Cross-subsidisation and State aid

On 25 February, ESA closed the case concerning the financing of the Analysis Centre in Trondheim after the Norwegian authorities had adopted the «appropriate measures» that ESA proposed in March 2013 following an examination triggered by a complaint filed in July 2010. According to the arguments provided therein, the Analysis Centre was in receipt of illegal aid, which was granted by the Municipality of Trondheim that owns and finances it.

The Municipality of Trondheim has been operating a laboratory for verifying the quality of drinking water and foodstuffs for almost 120 years. At present, these services are provided by the said Analysis Centre Trondheim, Analysesenteret Trondheim. Its main purpose is the control of the municipal water supply system. Furthermore, it monitors shellfish production for the Food Safety Authority, Mattilsynet.

Yet, as established by ESA in 2013, the Centre also provided laboratory services to private customers on a market, where there were already several private operators. These activities could result in cross-subsidisation that led to granting unlawful and incompatible aid in favour of the Centre. This was because it operated as a department of the Municipality of Trondheim that provided funds, premises and collective services at preferential terms. As noted by ESA, the Centre could offer its services below costs, because the Municipality of Trondheim had not separated the non-economic activities of the Analysis Centre from its economic activities. Moreover, since the Analysis Centre operated as a municipal department, it did not pay any income tax when carrying out its economic activities.

In order to bring the financing of the Analysis Centre Trondheim in line with the EU/EEA State aid provisions, in March 2013, ESA proposed «appropriate measures» that the Norwegian authorities accepted and implemented in 2014. The changes introduced into the system of financing of the Centre are as follows:

• The establishment of a separate legal entity, LabTjenester AS, to handle the sales and marketing activities previously carried out by the Analysis Centre. LabTjenester AS is subject to regular business taxation rules.
• New procedures ensuring that no cross-subsidisation takes place between the Analysis Centre and LabTjenester AS. This is achieved through the application of a full cost calculation method, ensuring not only that LabTjenester AS reimburses the full costs to the Analysis Centre for the laboratory services it procures, but also pays a market-based calculated rent for the premises it occupies, and covers the full costs for the collective services it enjoys.
• The assurance that the agreements concluded by LabTjenester AS, as of 1 January 2015, are based on prices covering the full costs relating to the laboratory services procured from the Analysis Centre, with the addition of an amount to cover LabTjenester AS's administrative costs as well as a reasonable profit.