Det Kongelige Samferdselsdepartement
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DET KONGELIGE SAMFERDSELSDEPARTEMENT Ministry of Transport and Communications EFTA Surveillance Authority (ESA) Rue Belliard 35 B-1040 Brussels Belgium Your ref Our ref Date U/1708-AU 19.12.2011 Reply to the Authoritys letter of formal notice for failure to comply with the fundamental principle of non-discrimination laid down in Article 4 and Article 48 of the EEA-Agreement Dear Sir/Madam Reference is made to the Authority's letter of formal notice regarding the above mentioned issue in the Authority's cases Nos 69548 and 69656, and to former correspondence concerning these cases. Reference is also made to the discussions at the package meeting in Oslo on 11. November 2011. In its letter of formal notice the Authority concludes that by allowing Aust-Agder County (the county) to award concessions for bus transport services without any form of publication, and to prolong these concessions without any form of publication, Norway has failed to comply with the principles of non-discrimination and transparency arising from Article 4 and 48 of the EEA Agreement. Furthermore, at the package meeting in November the Authority informed the Norwegian representatives that, in case Norway agrees with the views expressed by the Authority in its letter of formal notice, the Norwegian Government will be expected to identify the measures it intends to take to rectify the breach of EEA law and, in case an annulment of the contracts would not be possible, to provide a proper justification for that. The Ministry of Transport and Communications (hereinafter the Ministry) has forwarded the Authority's letter of formal notice to the County. ALT Law Firm that represents the county in this case has drawn up a letter explaining in details the situation as regards the award of concessions in the county, and has presented its Postal address: Office address: Tel. - switchboard Department of Public Reference: Postboks 8010 Dep Akersg. 59 +47 22 24 90 90/ and Rail Transport Anne-Lise Junge- 0030 OSLO www.regjeringen.no/sd +47 22248301 Telefax:+4722 24 95 73 jensen Org. no.: 972 417 904 +4722 24 81 29 arguments as regards the issues raised by the Authority in its letter of formal notice. The Ministry asks the Authority to study the arguments brought by the County in the enclosed letter with enclosures, and to assess the case in the light of the information and arguments provided in the letter. The Ministry's observations From the letter of formal notice the Ministry understands that the Authority holds that contracting authorities are not yet under the obligation to award contracts on the basis of a competitive tendering procedure. This is also the view of the Ministry. The Ministry recognizes that the award of public service concessions, as a starting point, is covered by the principles of transparency and non-discrimination. However, there does not seem to be established any detailed rules regarding the actual advertisement of the intention to enter into a service concession. Before the entering into force of Regulation No. 1370/2007 on public passenger transport services by rail and by road, the question of publication of concessions for direct award seemed particularly unclear in the transport sector. The Ministry is of the impression that the Commission's approach to contribute to the clarification of the legal uncertainty as regards the award of concessions in the transport sector, was to adopt Regulation 1370/2007, and that the Commission has not pursued individual cases in the transport sector, except for cases concerning state aid. Furthermore, it is the Ministry's impression that there is great variation between EEA states as regards the practice of awarding concessions in the transport sector. In this particular case, the Ministry would like to underline that the County is actually planning to put the relevant contracts out to tender, and that the process of tendering will be finalized long before the deadline in 2019 set in Regulation 1370/2007. The County seems to have a clear intention of complying with the rules of the Regulation. Furthermore, the Ministry would like to draw the Authority's attention to the fact that the concessions in question are all limited in time - all to a rather short period. The far biggest concession (covering approximately 70 percent of the compensation granted) is prolonged only for a period of 2 years. As demonstrated in the enclosed letter from ALT Law Firm, the process of tendering out public service concessions in the bus sector takes time if the authorities are to ensure a fair and open competition complying with EEA-law (e.g. the duty to publish the intent of the tender procedure 1 year in advance). The process should allow for more operators than the one at present operating the service to compete for the concession. Time must also be given for potential new operators to purchase the material needed to operate the service. Page 2 At this stage the Ministry asks the Authority to consider the arguments brought by the County in the enclosed letter as regards the compliance with the principles of non discrimination and transparency arising from Article 4 and 48 of the EEA Agreement. As regards the question of corrective measures the Ministry will revert to the question at a later stage if necessary. Yours^sincerely, Anne-Lise Junge-Jensen Enclosure Page 3 alt LAW FIRM EFTA Surveillance Authority Rue Belliard 25 B-1040 Brussels Belgium Oslo, 16 December 2011 BUS TRANSPORT SERVICES - REPLY TO THE EFTA SURVEILLANCE AUTHORITY'S LETTER OF FORMAL NOTICE (CASE 69548 AND 69656) 1 INTRODUCTION ALT Law Firm represents the County of Aust-Agder in the present case. Reference is made to the EFTA Surveillance Authority's (the Authority) letter of formal notice dated 12 October 2011. Reference is also made to the Authority's letters of 15 and 25 March 2011 and the letter from the Norwegian Government of 14 April 2011 in which a letter from the County of Aust-Agder (hereinafter the County) was enclosed. The Authority's preliminary view is that the public service concessions to bus companies appears to have been granted in violation of the principles of non-discrimination and transparency arising from Article 4 and Article 48 of the EEA Agreement. The County submits that it has endeavoured to comply with the EEA rules and principles when granting the concessions, and that no breach of EEA rules has been committed. It is also mentioned that the County will open the relevant market for competition earlier than required by Regulation 1370/2007. In the following, the County will elaborate on the relevant facts and the applicable law. \l I i.m linn lOru.m ')1>M SIHisS j Ui,s,-nkraiil/-;ilc JO. illdiW Ni<> \,.rv,.!\ 4 ~ 'ill (t ~: ^s '; i ; u \> u ..iliaiK okai.üo 2 FACTS 2.1 Introduction In this section, a brief presentation of case-relevant facts will be given. First, the holders of the public service concessions will be presented. Secondly, a chronological overview of the concession development since the 1920s and the processes prior to the award of the concessions at issue will be given. Finally, the County's plans to gradually open the market for competition will be presented. 2.2 The bus companies 2.2.1 Holders of the public service concessions The public service concessions have been granted to the following bus companies, which provide bus transport services in the County: • Birkeland Busser AS • Frolandsruta Frode Oland • NettbussSorAS1 • Setesdal Bilruter L/L • Telemark Bilruter AS In item 2.2.2 to 2.2.6, the County will provide brief information regarding the bus companies which is relevant for the case.' 2.2.2 Birkeland Busser AS (organization number 989 260 944) Birkeland Busser AS is owned by Setesdal Bilruter L/L (organization number 915 814 581). At the moment, Birkeland Busser AS has 32 employees. The company operates less than 23 vehicles. With regard to the company's operation in Aust-Agder under the public service obligation, the company provides a total annual amount of 390 000 kilometres of public passenger transport services. The annual value of the service concession contract amounted to NOK 10 353 000 in 2010. The County's grant in 2010 amounted to NOK 6 718 000. 2.2.3 Frolandsruta Frode Oland (Organization number 981 643 135) The owner of Frolandsruta Frode Oland is Frode Stoltenberg Oland. The company has three employees. Frolandsruta Frode Oland operates less than 23 vehicles. With regard to the company's operation in Aust-Agder under the public service obligation, the company provides a total annual amount of 120 000 kilometres of public passenger transport services. The total value of the service concession contract was NOK 2 779 000 in 2010. The County's grant in 2010 amounted to NOK 1 529 000. 1 The companies Risor og Tvedestrand Bilruter AS and Hovagruta AS previously provided public transport services. These companies were merged with Nettbuss Ser AS in the autumn 2008. 2 For further information about the companies, see enclosure 1. 1 2.2.4 Nettbuss Sor AS (organization number 910 261 258) Nettbuss Ser AS is part of the Nettbuss-group. The owner of Nettbuss Sar AS is Nettbuss AS. Norges Statsbaner AS is the owner of Nettbuss AS. At present, Nettbuss Sor AS has 729 employees. The company operates far more than 23 vehicles. With regard to the company's operation in Aust-Agder under the public service obligation, the company provides a total annual amount of 6 000 000 kilometres of public passenger transport services. The total value of the service concession contract was NOK 156 495 000 in 2010.