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The Market Economy Investor Principle (MEIP) applied to a lease agreement and the use of a tender procedure for this purpose

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On 16 July, the ETA Surveillance Authority (ESA) opened an in-depth investigation into potential aid granted by the Icelandic authorities through a lease of an optical fibre previously operated on behalf of NATO.

In April 2008, the Icelandic State Trading Centre organised a tender for the use and operation of two optical fibres out of the three fibres previously reserved for defence purposes. The purpose of the tender was to lower the State's maintenance and operating costs of the optical fibres, increase public broadband access and encourage competition in data transmission. In February 2010, a contract with Vodafone Iceland was concluded on the basis of the tender for the use of one of the fibres.

Following a complaint lodged on behalf of M铆la, a competitor of Vodafone Iceland, ESA opened a preliminary examination of the allegedly subsidised lease. In 2012, without opening a formal investigation procedure, ESA concluded that the lease was awarded following an open and well-publicised tender procedure. Thus, it did not contain aid.[1] This was challenged before the EFTA Court. In January 2014, the Court annulled it in .

In particular, as the EFTA recalled, 芦[w]here a public authority proceeds to sell an asset by way of an open, transparent and unconditional tender procedure, it may be presumed that the market price corresponds to the highest offer, provided, that it is established that the offer is binding and credible, and that the consideration of economic factors other than the price cannot be justified. 鈥 The criteria used in the tender procedure in the present case were as follows: 鈥淪timulation of competition鈥 was awarded 40 out of 100 points, 鈥渞ental charge鈥 15 points, 鈥渃ommencement of services鈥 10 points, 鈥渟upply of services鈥 10 points, 鈥渘umber of network termination points鈥 15 points, and 鈥渙ne tariff throughout the country鈥 10 points. It is obvious that the tender procedure in question did not use price or leasing charge as the sole or main selection criterion. It was accorded a relative weight of just 15%. Moreover, as pointed out by the Commission, the remaining selection criteria appear to reflect public policy or regulatory considerations. They do not appear to be criteria that a similarly situated private operator would consider relevant when tendering out a lease.[2]

As the Court ruled, the examination conducted by ESA was insufficient. Thus, 芦ESA adopted the contested decision notwithstanding that the information and evidence it had at its disposal during the preliminary examination phase should, objectively, have raised doubts or serious difficulties as to whether the lease agreement conferred an economic advantage on Vodafone禄[3]. As noted, the 2012 decision was annulled.

ESA has now preliminarily concluded that the lease with Vodafone may contain aid. In the course of the in-depth investigation procedure, it will verify whether the tender procedure ensured that the payment for the lease was at market price and, as a consequence, whether awarding the lease complied with the MEIP or whether it amounted to aid in favour of Vodafone Iceland.

The decision to open a formal investigation procedure is without prejudice to the final decision of ESA, which will now call for further comments from the Icelandic authorities and third parties with an interest in the case. A non-confidential version of today鈥檚 decision to will shortly be published on ESA鈥檚 website and in the Official Journal of the European Union.


[1] 410/12/COL: EFTA Surveillance Authority Decision of 21.11.2011 on alleged state aid through subsidised lease of optical fibres previously operated on behalf of NATO.

[2] Case E-1/13 - M铆la ehf. v EFTA Surveillance Authority, judgment of 27.1.2014, see paras 97-99.

[3] Ibid, para 101.