Decision of the EFTA Surveillance Authority

No 72/00/COL

of 5 April 2000

amending for the twenty-sixth time the Procedural and Substantive Rules in the field of State aid, introducing new guidelines for the reference rate of interest

THE EFTA SURVEILLANCE AUTHORITY,

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

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 and Article 1 of Protocol 3 thereto,

Having consulted the European Commission,

Recalling the Procedural and Substantive Rules in the field of the State aid(3) adopted on 19 January 1994 by the EFTA Surveillance Authority(4),

Whereas under Article 24 of the Surveillance and Court Agreement the EFTA Surveillance Authority shall give effect to the provisions concerning State aid;

Whereas under Article 5(2)(b) of the Surveillance and Court Agreement the EFTA Surveillance Authority shall issue notices or guidelines on matters dealt with in the EEA Agreement, if that Agreement or the Surveillance and Court Agreement expressly so provides or if the EFTA Surveillance Authority considers it necessary;

Whereas the European Commission has adopted a notice on the method for setting the reference and discount rates(5);

Whereas a uniform application of the EEA State aid rules is to be ensured throughout the European Economic Area;

Whereas according to point II under the heading "GENERAL" at the end of Annex XV to the EEA Agreement, the EFTA Surveillance Authority is to adopt, after consultation with the Commission, acts corresponding to those adopted by the European Commission in order to maintain equal conditions of competition;

Recalling that the EFTA Surveillance Authority has consulted the EFTA States in writing on the subject of introducing new guidelines on the method for setting the reference and discount rates,

HAS DECIDED AS FOLLOWS:

1. The procedural and substantive rules in the field of State aid shall be amended by introducing a new Chapter 33.2 (Reference rate of interest) as contained in Annex I to this Decision.

2. The EFTA States shall be informed by means of a letter, together with a copy of this Decision, including Annex I.

3. The European Commission shall be informed, in accordance with point (d) of Protocol 27 to the EEA Agreement, by means of a copy of this Decision, including Annex I.

4. This Decision, including the Annex I, shall be published in the EEA section of, and the EEA Supplement to, the Official Journal of the European Communities.

5. This Decision shall be authentic in the English language.

Done at Brussels, 5 April 2000.

For the EFTA Surveillance Authority

The President

Knut Almestad

(1) Hereinafter referred to as the EEA Agreement.

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

(3) Hereinafter referred to as the State Aid Guidelines.

(4) Initially published in OJ L 231, 3.9.1994, and in EEA Supplement No 32 thereto on the same date, as last amended by Decision No 52/00/COL of 1 March 2000 (not yet published in the Official Journal).

(5) OJ C 273, 9.9.1997, p. 3.

ANNEX I

"33.2. Reference rate of interest(1)

For the purposes of EEA monitoring of State aid as required by the EEA Agreement, the EFTA Surveillance Authority uses various parameters, including the reference and discount rates.

Those rates are used to measure the grant equivalent of aid that is disbursed in several instalments and to calculate the aid element resulting from interest subsidy schemes for loans. They are also used in implementing the de minimis rule and for the repayment of illegal aid.

The reference rates are supposed to reflect the average level of interest rates charged, in the various EFTA States parties to the EEA Agreement, on medium and long-term loans (five to 10 years) backed by normal security.

As from 1 April 2000 the reference rates are fixed as follows:

- the indicative rate is defined as the level of the rate of yield on five-year State bonds, in the relevant currency, plus a premium of 25 basis points,

- the reference rate is deemed to be equal to the average of the indicative rates recorded in the preceding months of September, October and November,

- the reference rate will be fixed (from 2001 onwards) with effect from 1 January,

- the reference rate is adjusted again in the course of the year if it differs by more than 15 % from the average of the indicative rates recorded over the last known three months.

It should also be noted that:

- the reference rate thus determined is a floor rate which may be increased in situations involving a particular risk (for example, an undertaking in difficulty, or where the security normally required by banks is not provided). In such cases, the premium may amount to 400 basis points or more if no private bank would have agreed to grant the relevant loan,

- the EFTA Surveillance Authority reserves the right, if necessary for examining certain cases, to use a shorter base rate (for example, LIBOR one-year rate) or a longer base rate (for example, the rate on 10-year bonds) than the rate of yield on five-year State bonds.

Reference rates will be made known by the EFTA Surveillance Authority on the Internet at the following address: http://www.efta.int/".

(1) This chapter partly corresponds to the Commission notice on the method for setting the reference and discount rates (OJ C 273, 9.9.1997, p. 3).