, accompanied by a meaningful summary in languages other than the authentic language version, in the EEA Section of the Official Journal of the European Union and the EEA Supplement thereto, inviting them to submit comments within one month from the date of publication.

Official Journal of the European Union

| 7. | This Decision is authentic in the English language. |
| --- | --- |

7.

This Decision is authentic in the English language.

Done at Brussels, 26 May 2005.

For the EFTA Surveillance Authority

Einar M. BULL

Acting President

Bernd HAMMERMANN

College Member

---

(1)  Hereinafter referred to as the EEA Agreement.

1

(2)  Hereinafter referred to as the Surveillance and Court Agreement.

2

(3)  Guidelines on the application and interpretation of Articles 61 and 62 of the EEA Agreement and Article 1 of Protocol 3 to the Surveillance and Court Agreement, adopted and issued by the EFTA Surveillance Authority on 19 January 1994, published in OJ 1994 L 231, EEA Supplement 3.9.1994 No 32. The Guidelines were last amended on 15.12.2004.

3

(4)  In accordance with the provisions of Protocol 21 to the EEA Agreement and Article 11 of Chapter II, Protocol 4 to the Surveillance and Court Agreement.

4

(5)  The consortium included inter alia the Icelandic telecom operator Landssími Íslands hf., Teleglobe and Deutsche Telekom.

5

inter alia

(6)  See Summary Report, provided as Annex 1 to the notification.

6

(7)  See also the following comment by the Icelandic authorities: ‘Although the designated universal service provider, and as such required to provide secure long-distance communication, Síminn felt that increasing the capacity to meet demand, as well as providing an alternative route for emergencies, was a financially risky undertaking, providing little return on investment. In order to facilitate the necessary upgrade in capacity, particularly in view of the short time frame available until capacity would be outstripped by demand, the government stepped in.’

7

Although the designated universal service provider, and as such required to provide secure long-distance communication, Síminn felt that increasing the capacity to meet demand, as well as providing an alternative route for emergencies, was a financially risky undertaking, providing little return on investment. In order to facilitate the necessary upgrade in capacity, particularly in view of the short time frame available until capacity would be outstripped by demand, the government stepped in

(8)  In 2003, E-Farice ehf held 80 % of the shares in Farice hf, with the 20 % remaining shares held by Føroya Tele (17,3 %) and other Faeroe parties (together 2,7 %).

8

(9)  The IBM report stresses the business possibility that E-Farice's purchase of CANTAT-3 connectivity gives the possibility to ring-connect the two cable systems in such a way that Farice hf. can offer its customers secured connectivity. The report further describes negotiations of E-Farice with Teleglobe to further lease CANTAT-3. It has been discussed whether Farice hf. or E-Farice should lease all available capacity to Iceland and the Faeroe Islands.

9

all

(10)  Initial capital contributions, which were later changed. The holding company E-Farice holds all the shares of the Icelandic parties in Farice hf.

10

(11)  Although in the letter accompanying the notification reference is made to Libor as the basis for establishing the rate of interest to the Loan for each tranche, clause 7.1 of the Loan Agreement refers to Euribor. For this reason, the Authority considers the Euribor rate to be the valid reference for the determination of the rate of interest applicable to the Loan for each interest period.

11

(12)  Brackets throughout the text indicate figures which have been deleted because they are covered by the obligation of professional secrecy.

12

(13)  It seems however, that this statement by the Icelandic authorities rather refers to the share capital split between the capital holder in June 2003. In January 2003, the Icelandic government had a share of EUR 6,2 million.

13

(14)  Press release of 3 February 2004.

14

(15)  Communication of 13.2.2001, COM (2001) 35 final.

15

(16)  Commission decision N 527/02 — Greece Financial support of a private company for the design, construction, testing and commissioning of the aviation fuel pipelines for supply of the new Athens International Airport.

16

(17)  See Commission decision C 67-69/2003 concerning aid for the construction of a propylene pipeline between Rotterdam, Antwerp and the Ruhr-area, paragraph 48. The Authority will further look at the argument of the Icelandic authorities that according to Directive 2002/20/EC the license can only be granted by way of authorisation and that therefore the requirement of a public tender cannot be relevant. The Authority takes the preliminary view that, given all the other circumstances in this case, even if the argument was found valid, it is not likely to make a difference for the assessment.

17

(18)  See Commission decision N 527/02 with further references in footnote 8. Also Commission decision N 860/01 — Austria on the ski resort Mutterer Alm where the running of ski lifts was considered to be an economic activity benefiting the operator of the ski lift and therefore not constituting an infrastructure measure. See Commission decision C 67-69/2003, paragraph 48.

18

(19)  See Case T-128/98, Aéroports de Paris v. European Commission, [2000] ECR II-3929.

19

Aéroports de Paris

European Commission

(20)  See Commission decision N 213/2003 — Project Atlas, broadband infrastructure for business parks.

20

(21)  The provisions of the loan agreement foresee the possibility of prepaying the whole or part of the loan, except for the A term loan, without any prepayment fee.

21

(22)  The Icelandic authorities do not consider that aspect, but look at the adequacy of the market price as such. The result is that the fact that the State guarantee has led to better loan conditions than market conditions, is neither considered under the first condition (see above) nor under the fourth condition.

22

(23)  According to Clause 7.4 of the Loan Agreement, solely the margin for the A Term Loan can be modified after signature of the agreement. Such an amendment may take place on 18 March 2011 and will be effective until the loan maturity. As this is depending on the future negotiations, the Authority is not in a position to assess whether such a modified margin would constitute State aid within the meaning of Article 61(1) of the EEA Agreement or whether such aid could be authorised. However, the Icelandic authorities would be able to identify the existence of an aid element for any future modification by applying the calculation parameters laid down in the previous paragraph and, in case of the existence of an aid element, would have to notify the aid measure to the Authority.

23

(24)  See section I 3.b of this Decision.

24

(25)  See letter by the Icelandic authorities dated 25 June 2004, page 3.

25

(26)  The Authority is aware of the reference of the Icelandic authorities to the speech of the chairman on 24 January 2004. However, this speech only states that there is a ‘modestly profitable business case’ and that the private operators also provided securities. The latter point has never been denied by the Authority; the question whether the share increase by the State is proportionate is, however, not answered.

26

modestly profitable business case

(27)  The Icelandic authorities have not provided information which enables the Authority to make an assessment under that provision.

27

(28)  Commission Regulation (EC) No 70/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises (OJ L 10, 13.1.2001, p. 33), as amended by Commission Regulation (EC) No 364/2004 of 25 February 2004 (OJ L 63, 28.2.2004, p. 22). The point ‘Aid to small and medium enterprises’ was inserted by Joint Committee Decision No 88/2002 (OJ L 266, 3.10.2002, p. 56 and EEA Supplement No 49, 3.10.2002, p. 42), e.i.f. 1.2.2003. The amendment was inserted by Decision No 131/2004 (OJ No L 64, 10.3.2005, p. 67 and EEA Supplement No 12, 10.3.2005, p. 49), e.i.f. 25.9.2004.

28

(29)  As stated in the summary report submitted by the Icelandic authorities in the notification dated 27 February 2004, the consortium member Teleglobe, in particular, was faced with business difficulties.

29

(30)  Data transmission in which a single medium can carry several channels at once. The term is also used to compare frequency bandwidth greater than 3 MHz narrowband frequencies. Broadband can transmit more data at a higher speed.

30

(31)  See e-Europe 2004 Action Plan, Communication from the Commission, An information society for all, 28.5.2002, COM (2002) 263 final, see Commission Decision N 231/2003 Project Atlas — broadband infrastructure for business parks and N 307/2004 Broadband in Scotland — remote and rural areas.

31

(32)  The Icelandic authorities state: ‘Widespread participation was sought in Iceland and the Faeroe Islands for shareholders in the Farice project and all telecoms operators were invited to participate in the foundation of the company.’

32

Widespread participation was sought in Iceland and the Faeroe Islands for shareholders in the Farice project and all telecoms operators were invited to participate in the foundation of the company

(33)  Commission Decision N 307/2004, N 199/2004 and N 213/2003.

33

(34)  Cf. Case C-225/91, Matra SA v Commission, [1993] ECR-3203, paragraph 41.

34

Matra SA

Commission

(35)  On the co-existence of existing infrastructure, see Commission Decision N 307/2004, paragraph 45, where it is positively outlined that this minimises the risk of unnecessary duplication and limits the economic impact for operators that already have infrastructure in place. See also Commission Decision N 199/2004, paragraph 41, N 213/2003, paragraph 47.

35

(36)  See footnote 8 of this Decision.

36

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| 10.11.2005 | EN | Official Journal of the European Union | C 277/29 |
| --- | --- | --- | --- |

10.11.2005

EN

Official Journal of the European Union

C 277/29

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STATE AID — ICELAND

Notice by the EFTA Surveillance Authority to EFTA States, EU Member States and other interested parties

State aid measure 47901 (former SAM 030.02.006) — Proposed aid in the form of a State guarantee in favour of deCODE Genetics in relation to the establishment of a drug development department

(2005/C 277/09)

By letter dated 27 May 2002, the Icelandic Government notified the EFTA Surveillance Authority of a proposal to provide a guarantee to deCODE Genetics Inc. (US) in connection with a research and development project which the company intends to undertake in the field of biotechnology in Iceland.

In May 2002, the Icelandic Parliament authorised the Ministry of Finance to issue a guarantee to deCODE Genetics Inc. (US) in relation to a bond amounting to USD 200 million. The proceeds of the bond would be utilised to establish a new drug development department in Iceland and to finance several drug development programmes.

On 16 July 2003, the Authority initiated the formal investigation procedure laid down in Article 1(2) of Protocol 3 to the Surveillance and Court Agreement in respect of the aid. The decision was published in the EEA Section of and the EEA Supplement to the Official Journal of the European Union
   (1).

By letter dated 14 April 2004, Iceland withdrew the above notification.

As the Icelandic authorities have withdrawn the notification and do not intend to grant the aid notified, the Authority has decided to close the proceedings initiated under Article 1(2) of Protocol 3 to the Surveillance and Court Agreement.

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(1)  OJ C 308, 18.12.2003, p. 22 and EEA Supplements to the Official Journal of the European Union No 63, p. 10 of the same date.

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European Central Bank

| 10.11.2005 | EN | Official Journal of the European Union | C 277/30 |
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10.11.2005

EN

Official Journal of the European Union

C 277/30

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RECOMMENDATION OF THE EUROPEAN CENTRAL BANK

of 26 October 2005

to the Council of the European Union on the external auditors of the Central Bank and Financial Services Authority of Ireland

(ECB/2005/10)

(2005/C 277/10)

THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,

Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular Article 27.1 thereof,

Whereas:

| (1) | The accounts of the European Central Bank (ECB) and of the national central banks of the Eurosystem are audited by independent external auditors recommended by the Governing Council of the ECB and approved by the Council of the European Union. |
| --- | --- |

(1)

The accounts of the European Central Bank (ECB) and of the national central banks of the Eurosystem are audited by independent external auditors recommended by the Governing Council of the ECB and approved by the Council of the European Union.

| (2) | The mandate of the current external auditors of the Central Bank and Financial Services Authority of Ireland has expired and will not be renewed. It is therefore necessary to appoint external auditors from the financial year 2005. |
| --- | --- |

(2)

The mandate of the current external auditors of the Central Bank and Financial Services Authority of Ireland has expired and will not be renewed. It is therefore necessary to appoint external auditors from the financial year 2005.

| (3) | The Central Bank and Financial Services Authority of Ireland has selected Deloitte & Touche as its external auditors starting from the financial year 2005, and the ECB considers that they fulfil the necessary requirements for appointment. |
| --- | --- |

(3)

The Central Bank and Financial Services Authority of Ireland has selected Deloitte & Touche as its external auditors starting from the financial year 2005, and the ECB considers that they fulfil the necessary requirements for appointment.

| (4) | The mandate of the external auditors will be for three years and may be extended, |
| --- | --- |

(4)

The mandate of the external auditors will be for three years and may be extended,

HAS ADOPTED THIS RECOMMENDATION:

It is recommended that Deloitte & Touche should be appointed as the external auditors of the Central Bank and Financial Services Authority of Ireland from the financial year 2005 for a duration of three years, with the possibility of extension.

Done at Frankfurt am Main, 26 October 2005.

The President of the ECB

Jean-Claude TRICHET

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