EFTA Surveillance Authority Decision No 22/04/COL of 25 February 2004 with regard to a notification of a new direct transport aid scheme (Norway)
Date: 2004-02-25
Institutions: EFTA Surveillance Authority
Subjects: Norway, State aid, carriage of goods, control of State aid, eligible region, regional aid, social-security contribution, transport price

L 168/36

EN

Official Journal of the European Union

30.6.2005

II

(Acts whose publication is not obligatory)

EUROPEAN ECONOMIC AREA

EFTA SURVEILLANCE AUTHORITY

EFTA SURVEILLANCE AUTHORITY DECISION

No 22/04/COL

of 25 February 2004

with regard to a notification of a new direct transport aid scheme (Norway)

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 and 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,

Having called on interested parties to submit their comments pursuant to the provisions cited above (4),

Whereas:

1. Introduction

I. FACTS

By letter from the Mission of Norway to the European Union dated 26 March 2003 (Doc. No: 03-1846 A),
forwarding a letter from the Ministry of Trade and Industry dated 25 March 2003, a letter from the Ministry
of Finance dated 25 March 2003 and a letter from the Ministry of Local Government and Regional
Development dated 25 March 2003, all received and registered by the Authority on 26 March 2003,
the Norwegian authorities notified a transition period for the regionally differentiated social security contri-
butions and a new direct transport aid scheme.

By letter dated 16 May 2003 (Doc. No: 03-2951 D), the Authority acknowledged the receipt of the above
letters and requested additional information.

By letter from the Mission of Norway to the European Union dated 10 June 2003 (Doc. No: 03-3707 A),
forwarding a letter from the Ministry of Finance dated 5 June 2003, both received and registered by the
Authority on 11 June 2003, the Norwegian authorities submitted additional information.

(1) Hereinafter referred to as the EEA Agreement.
(2) Hereinafter referred to as the Surveillance and Court Agreement.
(3) Procedural and Substantive Rules in the Field of State Aid (State Aid Guidelines), adopted and issued by the EFTA
Surveillance Authority on 19 January 1994. Published in OJ L 231, 3.9.1994, p. 1. The Guidelines were last amended
on 18 February 2004 (not yet published).

(4) Decision No 141/03/COL of 16 July 2003 (OJ C 216, 11.9.2003, p. 3 and EEA Supplement No 45 11.9.2003, p. 1).

30.6.2005

EN

Official Journal of the European Union

L 168/37

By letter from the Mission of Norway to the European Union dated 19 June 2003 (Doc. No: 03-3976 A),
forwarding a letter from the Ministry of Trade and Industry dated 10 June 2003, both received and
registered by the Authority on 20 June 2003, the Norwegian authorities submitted a survey documenting
additional transport costs (5).

By letter dated 16 July 2003 (Doc. No: 03-4598 D), the Authority informed the Norwegian authorities of its
decision to initiate the procedure laid down in Article 1(2) in Part I of Protocol 3 to the Surveillance and
Court Agreement, with regard to State aid in the form of regionally differentiated social security contri-
butions and direct transport aid (hereinafter the decision to open an investigation).

The decision to open an investigation was published in the Official Journal of the European Union (6). The
Authority invited interested parties to present comments on the aid schemes concerned.

The official response of the Norwegian authorities to the decision to open an investigation was received by
fax from the Ministry of Trade and Industry dated 17 September 2003, forwarding a letter from the
Ministry of Finance dated 17 September 2003 (Doc. No: 03-6381 A). The letter from the Ministry of
Finance dated 17 September 2003 was also forwarded by letter from the Mission of Norway dated 18
September 2003, received and registered by the Authority on 19 September 2003 (Doc. No: 03-6451 A).
The letter from the Ministry of Finance contained, inter alia, an extended version of the survey of additional
transport costs that was submitted to the Authority by letter dated 19 June 2003.

The Authority received comments from 10 interested parties concerning the decision to open an investi-
gation.

By letters dated 16 October 2003 (Doc. No: 03-7071 D) and 17 October 2003 (Doc. No: 03-7135),
respectively, the Authority submitted the comments from third parties to the Norwegian authorities.

By fax dated 21 October 2003, the Ministry of Trade and Industry forwarded a reply dated 21 October
2003 from the Ministry of Finance (Doc. No: 03-7243 A) concerning the comments from third parties. By
letter from the Mission of Norway dated 23 October 2003, received and registered by the Authority on 24
October 2003 (Doc. No: 03-7360 A), the letter from the Ministry of Finance was also forwarded to the
Authority.

By letter from the Mission of Norway to the European Union dated 22 October 2003, forwarding a letter
from the Ministry of Local Government and Regional Development dated 20 October 2003, both received
and registered by the Authority on 24 October 2003 (Doc. No: 03-7362 A), the Norwegian authorities
notified an extension of the geographic area eligible for direct transport aid that was notified by letter dated
25 March 2003.

By letter dated 19 December 2003 (Doc. No: 03-8952 D), the Authority requested additional information
and clarification, in particular concerning the cumulation rules contained in the notified scheme.

By fax dated 21 January 2004, the Ministry of Trade and Industry forwarded a letter dated the same day
from the Ministry of Local Government and Regional Development (Event No: 187224) containing addi-
tional information. By letter from the Mission of Norway to the European Union dated 23 January 2004,
received and registered on 26 January 2004 (Event No: 188041), the same letter was forwarded to the
Authority.

By fax dated 9 February 2004, the Ministry of Trade and Industry forwarded a letter dated the same day
from the Ministry of Local Government and Regional Development (Event No: 189794). By letter from the
Mission of Norway to the European Union dated 11 February 2004, received and registered on 12 February
2004 (Event No: 191138), the same letter was forwarded to the Authority. The letter dated 9 February from
the Ministry of Local Government and Regional Development contained a minor change concerning the
administration of the scheme.

(5) Institute of Transport Economics (TØI). Arbeidsdokument av 4.6.2003. U-2899. TR1180/2003.
(6) See footnote 4.

L 168/38

EN

Official Journal of the European Union

30.6.2005

The notification dated 25 March 2003 and the decision to open an investigation referred to above,
concerned a three year transitional period, from 2004 to 2007, for the regionally differentiated social
security contributions, as well as the introduction of a new direct transport aid scheme. The Authority
decided on 12 November 2003 to close — with a positive decision — the investigation concerning the
three year transitional period for the regionally differentiated social security contributions (Dec. No:
218/03/COL) (7).

Consequently, the present decision deals with two aspects concerning the direct transport aid scheme.
Firstly, the notification dated 25 March 2003 and the subsequent decision to open an investigation.
Secondly, the additional notification dated 22 October 2003 containing a geographical extension of the
scheme.

2. Description of the aid scheme notified on 25 March 2003

2.1. Aim of the scheme

The Norwegian authorities point out that extra transport cost is one of the permanent disadvantages or
costs of distance related handicaps for firms located in peripheral areas and within sparsely populated
regions compared to firms located in central areas. According to the Norwegian authorities, the aim of
the new scheme is thus partly to offset the competitive disadvantages that additional transport costs
represent for enterprises situated long distances from their markets.

2.2. Proposed eligible geographic area

The following counties/municipalities were proposed as eligible for national direct transport aid:

— Troms: Harstad, Tromsø, Kvæfjord, Skånland, Bjarkøy, Ibestad, Gratangen, Lavangen, Bardu, Salangen,

Målselv, Sørreisa, Dyrøy, Tranøy, Torsken, Berg, Lenvik and Balsfjord,

— Nordland: all municipalities,

— Nord-Trøndelag: Leka, Nærøy, Vikna, Flatanger, Fosnes, Overhalla, Høylandet, Grong, Namsos,
Namsskogan, Røyrvik, Lierne, Snåsa, Inderøy, Namdalseid, Verran, Mosvik, Verdal, Leksvik, Meråker
and Steinkjer,

— Sør-Trøndelag: Hemne, Snillfjord, Hitra, Frøya, Ørland, Agdenes, Rissa, Bjugn, Åfjord, Roan, Osen,

Oppdal, Rennebu, Meldal, Røros, Holtålen, Midtre Gauldal, Selbu and Tydal,

— Møre og Romsdal: Kristiansund, Vanylven, Sande, Herøy, Ulstein, Hareid, Norddal, Stranda, Stordal,
Rauma, Nesset, Midsund, Sandøy, Aukra, Eide, Averøy, Frei, Gjemnes, Tingvoll, Sunndal, Surnadal,
Rindal, Aure, Halsa, Tustna and Smøla,

— Sogn og Fjordane: Gulen, Solund, Hyllestad, Høyanger, Vik, Balestrand, Leikanger, Sogndal, Aurland,
Lærdal, Årdal, Luster, Askvoll, Fjaler, Gaular, Jølster, Bremanger, Vågsøy, Selje, Eid, Hornindal, Gloppen
and Stryn.

The proposed areas eligible for direct transport aid are within the eligible area for regional aid, approved by
the Authority on 17 December 1999 (327/99/COL), except for the municipalities Herøy (8 374 inha-
bitants), Ulstein (6 664 inhabitants), Hareid (4 780 inhabitants) and Aukra (3 026 inhabitants) in Møre
og Romsdal county. The area for regional aid in Norway covers 25,2 % of the total population (8), while the
proposed area for the new direct transport aid scheme, as notified on 25 October 2003, covers 16,0 % of
the total population (721 079 inhabitants).

The Norwegian authorities state that the designation of the area for regional transport aid is based on
Annex XI of the State Aid Guidelines, which establishes criteria for granting aid to offset additional
transport costs in low population density areas, i.e. regions with fewer than 12,5 inhabitants per square
kilometre.

(7) OJ L 145, 9.6.2005, p. 25.
(8) All the population figures used in this decision are on 1 January 2002. The total population of Norway on 1 January

2002 was 4 503 436 inhabitants.

30.6.2005

EN

Official Journal of the European Union

L 168/39

The counties Troms, Nordland, Nord-Trøndelag and Sogn og Fjordane have a population density of fewer
than 12,5 inhabitants per square kilometre.

The counties Sør-Trøndelag and Møre og Romsdal do not have a low population density, but the parts of
these counties proposed eligible for direct transport aid have a low population density (4,1 and 9,6
inhabitants per square kilometre, respectively). The total population of the municipalities in the two
counties that are included in the proposed area is 179 792.

The Norwegian authorities state in the notification that the population covered by the existing indirect
transport aid scheme (the geographically differentiated social security contributions scheme) is 23,55 %
compared to a population coverage of 16,01 % in the new proposed area, and that this is in accordance
with the first condition in the fifth indent in Annex XI (see section II.3 below) of the State Aid Guidelines
for national regional aid.

2.3. Calculation of the regional direct transport aid

According to the notification, aid may only be given in respect of the extra costs of transporting goods
inside the national territory, calculated on the basis of the most direct and economical mode of transport
between the place of production and processing and the nearest commercial outlet. When transporting
goods to destinations in Sweden and Finland, the calculation of the total transport distance also includes the
distances within Sweden and Finland. However, aid is only given to the transport costs occurred within the
national borders.

Only documented transport costs may form the basis for calculating the aid. The transport aid is calculated
as a percentage of the total transport costs. The transport costs must be specified in a consignment note or
equivalent document that is dependent on the transport distance inside national boundaries, weight of
goods and type of goods and on freight charges and other charges that may be attributed to the actual
transport. Compensation is given on the basis of applications from the firms, the year after the transport
costs occurred.

The aid intensity will be differentiated according to two geographical transport zones and according to
transport distance (minimum 350 km). The highest aid intensity priority is given to Troms, Nordland and
Nord-Trøndelag (zone 1) while Sør-Trøndelag, Møre og Romsdal and Sogn og Fjordane (zone 2) is subject
to lower aid intensity. Table 1 below shows the differentiation in aid intensities.

Table 1

Aid intensity

Transport distances in kilometres

Zone 1

Zone 2

(in %)

350-700

701-

30

40

20

30

2.4. Documentation of additional transport costs

By letter dated 10 June 2003, the Ministry of Trade and Industry submitted a survey from the Institute of
Transport Economics (TØI) (9) on the extra transport costs in the proposed area for transport aid. The
survey is based on interviews with 33 enterprises divided into six samples (geographic areas). The 33
enterprises are selected from the Central Register of Establishments and Enterprises (CRE) at Statistics
Norway (10) by using a random sample statistical method. The conclusion from TØI is that sample 1
(the three northernmost counties (Troms, Nordland and Nord-Trøndelag)) and sample 2 (counties in
Western-Norway (Sør-Trøndelag, Møre og Romsdal and Sogn og Fjordane)) have on average transport
costs per man-year — in total and for transport distances above 350 kilometres — that are significantly
above comparable cost figures for the reference area. The reference area is zone 1 of the geographically
differentiated social security contributions scheme (mostly Oslo and surrounding areas).

(9) Interju av industribedrifter i aktuelle transportstøttesoner og i referansesoner. Arbeidsdokument av 4.6.2003.
(10) ‘Statistisk sentralbyrås bedrifts- og foretaksregister’.

L 168/40

EN

Official Journal of the European Union

30.6.2005

2.5. Duration of the scheme

1 January 2004-31 December 2006.

2.6. Budget

The budget is estimated at approximately NOK 200 million (some EUR 24,5 million) per year.

2.7. Cumulation

By setting the maximum aid intensities as percentages of the total transport costs (see table 1 above), the
Norwegian authorities state that they will ensure that firms are not being overcompensated. If undertakings
benefit from a reduced social security contribution in the same period, the advantages of this reduction will
be deducted from the transport aid grant calculated according to table 1. Furthermore, the undertakings will
not receive more in transport aid from the new transport aid scheme and reduced social security contri-
butions, altogether, than the amount equivalent to what they would have received through the existing
differentiation of social security contributions.

2.8. Sectors exempted from the scheme and sensitive sectors that are subject to specific notification requirements

The economic activities hereunder cannot, according to the notification, receive direct transport aid.

(a) The scheme does not apply to transport or transmission of products of the following sectors and/or

products of businesses without an alternative location:

— production and distribution of electricity,

— extraction of crude petroleum and natural gas,

— service activities incidental to oil and gas extraction excluding surveying,

— mining of metal ores,

— extraction of the industrial minerals nepheline syenite and olivine.

(b)

Industries covered by specific sectoral rules

The following sectors may not receive regional transport aid due to specific sectoral rules:

— enterprises covered by the Act referred to in point 1a and b of Annex XV to the EEA Agreement (on

aid to the steel industry and aid to shipbuilding).

(c) Economic activities within the agriculture/forestry-and-fisheries-sectors that will still be subject to the

current system of differentiated rates of social security contribution.

Direct transport aid given to the motor vehicle industry or industrial production of synthetic fibres will,
according to the notification, be subject to prior notification and approval by the Authority in accordance
with the State Aid Guidelines.

2.9. The decision to open an investigation

In its decision of 16 July 2003 to open an investigation, the Authority expressed two doubts in respect of
the direct aid scheme.

Firstly, the Authority noted that four of the notified municipalities proposed eligible for direct transport aid
are outside the approved regional aid map (Herøy, Ulstein, Hareid and Aukra). As the Norwegian authorities
have not notified an adjustment of the map of assisted areas, the Authority considered that direct transport
aid to these four municipalities would be incompatible with the State aid provisions of the EEA Agreement.

30.6.2005

EN

Official Journal of the European Union

L 168/41

Secondly, the Authority considered that the documentation submitted by the Norwegian authorities did not,
to a sufficient degree, prove that additional transport costs exist in the geographical areas in southern
Norway proposed eligible for direct transport aid (Sogn og Fjordane, Møre og Romsdal and Sør-Trøndelag).

2.10. Comments from Norway to the decision to open an investigation

By letter dated 17 September 2003 from the Ministry of Finance, the Norwegian authorities submitted
comments on the Authority’s decision to open an investigation. The Norwegian authorities stated that, to
ensure the validity of the previously presented documentation for extra transport costs in the notified area
for transport aid, they had carried out a more extended survey compared to the one submitted by letter
dated 19 June 2003 (enclosed with the comments). This survey confirmed the results of the previous survey,
according to the Norwegian authorities.

transport aid. The conclusions of

The extended survey (11) covers 39 enterprises, including firms in the area not proposed eligible for the new
national transport aid. Transport costs in zone 1 of the geographically differentiated social security contri-
butions scheme are established as reference transport costs compared to extra transport costs in areas
the study confirm, according to the
proposed eligible for direct
Norwegian authorities,
in the counties of Troms, Nordland, Nord-Trøndelag, Sør-
Trøndelag, Møre og Romsdal and Sogn and Fjordane have average transport costs — both in total and
for distances above 350 kilometres — that are significantly higher than for enterprises in the reference area.
The transport costs in the counties Troms, Nordland and Nord-Trøndelag are 220 % higher than the
reference area for transport distances above 350 kilometres. The transport costs in the counties Sør-
Trøndelag, Møre og Romsdal and Sogn og Fjordane are 143 % higher than the reference area for
transport distances above 350 kilometres.

that enterprises

2.11. Comments from interested parties to the decision to open an investigation

Ten organisations and undertakings from Norway submitted comments to the decision to open an inves-
tigation. The main part of the comments concerned the geographically differentiated social security contri-
butions scheme (transition period). The interested parties commenting upon the direct transport aid scheme,
inter alia, stated that they do not know how the direct transport aid scheme will work, or what the effects of
the scheme will be. Some comments also claim that the new direct transport aid scheme will only, to a
limited extent, reduce the additional transport costs for enterprises located in the peripheral regions in
Norway.

By letter dated 23 October 2003 from the Mission of Norway to the European Union, forwarding a letter
dated 21 October 2003 from the Ministry of Trade and Industry and a letter dated 21 October 2003 from
the Ministry of Finance, all received and registered by the Authority on 24 October (Doc. No: 03-7360 A),
the Norwegian authorities briefly commented upon the comments from third parties. The Norwegian
authorities note that the considerations and figures put forward in the comments from third parties
substantiate the arguments that have been presented previously to the Authority. The Norwegian authorities
also note that no third parties have raised any objections to the notified direct transport aid scheme.

3. Description of the notification of 22 October 2003

3.1. Extension of the geographical scope

On 22 October 2003 the Norwegian authorities notified an extension of the geographical scope of the
scheme notified on 25 March 2003. The following 13 municipalities were also proposed as eligible for
national direct transport aid:

in Hedmark county: Rendalen, Engerdal, Tolga, Tynset, Alvdal, Folldal and Os,

in Oppland county: Dovre, Lesja, Lom, Skjåk, Vågå and Sel.

The total population in these 13 municipalities is 37 271 persons. Both Hedmark and Oppland have a
population density of fewer than 12,5 inhabitants per square kilometre. The population density for the area
in Hedmark proposed as eligible for direct transport aid is 1,5 inhabitants per square kilometre, while it is
2,0 inhabitants per square kilometre for the proposed eligible area in Oppland county.

(11) ‘Arbeidsdokument av 4.6.2003 (rev.1.9.2003-U-2899-TR1180/2003)’.

L 168/42

EN

Official Journal of the European Union

30.6.2005

3.2. Amended justification for including municipalities from non-low population density counties (Møre og Romsdal

and Sør-Trøndelag)

In the notification dated 22 October 2003, the Norwegian authorities amended their justification for
including municipalities from counties that do not have a low population density in the proposed area
eligible for direct transport aid (see last paragraph in point I.2.2 above).

The Norwegian authorities now argue that it is justified to include municipalities in Sør-Trøndelag and Møre
og Romsdal according to Annex XI of the State Aid Guidelines, because the population of Sør-Trøndelag
and Møre og Romsdal within the proposed area for direct transport aid is 179 792 inhabitants, while the
population in other low density population counties (12) within the regional aid map, but outside the
proposed transport aid map,
is 172 322 inhabitants. The population within the proposed direct
transport aid area in Sør-Trøndelag and Møre og Romsdal (counties with a population density higher
than 12,5 inhabitants per square kilometre) is thus slightly higher (7 470 inhabitants) than the population
within the regional aid map, but outside the proposed direct transport aid map, in counties with a low
population density. The Norwegian authorities consider that it is within the Authority’s discretionary powers
to approve this limited increase in the population covered by the scheme.

3.3. Additional documentation of transport costs

As part of the amended notification of 22 October 2003, the Norwegian authorities submitted a new survey
covering enterprises in notified municipalities in Hedmark and Oppland. The method used is the same as in
the first survey (see point 2.4 above).

The survey (13) — also carried out by TØI — covers 13 enterprises in 13 municipalities in the northern
parts of the counties of Hedmark and Oppland. Engerdal municipality was not covered by the survey, but is
included in the additional notification. The survey confirms, according to the Norwegian authorities, that the
enterprises in these 12 municipalities have transport costs — both in total and for distances above 350
kilometres — that on average are significantly higher than the costs of enterprises in the reference area. The
reference area is the same as for the first study. The survey concludes that the transport costs in the 12
municipalities are 120 % higher than the reference area for transport distances above 350 kilometres.

1. The existence of aid

Article 61(1) of the EEA Agreement reads as follows:

II. APPRECIATION

‘Save as otherwise provided in 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 notified aid is being funded by State resources and will favour certain undertakings in the meaning of
Article 61(1) of the EEA Agreement. The benefiting enterprises are actually or potentially in competition
with similar undertakings in Norway and other EEA States. As the proposed aid distorts or threatens to
distort competition and affects trade within the EEA, the scheme therefore constitutes State aid in the
meaning of Article 61(1) of the EEA Agreement.

2. Notification requirement
Article 1(3) in Part I of Protocol 3 to the Surveillance and Court Agreement states: ‘The EFTA Surveillance
Authority shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or
alter aid.’ Aid provided without notification or aid that is notified late, i.e. notified after being ‘put into
effect’ is considered unlawful aid.

(12) Population within the low density population counties of Aust-Agder, Telemark, Hedmark and Oppland.
(13) ‘Arbeidsdokument av 22.9.2003-U-2929-TR1194/2003’.

30.6.2005

EN

Official Journal of the European Union

L 168/43

By letters from the Mission of Norway to the European Union dated 26 March 2003 (Doc. No: 03-1846 A),
10 June 2003 (Doc. No: 03-3707 A), 22 October 2003 (Doc. No: 03-7362 A), 23 January 2004 (Event No:
188041) and 11 February 2004 (Event No: 191138) the Norwegian authorities have complied with their
obligation under Article 1(3) in Part I of Protocol 3 to the Surveillance and Court Agreement by notifying
the aid measure before putting it into effect.

3. Relevant legal basis

In their notifications, the Norwegian authorities qualified the aid granted under the proposed scheme as
transport aid.

Chapter 25.4(27) of the Authority’s State Aid Guidelines states that:
‘In the regions of low population
density qualifying either for exemption under Article 61(3)(a) or under 61(3)(c) on the basis of the
population density test referred to in Chapter 25.3, paragraph 17, aid intended partly to offset additional
transport costs (14) may be authorised under special conditions. It is up to the EFTA State to prove that such
additional costs exist and to determine their amount.’

Chapter 25(3), paragraph 17, of the State Aid Guidelines defines low population density as below 12,5
inhabitants per square kilometre.

With regard to the special conditions for regions qualifying for the Article 61(3)(c) derogation under the
population density criterion, Chapter 25.4(27) of the Guidelines refers to Annex XI that sets out the
conditions to be met for aid to qualify for exemption. The conditions to be met are:

‘— Aid may serve only to compensate for the additional cost of transport. The EFTA State concerned
will have to show that compensation is needed on objective grounds. There must never be over-
compensation. Account will have to be taken here of other schemes of assistance to transport.

— Aid may be given only in respect of the extra cost of transport of goods inside the national borders

of the country concerned. It must not be allowed to become export aid.

— Aid must be objectively quantifiable in advance, on the basis of an aid-per-kilometre ratio or on the
basis of an aid-per-kilometre and an aid-per-unit-weight ratio, and there must be an annual report
drawn up which, among other things, shows the operation of the ratio or ratios.

— The estimate of the additional cost must be based on the most economical form of transport and the

shortest route between the place of production or processing and commercial outlets.

— Aid may be given only to firms located in areas qualifying for regional aid on the basis of the new
population density test. Such areas will be made up essentially of NUTS level III geographic regions
with a population density of less than 12,5 inhabitants per square kilometre. However, a certain
flexibility is allowed in the selection of areas, subject to the following limitations:

— flexibility in the selection of areas must not mean an increase in the population covered by

transport aid,

— the NUTS III parts qualifying for flexibility must have a population density of less than 12,5

inhabitants per square kilometre,

— they must be contiguous with NUTS III regions which satisfy the low population density test,

— their population must remain low compared with the total coverage of the transport aid;

(14) Additional transport costs mean the extra costs occasioned by movements of goods within the borders of the country
concerned. In no circumstances may such aid constitute export aid, nor must it constitute measures having an
equivalent effect to quantitative restrictions on imports, within the meaning of Article 11 of the EEA Agreement.

L 168/44

EN

Official Journal of the European Union

30.6.2005

— No aid may be given towards the transport or transmission of the products of businesses without an

alternative location (products of the extractive industries, hydroelectric power stations, etc.);

— Transport aid given to firms in industries which the EFTA Surveillance Authority considers sensitive
(motor vehicles, synthetic fibres, shipbuilding and steel) must always be notified in advance and will
be subject to the industry guidelines in force.’

In Chapter 25.5(5) of the State Aid Guidelines it is stated in relation to the EFTA State’s regional aid maps
that: ‘During the period of validity of the map, EFTA States may request adjustments to it, if it is shown that
socioeconomic conditions have changed significantly. Such changes may relate to the rates of intensity and
the eligible regions, provided that the possible inclusion of new regions is offset by the exclusion of regions
having the same population. The validity of the adjusted map expires on the date already set for the original
map’.

The Authority has examined the two notifications dated 25 March 2003 and 22 October 2003, respectively,
in light of Article 61(3)(c) of the EEA Agreement and the relevant parts of the State Aid Guidelines on
national regional aid cited above.

4. The notification dated 25 March 2003

The assessment of the notification dated 25 March 2003, which was the subject of the opening decision
dated 16 July 2003, has led to the following observations:

(a) The aid is limited to regions of low population density qualifying for Article 61(3)(c) status, with the exception of
four municipalities (Chapter 25.4(27) and 25.5(5) and fifth indent of Annex XI of the State Aid Guidelines)

The Norwegian authorities have notified four municipalities outside the current regional aid map (Herøy,
Ulstein, Hareid and Aukra).

The Authority’s authorisation of the map of assisted areas for Norway in 1999 (327/99/COL) implied an
endorsement of the granting of aid to enterprises in areas covered by the regional aid map under approved
regional aid schemes. It follows that regional aid (for example direct transport aid) cannot be granted
outside the approved map of assisted areas.

Chapter 25.5(5) of the State Aid Guidelines obliges Member States to remove existing regions of the
approved regional aid map,
in order to include new regions. As the Norwegian authorities have not
notified an adjustment of the map of assisted areas in accordance with Chapter 25.5(5) of the State Aid
Guidelines, regional aid (direct transport aid) to the four municipalities outside the regional aid map (Herøy,
Ulstein, Hareid and Aukra, all located in the county of Møre og Romsdal)) is incompatible with the State aid
provisions of the EEA Agreement. Consequently, the Norwegian authorities cannot implement the notified
aid scheme for these four municipalities.

The total population coverage in the notification dated 25 March 2003 was 721 079 inhabitants, or 16,0 %
of the total population in Norway. The total population of Herøy, Ulstein, Hareid and Aukra is 22 844
inhabitants. The population coverage without these four municipalities therefore becomes 698 235 inha-
bitants, or 15,5 % of the total population.

The population coverage in Sør-Trøndelag and Møre og Romsdal (the counties that do not have a low
population density) was 179 792 inhabitants in the notification dated 25 March 2003. Without the four
municipalities Herøy, Ulstein, Hareid and Aukra the population coverage for these two counties becomes
156 948 (15) inhabitants, which is lower than the population within the regional aid map in counties with a
low population density that is not proposed eligible for direct transport aid (Hedmark, Oppland, Telemark
and Aust-Agder). The total population within the regional aid map in these four counties is 209 593
inhabitants.

(15) 179 792 – 22 844 = 156 948.

30.6.2005

EN

Official Journal of the European Union

L 168/45

The areas in Sør-Trøndelag and Møre og Romsdal proposed eligible for direct transport aid have a
population density lower than 12,5 inhabitants per square kilometre. They are contiguous with the
counties that satisfy the low population density test (Nord-Trøndelag and northwards). The population
coverage in Sør-Trøndelag and Møre og Romsdal (156 948 inhabitants) amounts to 22,5 % of the total
population coverage of the proposed scheme (698 235 inhabitants).

As to the rest of the notified areas, they are all Article 61(3)(c) EEA areas with a low population density. The
conditions of Chapter 25.4(27) and the fifth indent of Annex XI are fulfilled.

(b) The Norwegian authorities have proven that additional transport costs exist and have determined their amount

(Chapter 25.4(27) of the State Aid Guidelines)

To document additional transport costs, the Norwegian authorities have submitted two surveys. The first
one by letter from the Mission of Norway to the European Union dated 19 June 2003, the second one,
which is an extension of the first one, by letter from the Mission of Norway to the European Union dated
18 September 2003. Both surveys are random sample surveys where a number of firms were selected
according to established statistical methods. For the selected firms data on transport costs were assembled.

In the opening decision (dated 16 July 2003), the Authority expressed doubts about the documentation
submitted by the Norwegian authorities (the first survey). The Authority considered that the survey did not,
to a sufficient degree, prove that additional transport costs exist in the geographical areas in southern
Norway proposed eligible for direct transport aid (Sogn og Fjordane, Møre og Romsdal and Sør-Trøndelag).

In the second survey, the number of enterprises was increased. The study now confirms that enterprises
located in the proposed area for direct transport aid have additional transport costs. Enterprises in the
counties of Troms, Nordland, Nord-Trøndelag, Sør-Trøndelag, Møre og Romsdal and Sogn and Fjordane
have average transport costs, both in total and for distances above 350 kilometres, that are significantly
higher than for enterprises in the reference area. Enterprises in Troms, Nordland and Nord-Trøndelag have
transport costs that are 220 % higher than enterprises in the reference area for transport distances above
350 kilometres. Enterprises in Sør-Trøndelag, Møre og Romsdal and Sogn and Fjordane have transport costs
that are 143 % above the reference area for transport distances above 350 kilometres.

The Authority finds that the Norwegian authorities have proven that additional transport costs exist, and
that the condition of Chapter 25.4(27) of the State Aid Guidelines therefore is fulfilled.

(c) The aid serves to compensate for the additional transport costs only (first indent of Annex XI of the State Aid

Guidelines)

The aid intensities presented in table 1 in point I.2.3 above ensure that enterprises can receive aid up to a
maximum of 40 % of their transport costs (for transport distances above 701 kilometres). Only transpor-
tation of more than 350 kilometres will be eligible for transport aid. The Authority considers that this is
consistent with the results of the surveys presented by the Norwegian authorities (see point I.3.3 above) and
finds that the scheme does not provide aid in excess of what is needed to compensate these additional
transport costs.

In order to ensure that companies are not being overcompensated, any benefit from a reduced social
security contribution rate will be deducted from the transport aid grant calculated according to table 1
in point I.2.3 above.

The condition in the first indent of Annex XI of the State Aid Guidelines is thus fulfilled.

(d) Aid is given only in respect of transport of goods inside the national borders of the country concerned (second

indent of Annex XI of the State Aid Guidelines)

Under the scheme, aid may only be given in respect of the extra cost of transport of goods inside national
boundaries and calculated on the basis of the direct and most economical option of transport mode
between the place of production and processing and commercial outlet. When transporting goods to
destinations in Finland and Sweden, the calculation of total transport distance also includes the distances
within Sweden and Finland but aid is only given to the transport costs incurred within the national borders.

L 168/46

EN

Official Journal of the European Union

30.6.2005

The condition in the second indent of Annex XI of the State Aid Guidelines is therefore fulfilled.

(e) The aid is objectively quantifiable in advance on the basis of an aid-per-kilometre and an aid-per-unit-weight ratio;
the estimate of additional costs is based on the most economical form of transport and the shortest route (third and
fourth indent of Annex XI of the State Aid Guidelines)

The proposed scheme satisfies these requirements in the following manner:

— the aid is calculated as a percentage of the transport costs (see table 1 in point I.2.3),

— the transport costs refer to reasonable costs specified in a consignment note or equivalent document,
and which are dependent on the transport distance inside national boundaries, weight of goods and type
of goods and on freight charges and other charges that may be attributed to the actual transport,

— transport costs must be calculated on the basis of the most economical mode of transport and the

shortest route between place of production and the destination.

The conditions in the third and fourth indent of Annex XI of the State Aid Guidelines are thereby fulfilled.

(f) The sector-specific arrangements are complied with (sixth and seventh indent of Annex XI of the State Aid

Guidelines)

— The scheme does not apply to transport or transmission of the products of businesses without an
alternative location: production and distribution of electricity, extraction of crude petroleum and natural
gas, service activities incidental to oil and gas extraction excluding surveying, mining of metal ores and
extraction of the industrial minerals nepheline syenite and olivine.

— The scheme does not apply to enterprises covered by the Act referred to in point 1a and b of Annex XV

to the EEA Agreement (on aid to the steel industry and aid to shipbuilding).

— The scheme does not apply to agriculture, forestry and fisheries that will continue to be subject to the

current system of geographically differentiated social security contributions.

The conditions in the sixth and seventh indent of Annex XI of the State Aid Guidelines are thus fulfilled.

5. The amended notification dated 22 October 2003

By letter from the Mission of Norway to the European Union dated 22 October 2003, the Norwegian
authorities notified a geographical extension of the scheme notified on 25 March 2003 (see point I.3.1
above).

To document additional transport costs, the Norwegian authorities have submitted a survey that documents
additional transport costs for the 13 proposed eligible municipalities in Hedmark and Oppland counties.
The conclusion of the survey is that the enterprises in these 13 municipalities have transport costs — both
in total and for distances above 350 kilometres — that, on average, are significantly higher than the costs of
enterprises in the reference area (120 % for transport distances above 350 kilometres).

The Authority finds that the survey proves that additional transport costs exist for the notified 13 munici-
palities.

The Authority notes that the extension of the geographical scope of the scheme brings the total population
coverage for the scheme up to 735 506 inhabitants (16), or 16,3 % of the total population (without the
municipalities Herøy, Ulstein, Hareid and Aukra).

The Authority also notes that the population density in the proposed areas from Hedmark and Oppland is
lower than 12,5 inhabitants per square kilometre.

(16) 698 235 + 37 271 = 735 506.

30.6.2005

EN

Official Journal of the European Union

L 168/47

Furthermore, the population within the regional aid map in counties with a low population density that is
not proposed eligible for direct transport aid becomes 172 322 inhabitants (17), which is higher than the
population of the areas in Møre og Romsdal and Sør-Trøndelag (the counties that do not have a low
population density) that is proposed eligible for direct transport aid (156 948 inhabitants).

Concerning the notification of 22 October 2003, the Authority concludes that the population density in the
13 municipalities is lower than 12,5 inhabitants per square kilometre and that they are within the existing
regional aid map. The inclusion of these 13 municipalities does not bring the population coverage in the
non-low population density counties Møre og Romsdal and Sør-Trøndelag (156 948 inhabitants) above the
population coverage in the low population density counties Hedmark, Oppland, Telemark and Aust-Agder
that is not proposed eligible for direct transport aid (172 322 inhabitants). The Norwegian authorities have
also proven that additional transport costs exist for the 13 additional municipalities. As to the remaining
requirements that need to be fulfilled, the Authority refers to the assessment in point 4 above that are
equally valid when the 13 municipalities are included in the scheme.

6. Conclusion

The Authority concludes, with reference to the arguments above, that direct transport aid to the four
municipalities Herøy, Ulstein, Hareid and Aukra is incompatible with the State aid provisions of the EEA
Agreement and the aid shall not be put into effect for these four municipalities. Otherwise, the notified
direct transport aid scheme is compatible with the EEA Agreement.

The Norwegian authorities are reminded that they are obliged to inform the Authority of any plan to amend
or extend the scheme. The Norwegian authorities are also requested to submit an annual report providing
detailed information on the implementation of the scheme and on the aid-per-kilometre ratio or the aid-per-
kilometre and aid-per-unit-weight ratio in particular,

HAS ADOPTED THIS DECISION:

1. Direct transport aid to the four municipalities Herøy, Ulstein, Hareid and Aukra is incompatible with the
State aid provisions of the EEA Agreement. The aid shall not be put into effect for these four munici-
palities.

2. The direct transport aid scheme, as notified by the Norwegian authorities on 25 March 2003 and
22 October 2003, with the exception of direct transport aid to the four municipalities mentioned in
point 1 above, is compatible with Article 61(3)(c) of the EEA Agreement.

3. This decision is addressed to the Kingdom of Norway.

4. This decision is authentic in the English language.

Done at Brussels, 25 February 2004.

For the EFTA Surveillance Authority

The President

Hannes HAFSTEIN

College Member

Einar M. BULL

(17) 209 593 – 37 271 = 172 322.