Dear Sir/Madam,

Notification of a new direct transport aid scheme - Request for further information

1. Introduction

In its letter dated 19 December 2003 (Doc.No: 03-8952 D), the Authority asks for some clarification of the content of the letters from the Ministry of Local Government and Regional Development dated 25 March 2003 and 20 October 2003, and the letter from the Ministry of Finance dated 25 March 2003. The Norwegian authorities are pleased to submit comments and answers to the questions from the Authority. We would at the same time like to express our regret that the request for further information was not made at an earlier stage.

Different provisions quoted in the letters from the Ministry of Local Government and Regional Development (25 March and 20 October 2003) and the letter from the Ministry of Finance (25 March 2003)

The Ministry of Local Government and Regional Development agrees with the Authority that the letter from the Ministry of Finance specifies an additional condition (see the underlined sentence below) not mentioned in the letters from the Ministry of Local Government and Regional Development. In our opinion, this additional condition, which further restricts the maximum level of aid from the new transport aid scheme, is not a necessary condition according to Annex XI of the State Aid Guidelines on National Regional Aid. We therefore intended to include this condition in the detailed national regulations for the transport aid scheme and not as part of the notification letter. But to avoid further misunderstanding, the Ministry of Local Government and Regional Development is willing to include this additional condition in the notification, so that the paragraph will now read:

“By setting a fixed maximum aid intensity (see table 1 in the notification letter) for transport aid, the Norwegian Government will ensure that firms are not being overcompensated according to Annex XI to the Authority’s State Aid Guidelines on National Regional Aid. If undertakings benefit from a reduced social security tax in the same period, the advantages of this tax reduction will be deducted from the transport aid grant calculated according to table 1. Furthermore, undertakings will not receive more in transport aid from the new transport aid scheme and reduced social security contributions, altogether, than the amount equivalent to what they would have received through the existing differentiation of social security contributions.

The present notified regional transport aid scheme, administered and financed by the four northern county municipalities of Norway, will continue.”

In this connection, we ask the Authority to note that the municipalities of Steinkjer, Verdal and Inderøy in Nord-Trøndelag and Kristiansund, Averøy, Frei, Ulstein and Hareid in Møre og Romsdal are outside the area that is eligible for differentiated social security contributions as approved by the Authority on 22 September 1999 (228/99/COL). However, these municipalities are within the area that is eligible for regional aid, as approved by the Authority on 17 December 1999 (327/99/COL) and may therefore, according to Annex XI of the State Aid Guidelines on National Regional Aid, be eligible for regional transport aid. These municipalities are thus also included in the proposed area for transport aid.

We would also like to point out that many companies in these municipalities have employees who are resident in neighbouring municipalities where the reduced rate of social security tax applies, and are thus affected by the increase in the tax. We therefore consider that these eight municipalities should be treated in the same way as neighbouring municipalities that are eligible for the reduced level of social security tax. This means that when transport aid is calculated, the eight municipalities should be treated as if they belong to zone II in the system of differentiated social security contributions. Maximum aid intensities will be equal to the theoretical advantage the eight municipalities would have had as a result of a reduced rate of social security tax in zone II.

2. Provision limiting the reduction in social security tax rates in the National Guidelines for Transport Aid (“Nasjonale retningslinjer”)

The Authority has pointed out that the sentence “Kompensasjon i form av redusert arbeidsgiveravgift og direkte transportstøtte må ikke overstige bedriftens dokumenterte ekstra transportkostnader” in the National Guidelines for Transport Aid can be read as a provision limiting the reduction in social security tax rates. We agree that this is an unintended consequence and therefore suggest that the sentence should be removed from the National Guidelines. The entire paragraph would then read as follows:

”Ved beregning av støtte tas det utgangspunkt i bedriftens dokumenterte transportkostnader. Regjeringen har satt en øvre grense for refusjon av de støtteberettigede fraktene som varierer med transportdistanse og bedriftens beliggenhet. Dette vil sikre at ingen bedrifter overkompenseres i tråd med ESAs retningslinjer for regional statsstøtte (Authority’s State Aid Guidelines on National Regional Aid). Ved beregning av refusjon av transportstøtte skal fordelen med redusert avgift trekkes fra beløpet bedriften får i transportstøtte. Videre kan ingen bedrifter motta mer i transportstøtte fra den nasjonale transportstøtteordningen og gjennom redusert arbeidsgiveravgift, til sammen, enn det beløp/fordel bedriften ville hatt gjennom eksisterende ordning med differensiert arbeidsgiveravgift. Bedrifter kan bare motta transportstøtte fra en av de notifiserte transportstøtteordningene (det vil si enten den fylkeskommunale eller den nasjonale ordningen) samme år.”

3. Clarification of the relationship between the existing direct regional transport aid scheme and the new direct national transport aid scheme

Norway currently operates a notified and approved regional transport aid scheme administrated by the counties Finnmark, Troms, Nordland and Nord-Trøndelag. This scheme was approved by the Authority on 19 December 2001 (418/01/COL) and will continue to operate in addition to the new national scheme. To ensure that there will be no overcompensation if an undertaking applies for support from both schemes, undertakings will not be eligible to receive transport aid from both schemes in the same year. An undertaking is free to apply for support from either the direct regional transport aid scheme or the new, direct national transport aid scheme. Thus, the Norwegian authorities will be operating two separate transport aid schemes with different guidelines and different maximum aid intensities, both of which have been notified to the Authority and approved before implementation.

We suggest that the following sentence is included in the National Guidelines for Transport Aid, “In any calendar year, an undertaking may only receive support from one of the notified transport aid schemes.”

4. Concluding remarks

The Ministry of Local Government and Regional Development hopes that the this answers the Authority’s questions, and will be pleased to provide further information and assistance if needed.

Yours sincerely,

Jan Sandal
Director General

Arve Cato Skjerpen
Senior adviser