EN Official Journal of the European Union C 11/6

Invitation to submit comments pursuant to Article 1(2) in Part I of Protocol 3 to the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice on State aid in favour of Sandefjord Fotball AS

(2015/C 11/05)

By means of Decision No 444/14/COL of 22 October 2014, 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. The Norwegian authorities have been informed by means of a copy of the Decision.

By means of this notice, the EFTA Surveillance Authority invites the EFTA States, EU Member States and interested parties to submit their comments on the measure in question within one month of the date of publication to:

EFTA Surveillance Authority Registry Rue Belliard/Belliardstraat 35 1040 Bruxelles/Brussel BELGIQUE/BELGIË

The comments will be communicated to the Norwegian authorities. The identity of the interested party submitting the comments may be withheld following a request in writing stating the reasons for the request.

SUMMARY

Procedure

Following several complaints and market information, the EFTA Surveillance Authority (the Authority) investigated alleged State aid in favour of Sandefjord Fotball AS, a professional football club. The Authority subsequently sent two requests for information to which the Norwegian authorities have replied.

Description of the measure

By way of an agreement dated 28 November 2006, the municipality of Sandefjord transferred two plots of land in the Pindsle area free of charge to subsidiaries of Sandefjord Fotball AS. The land in question (zoned for agricultural use) had previously been acquired by the municipality for NOK 3,7 million and then rezoned for stadium and business use.

According to the agreement, Sandefjord Fotball AS was obliged to build a football stadium (at an estimated cost of around NOK 110 million) on part of the land, and could sell the other part to help finance the construction. Shortly thereafter, Sandefjord Fotball AS sold its subsidiary owning this second part of the land to Pindsle Property AS for NOK 40 million. No valuation of the company was undertaken prior to the sale.

The agreement also contained a number of further obligations. In particular, Sandefjord Fotball AS agreed to carry out road works at the stadium site (at a cost of approx. NOK 6,5 million) and to cover costs in relation to the discontinued use of the old stadium, including repairs (together approx. NOK 2,6 million).

The new stadium was completed in July 2007 at a total construction cost of NOK 100 million. In addition to the football pitch and stands, it contains a number of other facilities, including an athletics track, a fitness centre and meeting rooms. These are rented out free of charge to other (mainly amateur sport) organisations.

On 9 June 2009, Sandefjord Fotball AS sold the company owning the stadium and adjacent business properties to Pindsle Property AS for NOK 15 million. The price was based on an expert report, which was required as several individuals held board positions and shareholdings in both the club and Pindsle Property AS. Following the sale, Sandefjord Fotball AS has been paying annual rent of NOK 3 million plus 30 % of the value of ticket sales for the use of the stadium. According to the Norwegian authorities, the rent level corresponds to what other football clubs in Norway pay for stadium use.

Comments by the Norwegian authorities

According to the Norwegian authorities, the agreement of 28 November 2006 by which the plots of land were transferred obliged Sandefjord Fotball AS to build the stadium at an estimated cost that vastly exceeded the value of the land. Therefore the transfer of land could not result in the granting of an economic advantage to Sandefjord Fotball AS.

Regarding the value of the two plots of land in question, the Norwegian authorities argue that the land on which the stadium is located does not have any market value as its zoning includes the use as a football stadium. This means that any development of the land must include the construction of a football stadium, implicating very important construction costs. No buyer except for the football club would thus be interested in the land.

Regarding the value of the other plot, the Norwegian authorities argue that the price of NOK 40 million paid by Pindsle Property AS does not reflect the market price, but was rather based on the financial requirements of Sandefjord Fotball AS. The owners of Pindsle Property AS were supporters of the football club and wanted to contribute to the stadium construction. The Norwegian authorities have provided a third-party expert valuation indicating a market price of around NOK 15 million.

Finally, the Norwegian authorities argue that the further obligations contained in the agreement of 28 November 2006 in relation to road works and the discontinued use of the old stadium, including repairs, should be deducted from the value of the land.

The presence of State aid

Since the municipality of Sandefjord acquired land that was subsequently given free of charge to Sandefjord Fotball AS, state resources within the meaning of Article 61 of the EEA Agreement are involved.

Sandefjord Fotball AS is a professional football club engaged in economic activities on several markets, including the transfer market for players as well as the markets for ticket sales, television rights, club memorabilia and sponsorship. It therefore qualifies as an undertaking. Since it was the only beneficiary, the measure is selective.

The municipality of Sandefjord did not follow the procedures set out in the Authority’s guidelines on State aid elements in sales of land and buildings by public authorities. As a result, the Authority cannot exclude the presence of State aid based on the procedure followed by the municipality.

Regarding the transfer of the land on which the stadium was built, the Authority is not convinced that the obligation to build a football stadium can be considered to reduce the market price to zero. Furthermore, the Norwegian authorities have not justified the sale at a price below the acquisition cost for the municipality.

Regarding the transfer of the land zoned for business use, the Authority considers that a market economy operator selling land would not have included a condition in relation to the construction or financing of a stadium in the contract. The Authority further considers at this stage that the price of NOK 40 million paid by Pindsle Property AS for the company owning the land provides a more reliable indication of market value than the ex post valuation report put forward by the Norwegian authorities.

Regarding the further costs incurred by Sandefjord Fotball AS pursuant to the agreement that the Norwegian authorities claim to be deductible from the market price, the Authority is not yet convinced that they reflect costs that the municipality would otherwise have to bear itself.

Finally, the Authority considers that the measure in question is liable to distort competition and to affect trade between the Contracting Parties to the EEA Agreement as Sandefjord Fotball AS is engaged in economic activities on markets that cover several countries in the EEA. In particular, the club is active on the international transfer market, regularly recruiting players notably from other countries in the EEA.

The Authority therefore arrives at the preliminary conclusion that the transfer of land at issue resulted in the granting of State aid in favour of Sandefjord Fotball AS.

Compatibility of the aid

Under Article 61(3)(c) of the EEA Agreement, State aid to promote sport, including aid for sport infrastructure, may be considered compatible with the functioning of the EEA Agreement where such aid does not affect trading conditions and competition in the EEA to the extent that is contrary to the common interest.

However, the Norwegian authorities have not yet put forward any arguments regarding compatibility. Consequently, the Authority currently has doubts whether the transfer of land to Sandefjord Fotball AS could be deemed compatible under Article 61(3)(c) of the EEA Agreement.

Conclusion

In light of the foregoing considerations, the Authority decided to open the formal investigation procedure in accordance with Article 1(2) of Part I of Protocol 3 to the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice with regard to State aid in favour of Sandefjord Fotball AS. Interested parties are invited to submit their comments within one month from publication of this notice in the Official Journal of the European Union.

In accordance with Article 14 of Protocol 3, all unlawful aid can be subject to recovery from the recipient.