Norway food and water quality lab needs financing shake-up, says EFTA

The Norwegian authorities must take appropriate measures in order to bring the financing of the Analysis Centre Trondheim in line with the state aid provisions of the European Economic Area (EEA) Agreement, said a decision adopted by EFTA’s surveillance authority.

The laboratory is known as the Analysis Centre and monitors the water supply system of the Municipality of Trondheim and the shellfish production for the Food Safety Authority.

Laboratory services​

It also provides laboratory services to private customers on a market, where there are already several private operators.

“The Analysis Centre operates as a department of the Municipality of Trondheim which provides funds, premises and collective services at preferential terms. ​

“The authority has found that there is a risk that these advantages enable the Analysis Centre to offer its services below costs, because the Municipality of Trondheim has not separated the non-economic activities of the Analysis Centre from its economic activities.” ​

Since the centre operates as a municipal department, it does not pay any income tax when carrying out its economic activities, explained EFTA.

The authority has concluded that these measures constitute state aid which is not compatible with the EEA Agreement since it may affect competition and trade within the region.

Propose changes​

It is proposed that the Norwegian authorities take the following measures in order to comply with the state aid rules of the EEA Agreement:

• The Municipality of Trondheim should ensure that the accounts of the Analysis Centre are split between the economic and the non-economic activities of the Centre and that there is no cross-subsidisation between the two parts;
• seize all direct payments to the part of the Analysis Centre engaging in economic activities;
• require that the part of the Analysis Centre that performs economic activities pays an appropriate portion of what would constitute the market rent on the buildings it occupies. The market rent should be established by an independent expert;
• should ensure the part of the Analysis Centre that performs economic activities pays an appropriate portion of what would constitute the market price for the collective services referred to above; and
• the rules of business taxation should be modified to include the taxation of the economic activities of the of the Analysis Centre.

The Norwegian authorities have until 20 April 2013 to decide whether to accept the measures proposed by the authority.