Case handler: lngeborg Maria GundemTel: (+32)(0)22861892igu@eftasurv.int

Norsk IndustriCo: Gunnar GriniPostboks 7 07 2 Majorstuen0306 OsloNorway

Brussels, 24May 2017Case No: 79457Document No: 854974

Subject: \ilaste collection in Tromss (complaint)- Preliminary assessment under paragraph 48 (b) of the Authority's

Guidelines on Best Practice for the conduct of state aid controlprocedures

Reference is made to your complaint dated 15 August 2016 and your subsequent submissiondated 15 December 2016 to the Competition and State Aid directorate of the EFTASurveillance Authority ("the Authority') concerning alleged unlawful aid granted to RerniksNering AS by contracting out the waste collection from municipal buildings and institutionsin Tromss to Remiks Nrering AS without any prior tender process and for a price above

normal market price.

The Authority would first like to point out that this letter only concerns your state aid

complaint. It does not affect your discussions concerning the alleged breach of the rules onpublic procurement, which is handled by the Authority's Internal Market Directorate.

Under Article 61(1) of the EEA Agreernent a measure constitutes state aid if the followingconditions are cumulatively fulfilled: the measure (i) is granted by the state or through state

resources; (ii) confers a selective economic advantage on the beneficiary; and (iii) is liableto affect trade between Contracting Parties and to distort competition.

Following a preliminary examination of your complaint, the Authority takes the view thatRemiks Nering AS has not received aid in breach of the EEA state aid rules, as the

Municipality of Tromso appears to have purchased the services of collection of municipalcommercial waste at market price. Therefore, no advantage has been bestowed upon Rerniks

Nrring AS.

According to your state aid complaint and later submission, the Municipality of Tromssallegedlypays Roniks Nrering AS more than market price for the collection of commercial

waste from municipal buildings.

You advance two lines of arguments in support of this allegation: (1) benchmarking against

prices paid by the Municipality of Bodo; and (2) that the Municipality of Tromss should

have negotiated cheaper prices.

Rue Betliard 35, B-1040 Brussels, tel: (+32X0)2 286 l8 I l, fax: (+32)(0)2286 18 00, www'eftasurv'int

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1. Benchmarking

You allege that the Municipality of Tromss pays disproportionally more than theMunicipality of Bodo for similar waste collection services, taking into account thedifferences in size and population between these municipalities.

However, the Norwegian authorities have been able to demonstrate that the collection ofcommercial waste from municipal buildings in Bods does not provide an appropriatebenchmark in the case at hand for two reasons:

- First, the respective contracts are different in nature. While in the case at hand, theMunicipality of Tromss pays a set price for waste collection services, theMunicipality of Bodo pays per kilogram of waste collected. These two types ofcontracts are not directly comparable.

- Second, benchmarking with other municipalities is not an appropriate way toevaluate the market price for the collection of municipal waste. Market conditions,and therefore prices, vary greatly between the different cities and areas of Norway.The market price will depend for instance on the number of inhabitants and the areacovered by a contract. A dispersed population implies also a decentralisation ofinstitutions and schools, which in turn requires more intensive and costly transport.ln addition, proximity to and the number of waste processing plants in the regionwill affect the price, as well as the type of end-treatment. The Norwegian authoritieshas provided information showing how such factors affect the prices set for thecollection of municipal waste in different municipalities.

Following its preliminary investigation, the Authority thus considers that the benchmark putforward in your complaint does not provide an appropriate indication of market prices forwaste collection services in Tromso. Please note that the Authority enjoys a wide margin ofdiscretion when deciding on whether benchmarks are appropriate.l

2. Price negotiations

In your submission of 15 December 2016, you argue that because the Municipality ofTromss is the largest purchaser of waste collection services in the area concerned, it shouldhave been able to negotiate a beffer price than private operators in the market.

The Authority would like to point out that an advantage, within the meaning of Article 61(l)of the EEA Agreement, is any economic benefit which an undertaking could not haveobtained under normal market conditions.2 To establish whether a transaction complies withmarket conditions, that transaction can be assessed in the light of the terms under whichcomparable transactions carried out by comparable private operators have taken place incomparable situations.3 It is not necessary to establish one precise reference value, but rather

l see,forexample,judgments inBelgiumvCommission,C-56193,EU:C:1996:64,paragraphs l0-ll,AirFrancevCommission,T-358194,8U:T:1996:lg,paragraph l4gatdLenzingAGvCommiision,T-36199,EU:T:2004:3 I 2, paragraph I 50.2 See the Authority's Guidelines on the notion of State aid as referred to in Article 6l(l) of the EEAAgreement (Notion of aid), at paragraph 66, available at http://www.eftasurv.int/media/esa-docs/physical/EFTA-Surveillance-Auhtority-Guidelines-on-the-notion-of-State-aid--8 128 l8--corrected-version-pub I ished-onlinen.pdf.3 Notion of aid, paragraph 98.

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a range of possible values by assessing comparable transactions.a The Authority has a widemargin of appreciation when veriffing the economic soundness of a transaction.s

The case law has clarified that when assessing whether aid has been granted, it is notnecessary to determine whether the State could have made a better deal, but rather if an

advantage has been conferred on the undertaking that it could not have received in any otherway. [n other words, the question assessed is whether Remiks Nrring AS, at the time, couldhave sold the services for the same price in the private market.6

The Norwegian authorities have provided evidence showing that private producers ofcommercial waste purchased the same services from Roniks Nrering AS at the same priceas the Municipality of Tromss did in 2015. There are no indications that the situation wasdifferent in earlier years.

Following its preliminary investigation, the Authority therefore considers that theMunicipality of Tromss has acted in accordance with the market economy operatorprinciple.

Accordingly, with reference to paragraph 48(b) of the Authority's Guidelines on BestPractice for the conduct of state control procedures and based on the information available,it is the Authority's preliminary view that Remiks Nrering AS has not been granted any state

aid in breach of the EEA state aid rules.7

If you have any additional information you would like to submit that might change thispreliminary view, please do so by 23 June 2017. Otherwise, the case will be closed withoutfurther notice.

Yours faithfully,

6^*e'L(WGjermund MathisenDirectorCompetition and State aid

a Notion of aid, paragraph 100.5 Commission communication on the Application of Articles 92 and 93 of the EEC Treaty and of Article 5

of Commission Directive 8Ofz3lEEC to public undertakings in the manufacturing sector, para}7, available

at http://eur-lex.europa.eu/leeal-contenUENlTXT/HTMl/'/uri:CElEX:31993Y11 l3(01)&from:EN6 Judgment rn Heleba I,T-163105, EU:T:2010:59, paragraph 175.7 Available at htEr://www.eftasurv.int/media/state-aid-euidelines/Part-Il--Guidelines-on-Best-Practice-for-the-conduct-of'-state-aid-contro l-procedures-DOC.pdf.