European Commission concludes City of Amsterdam investment in fibre network is not state aid 13-12-2007 The European Commission has approved the investment by the municipality of
Amsterdam and other shareholders in a glass fibre telecommunications network in
the Dutch city. After an in-depth investigation, launched in December 2006, the
Commission concluded that the municipality participates in the project on the
same terms as would a market investor. Therefore the Commission has concluded
that no state aid is involved.
Under EU state aid rules, investments by public authorities in companies
carrying out economic activities can be considered free of aid, if they are made
on terms that a private investor operating under market conditions would have
accepted (the market economy investor principle). In view of preliminary doubts
stemming from the viability of the business plan and certain pre-investments
carried out by the municipality of Amsterdam, the Commission opened a formal
investigation in December 2006.
Following observations from third parties and further clarifications from the
Dutch authorities, the Commission concluded that the two private companies
active in the sector, invested on equal terms with the municipality. In
particular, all investing parties would have to support any losses in the event
of an underperforming business. The structure of the new company ensures that
the private investors have significant stakes in the project in a setup where no
single shareholder can exert sole control over the company. Together with the
detailed analysis of the business plan, these elements provided sufficient
evidence for the Commission to conclude that the investment is conform to the
market economy investor principle and therefore does not involve state aid.
Source:
European
Commission
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