2006/69/: EFTA Surveillance Authority Decision No 69/06/COL of 22 March 2006 amending for the fifty-fifth time the Procedural and Substantive rules in the field of State Aid
Date: 2006-03-22
Institutions: EFTA Surveillance Authority
Subjects: EFTA, State aid, control of State aid, interest, redemption

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EFTA SURVEILLANCE AUTHORITY DECISION

No 69/06/COL

of 22 March 2006

amending for the fifty-fifth time the Procedural and Substantive rules in the field of State Aid

THE EFTA SURVEILLANCE AUTHORITY (1),

HAVING REGARD TO the Agreement on the European Economic Area (2), 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 (3), in particular to Articles 24 and 5(2)(b) thereof and Article 1 in Part
I of Protocol 3 thereof,

WHEREAS under Article 24 of the Surveillance and Court Agreement, the Authority shall give effect to the
provisions of the EEA Agreement concerning State aid,

WHEREAS under Article 5(2)(b) of the Surveillance and Court Agreement, the 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 Authority considers it necessary,

RECALLING the Procedural and Substantive Rules in the Field of State Aid (4) adopted on 19 January 1994
by the Authority (5),

WHEREAS, according to point II under the heading ‘GENERAL’ at the end of Annex XV to the EEA
Agreement, the Authority is to adopt, after consultation with the European Commission, acts corresponding
to those adopted by the European Commission,

WHEREAS the former Chapter 34 of the State Aid Guidelines, which dealt with ‘Reference and discount rates
and interest rates to be applied for the recovery of unlawful aid’ (6) was in whole deleted by College Decision
No 195/04/COL on the 14 July 2004 (7),

WHEREAS the legal basis for the calculation of interest rates, in the case of recovery, is now to be found in
College Decision No 195/04/COL,

WHEREAS reference rates are also dealt with outside recovery situations in the State aid Guidelines,

WHEREAS for the sake of clarity on which rules apply, the Authority finds it necessary to set out in one
single document the various calculation methods and the legal bases for the rate of interest used for
recovery of unlawful aid and for the reference rate and discount rate to be used in other than recovery
situations,

(1) Hereinafter referred to as the ‘Authority’.
(2) Hereinafter referred to as the ‘EEA Agreement’.
(3) Hereinafter referred to as the ‘Surveillance and Court Agreement’.
(4) Hereinafter referred to as the ‘State Aid Guidelines’.
(5) Initially published in OJ L 231, 3.9.1994, p. 1, and in the EEA Supplement thereto No 32 on the same date. An up-

dated version of the State Aid Guidelines is available on the Authority’s website: www.eftasurv.int

(6) Implementing partially Commission notice on the method for setting the reference and discount rates (OJ C 273,
9.9.1997, p. 3) and Commission Communication on interest rates in the case of recovery of unlawful State aid (OJ C
110, 8.5.2003, p. 21).

(7) College Decision No 195/04/COL of 14 July 2004 on the implementing provisions referred to under Article 27 in
Part II of Protocol 3 to the Agreement between the EFTA States on the establishment of a Surveillance Authority and
a Court of Justice (not yet published). Amended by Decision No 319/05/COL of 14 December 2005 (not yet
published). Decision No 195/04/COL corresponds to Commission Regulation (EC) No 794/2004 of 21 April 2004
implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of [ex] Article 93
of the EC Treaty [now Article 88] (OJ L 140, 30.4.2004, p. 1).

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HAVING consulted the European Commission,

RECALLING that the Authority has consulted the EFTA States in letters to Iceland, Liechtenstein and Norway
dated 15 February 2006 on the subject,

HAS ADOPTED THIS DECISION:

The Authority’s State Aid Guidelines shall be amended by introducing a new Chapter 34 on the
1.
method for setting the reference and discount rates outside recovery cases. The new Chapter 34 is enclosed
and forms an integral part of this Decision.

Article 1

2.

The new Chapter 34 will apply as of its adoption by the Authority.

Article 2

The EFTA States shall be informed by means of a letter, including a copy of this Decision and the enclosed
new Chapter 34 of the Authority’s State Aid Guidelines.

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

Article 3

The Decision shall be published in the EEA Section of, and in the EEA Supplement to, the Official Journal of
the European Union.

Article 4

Done at Brussels, 22 March 2006.

For the EFTA Surveillance Authority

Bjørn T. GRYDELAND
President

Kurt JÄGER
College Member

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ANNEX

34. CHAPTER ON SETTING THE REFERENCE AND DISCOUNT RATES (1)

34.1. INTRODUCTION

(1) The EFTA Surveillance Authority sets out in this Chapter the various calculation methods and the legal basis for the
rate of interest used for recovery of unlawful aid in addition to the reference and discount rates to be used in
situations other than for recovery, as for example for calculating the grant equivalent of investment aid (2).

34.2. INTEREST RATE TO BE USED IN THE CASE OF RECOVERY

(2) In the situation where unlawful aid has to be recovered by an EFTA State, the legal basis and the calculation method
for the interest rate to be used is to be found in Article 9 of EFTA Surveillance Authority Decision No
195/04/COL (3).

(3) However, as stated in Article 13 of Decision No 195/04/COL (4), as regards the execution by EFTA States of
recovery orders notified before 15 July 2004 (the entry into force day of Decision No 195/04/COL), the rules of
the previous Chapter 34 of the EFTA Surveillance Authority’s State Aid Guidelines on the interest rates to be applied
when aid granted unlawfully is being recovered, remain in effect.

(4) According to Article 10 of Decision No 195/04/COL (5), the current and relevant historical State aid recovery
interest rates are to be published in the EEA Section of and the EEA Supplement to the Official Journal of the
European Union and for information on the internet; www.eftasurv.int

34.3. REFERENCE AND DISCOUNT RATES TO BE USED IN SITUATIONS OTHER THAN FOR RECOVERY

(5) For the purposes of the monitoring of State aid as required by the EEA Agreement, the EFTA Surveillance Authority

uses various parameters, including the reference and discount rates.

(6) 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 (6).

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

(1) This Chapter includes the Commission Notice on the method for setting the reference and discount rates (OJ C 273, 9.9.1997, p. 3), as
adapted by Commission Notice on technical adaptions to the method for setting the reference and discount rates (OJ C 241,
26.8.1999, p. 9) and Commission Notice on a technical adjustment to the reference and discount rates for Greece (OJ C 66,
1.3.2001, p. 7), the latter two not being EEA relevant.

(2) The previous Chapter 34 on reference and discount rates and interest rates to be applied for the recovery of unlawful aid was deleted
by EFTA Surveillance Authority Decision No 195/04/COL of 14 July 2004 on the implementing provisions referred to under Article
27 in Part II of Protocol 3 to the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of
Justice (not yet published). Amended by Decision No 319/05/COL of 14 December 2005 (not yet published). Decision No 195/04/COL
largely corresponds to Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No
659/1999 laying down detailed rules for the application of
the EC Treaty [now Article 88] (OJ L 140,
30.4.2004, p. 1). The previous Chapter 34 incorporated in its part 1 (partially) the Commission Notice on the method for setting
the reference and discount rates (see footnote 1) and in its part 2 the Commission Communication on interest rates in the case of
recovery of unlawful State aid (OJ C 110, 8.5.2003, p. 21). Decision No 195/04/COL contains, inter alia, provisions on interest rates for
the recovery of unlawful aid. However, it does not concern the method for setting the reference and discount rates for purposes other
than recovery. In the Community, the reference and discount rates for purposes other than the recovery of unlawful state aid is still
governed by the Commission notice on the method for setting the reference and discount rates (see footnote 1). Commission
Communication of 30 April 2004 concerning the obsolescence of certain State aid policy documents (OJ C 115, 30.4.2004, p. 1)
does not list the Commission Notice on the method for setting the reference and discount rates.

[ex] Article 93 of

(3) See footnote 2.
(4) In conjunction with footnote 9 of the EFTA Surveillance Authority Decision No 195/04/COL (see footnote 2).
(5) See footnote 2.
(6) Commission Regulation (EC) No 69/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to de minimis
aid (OJ L 10, 13.1.2001, p. 30), incorporated into Section 1e in Annex XV to the EEA Agreement by EEA Joint Committee Decision
No 88/2002 (OJ L 266, 3.10.2002, p. 56 and EEA Supplement No 49, 3.10.2002, p. 42).

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(8) As from 15 July 2004 the reference and discount rates are fixed as follows (7):

— the indicative rate is defined as the five-year interbank swap rate, in the relevant currency, plus a premium of

0,75 points (75 basis points);

— the reference and discount rates are deemed to be equal to the average of indicative rates recorded in the

preceding September, October and November;

— the reference and discount rates are adjusted again in the course of the year if they differ by more than 15 %

from the average of the indicative rates recorded over the last known three months.

(9) It should also be noted that:

— the reference and discount rates thus determined are floor rates 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 cases, to use a shorter base rate
(for example Libor one-year rate) or a longer base rate (for example, the rate on ten-year bonds) than the five-
year interbank swap rate;

— in cases where the five-year interbank swap rate is not available, the base rate will be set at the level of the rate

of yield on five-year (or ten-year) State bonds, plus a premium of 25 basis points;

— in the absence of reliable or equivalent data or in exceptional circumstances the Authority may, in close co-
operation with the EFTA State(s) concerned, fix a reference/discount rate, for one or more EFTA States, on the
basis of a different method and on the basis of the information available to it.

(10) Reference and discount rates will be made known by the EFTA Surveillance Authority on the Internet at the

following address; www.eftasurv.int

(11) The Chapter 34 will apply from the date of its adoption by the EFTA Surveillance Authority.

34.4. ADOPTION

(7) As this chapter only applies from 15 July 2004, the previous Chapter 34.1 remains in effect as regards calculation of reference/discount

rates before that date.