Carl BILDT Chef För Utrikesdepartementet Arvfurstens Palats Gustav Adolfs Torg 1 SE - 103 39 Stockholm

Home , Arvika, Bengtsfors, Fagersta, Filipstad, Hagfors, Hedemora

EUROPEAN COMMISSION

Brussels, 20.XII.2006 C(2006) 6719

PUBLIC VERSION

WORKING LANGUAGE

This document is made available for information purposes only.

Subject: State aid N 431/2006 – Sweden Regional aid map 2007-2013

Sir,

1. PROCEDURE

(1) By electronic notification dated 30 June 2006, registered at the Commission on the same day the Swedish authorities notified their regional aid map for the period 1.1.2007 – 31.12.2013.

(2) By letter of 11 August 2006 (D/56958) the Commission services asked for complementary information, which the Swedish authorities provided by letter of 11 September 2006, registered at the Commission on the same day (A/37090).

(3) By letter of 27 October 2006 (D/59257) the Commission services asked for further information, which the Swedish authorities provided by letter of 28 November 2006, registered at the Commission on the same day (A/39655).

Carl BILDT Chef för Utrikesdepartementet Arvfurstens palats Gustav Adolfs torg 1 SE - 103 39 Stockholm

Commission européenne, B-1049 Bruxelles – Belgique Europese Commissie, B-1049 Brussel – België Telefon: 00-32-(0)2-299.11.11.

(4) On 21 December 2005, the Commission adopted the Guidelines on national regional aid for 2007-20131 (hereinafter “RAG”). In accordance with paragraph 100 of the RAG each Member State should notify to the Commission following the procedure of Article 88(3) of the Treaty, a single regional aid map covering its entire national territory which will apply for the period 2007-2013. In accordance with paragraph 101, the approved regional aid map is to be published in the Official Journal of the European Union, and will be considered an integral part of the RAG.

2. DESCRIPTION

(5) For the period between 1 January 2000 and 31 December 20062 Sweden had regions covering 15.9% of its population eligible under the derogation of Article 87(3)(c) of the EC Treaty. The Swedish authorities propose that for the period 2007-2013 regions covering 15.3% of their population3 should be eligible to receive regional investment aid under the derogation of Article 87(3)(c) of the EC Treaty at an aid intensity of 15% GGE4 or 10% GGE.

(6) The proposed aid ceilings are those for investments by large enterprises. For medium-sized enterprises5 these aid ceilings can be increased6 by 10 percentage points and for small enterprises7 by 20 percentage points.

(7) The Swedish authorities propose a series of regions for eligibility for regional investment aid under Article 87(3)(c) of the EC Treaty on the basis that they meet the conditions of at least one of the sub-paragraphs 30(b), 30(c) or 30(h) of the RAG:

2.1. Low population density regions proposed for the whole period 2007-2013 for eligibility under Article 87(3)(c)

(8) The following NUTS-III regions are proposed in their entirety as low population density regions for eligibility under the derogation of Article 87(3)(c) of the EC Treaty for the whole period 2007-2013 at an aid ceiling of 15% GGE, with the exception of the population centres8 of Luleå, Umeå and Sundsvall, which together have a population of 170,096:

Inhab/km² proposed population

– SE071 Västernorrland 9 194,573 – SE072 Jämtland 2.6 127,028 – SE081 Västerbotten 3.3 182,177

1 Guidelines on national regional aid for 2007-2013, OJ C 54, 4.3.2006, p. 13.

2 Commission decision of 17 April 2000 concerning State aid N 639/1999 – Sweden – Regional aid map 2000-2006 (SG(99)D/103189). 3 All population figures used in this decision refer to 31.12.2005. 4 GGE – Gross Grant Equivalent 5 As defined in the Annex of Commission Regulation (EC) No 364/2004 of 25 February 2004 amending Regulation (EC) 70/2001, OJ L 63, 28.2.2004, p. 22, or any successor regulation. 6 Except for aid awarded in the transport sector and aid for large investment projects. 7 See footnote 5. 8 As defined by Statistics Sweden in its publication on Localities 2005 of 31.12.2005. 2

– SE082 Norrbotten 2.1 206,282 – Total proposed population 710,060

2.2. Article 87(3)(c) regions proposed for the whole period 2007-2013

(9) Parts of the following NUTS-III regions are proposed for eligibility under the derogation of Article 87(3)(c) of the EC Treaty with an aid ceiling of 15% GGE for the whole period 2007-2013:

Population9 – SE062 Dalarna: The municipalities of Malung 10,513 Orsa 7,020 Vansbro 7,061 Älvdalen 7,445 Mora 20,212 Ludvika 25,537 Smedjebacken 10,812 Rättvik 10,886 Avesta 21,954 Hedemora 15,494 These municipalities have a total population of 136,934.

– SE063 Gävleborg: The municipalities of Ljusdal 19,384 Bollnäs 26,237 Hudiksvall 37,004 Nordanstig 9,847 Ovanåker 11,873 Söderhamn 26,506 Hofors 10,197 Ockelbo 6,051 These municipalities have a total population of 147,099.

– SE061 Värmland: The municipalities of Torsby 12,960 Arvika 26,265 Eda 8,601 Filipstad 11,017 Hagfors 13,337 Munkfors 3,995 Sunne 13,586 Kristinehamn 23,899

9 Population on 31.12.2005.

Stofors 4,542 Årjäng 9,800 Säffle 16,080 These municipalities have a total population of 144,082.

– SE024 Örebro: The municipalities of Hällefors 7,627 Ljusnarsberg 5,317 Karlskoga 30,185 Degerfors 10,093 Laxå 6,136 These municipalities have a total population of 59,358.

– SE025 Västmanland: The municipalities of Fagersta 12,270 Norberg 5,866 Skinnskatteberg 4,761 These municipalities have a total population of 22,897.

– SE093 Kalmar: The municipalities of Västervik 36,505 Vimmerby 15,613 Hultsfred 14,456 Högsby 6,066 These municipalities have a total population of 72,640.

(10) Parts of the following NUTS-III region are proposed for eligibility under the derogation of Article 87(3)(c) of the EC Treaty with an aid ceiling of 10% GGE for the whole period 2007-2013:

– SE0A2 Västra Götaland: The municipalities of Bengtsfors 10,225 Dals-Ed 4,891 Åmål 12,737 Mellerud 9,638 Färgelanda 6,824 Karlsborg 6,898 Töreboda 9,470 Gullspång 5,595 Mariestad 23,895 These municipalities have a total population of 90,173.

3. ASSESSMENT

(11) Annex V of the RAG allocated Sweden a total population coverage of 15.3% eligible for national regional state aid for the period 2007-2013 under the derogation of Article 87(3)(c) of the EC Treaty. The total population of Sweden on

31.12.2005 amounts to 9,047,752. The maximum population eligible for coverage for 2007-2013 is therefore 1,384,306.

3.1. Article 87(3)(c): low population density regions proposed for the whole period 2007-2013

(12) The low population density regions are defined in paragraph 30(b) of the RAG as areas made up of NUTS-III geographic regions with a population density of less than 12.5 inhabitants per km².

(13) The following NUTS-III regions have a population density of less than 12.5 inhabitants per km² : Inhab/km² total population – SE071 Västernorrland 9 243,736 – SE072 Jämtland 2.6 127,028 – SE081 Västerbotten 3.3 257,652 – SE082 Norrbotten 2.1 251,740 – SE062 Dalarna 6 275,755 – Total population 1,155,911

(14) The Swedish authorities proposed the entire NUTS-III regions of SE071 Västernorrland, SE072 Jämtland, SE081 Västerbotten and SE082 Norrbotten, with the exception of the population centres of Luleå, Umeå and Sundsvall for eligibility under the derogation of paragraph 30(b) at an aid ceiling of 15%. The total population of these proposed regions is 710,060, which represents 7.85% of the Swedish population.

(15) All the regions are situated within NUTS-III regions that have a population density of less than 12.5 inhabitants per square kilometre. The criteria of paragraph 30(b) of the RAG are thus met.

3.2. Article 87(3)(c) regions proposed for the whole period 2007-2013

(16) In accordance with paragraph 30(c) of the RAG, Member States may select regions which form contiguous zones with a minimum population of at least 100,000 and which are located within either NUTS-II of NUTS-III regions which have either a GDP per capita of less than the EU-25 average, or which have an unemployment rate which is higher than 115% of the national average.

(17) The following proposed NUTS-III regions have all a GDP per capita of less than the EU-25 average or an unemployment rate above 115% of the national average:

GDP10 Unemployment – SE063 Gävleborg 95.27% 153.0% – SE025 Västmanland 99.80% – SE062 Dalarna 99.97% 116.8%

(18) The Swedish authorities propose under paragraph 30(c) of the RAG one contiguous zone at an aid ceiling of 15% and which spreads over the above mentioned three

10 Most recent three years of Eurostat data covering the years 2001-2003.

NUTS-III regions. The zone consists of the following municipalities: in SE063 Gävleborg: Ljusdal, Bollnäs, Hofors, Hudiksvall, Nordanstig, Ovanåker, Söderhamn and Ockelbo, in SE025 Västmanland: Fagersta, Norberg and Skinnskatteberg; in SE062 Dalarna: Malung, Orsa, Vansbro, Älvdalen, Mora, Ludvika, Smedjebacken, Rättvik, Avesta and Hedemora. The total population of the zone is 306,930.

(19) It has to be observed that SE062 Dalarna apart from having a GDP below the EU average fulfils also the low population density criterion.

(20) The total population proposed under the subtitle 3.2 of this decision amounts to 306,930, which represents 3.39% of the Swedish population.

(21) Furthermore, the Swedish authorities correctly apply the aid intensity of 15% GGE as all the NUTS-III regions in question have a GDP below EU-25 average.

(22) The proposed region forms a contiguous zone with more than 100,000 inhabitants located in NUTS-III regions which have a GDP per capita of less than the EU-25 average. All the criteria of paragraph 30(c) of the RAG are thus fulfilled.

3.3. Other Article 87(3)(c) regions proposed for the whole period 2007-2013

(23) According to paragraph 30(h) of the RAG, in duly justified cases, Member States may also designate other regions which form contiguous zones with a minimum population of at least 50,000 which are undergoing major structural change, or are in serious relative decline, when compared with other comparable regions. It will be the task of the Member States which wish to use this possibility to demonstrate that the award of regional investment aid in the region concerned is justified, using recognised economic indicators and comparisons with the situation at Community level.

(24) The Swedish authorities have notified two regions, which form contiguous zones with a minimum population of at least 50,000. At the same time, the Swedish authorities provided explanations for the designation of these individual zones based on recognised economic indicators and comparisons with the situation at Community level, which are briefly summarised below.

(25) The total population proposed under the subtitle 3.3 of this decision amounts to 366,243, which represents 4.05% of the Swedish population.

(26) The Commission considers that the arguments provided by the Swedish authorities as summarised hereafter, demonstrate that the award of regional investment aid in the proposed regions in Västra Götaland and Kalmar are justified in the sense of paragraph 30(h) of the RAG.

Kalmar zone

(27) The Swedish authorities have notified a contiguous zone in the NUTS-III region of SE093 Kalmar of 72,640 inhabitants constituted of the municipalities of Västervik, Vimmerby, Hultsfred and Högsby, with an aid intensity of 15% GGE.

(28) The NUTS-III region of Kalmar had during the period 2001-2003 an average GDP per capita of 98.97% of the EU-25 average. The Swedish authorities explain that the 6

Kalmar County has a GRP11 of 87% of national average. The proposed municipalities of Västervik, Vimmerby, Hultsfred and Högsby have a lower GRP than the County as a whole: especially Hultsfred with only 64% of national average and Högsby with 50% of national average.

(29) The proposed municipality of Västervik has a higher unemployment rate (144% of the national average) and a weaker employment growth than the Kalmar County as a whole.

(30) The Kalmar County also has a negative population growth: relative decrease by 4% since 1995. Further, the County has a low proportion of the population which has received a post-secondary education, especially the municipality Vimmerby with only 20% as compared to 27% for the Kalmar County and 35% at national level.

(31) Furthermore, the Swedish authorities correctly apply the aid intensity of 15% GGE as the NUTS-III region in question has a GDP below EU-25 average.

Värmland-Örebro-Västra Götaland zone

(32) The Swedish authorities have notified a contiguous zone which spreads over the three following NUTS-III regions: SE061 Värmland, SE024 Örebro and SE0A2 Västra Götaland. The total population of this zone is 293,603 inhabitants. The zone consists of the following municipalities: in SE0A2 Västra Götaland: Bengtsfors, Dals-Ed, Åmål, Mellerud, Färgelanda, Karlsborg, Töreboda, Gullspång and Mariestad, in SE061 Värmland: Torsby, Arvika, Eda, Filipstad, Hagfors, Munkfors, Sunne, Kristinehamn, Stofors, Årjäng and Säffle and in SE024 Örebro: Hällefors, Ljusnarsberg, Karlskoga, Degerfors and Laxå. The part situated in the NUTS-III region of SE0A2 Västra Götaland is proposed with an aid intensity of 10%, the other parts with an aid intensity of 15% GGE.

(33) The NUTS-III region of Västra Götaland had during the period 2001-2003 an average GDP per capita of 114.9% of the EU-25 average and an unemployment of 53.5% of the EU-25 average. In terms of population the NUTS-III region Västra Götaland is the second largest NUTS-III region in Sweden after Stockholm. Sweden’s second largest city Gothenburg is situated in this region. However, the designated municipalities are small and lie on the periphery of the region and are not at all enjoying the same situation as other better-off areas around Gothenburg but are on the contrary in a similar situation as the proposed municipalities in Värmland (GDP 98.3%) and Örebro (GDP 98.63%). Of the nine designated municipalities, there are four that have already been included in the regional aid map for 2000-2006: Bengtsfors, Dals-Ed, Åmål and Karlsborg. It is now proposed to extend this area by including five adjacent municipalities.

(34) The Swedish authorities explain that for a long period the proposed zone has suffered problems of industrial decline and structural change which led amongst other things to a number of major industrial closures, high unemployment and a sharp fall in the population.

11 GRP (“Gross Regional Product”) for 2003 provided by Statistics Sweden.

(35) The Västra Götaland County has a GRP per capita which is almost at the national average (99%), however all proposed municipalities in this county have a lower GRP which varies from 57% for Gullspång to 96% for Bengtsfors. Örebro (85%) and Värmland Counties (86%) have a GRP well below the national average and almost all the proposed municipalities have a lower GRP which goes as low as 50% for Storfors (with the exception of Laxå (94%) and Karlskoga (106%).

(36) The Västra Götaland County has unemployment of 96% of national average. All proposed municipalities have an unemployment figure which is well above the County average. The unemployment rate in Bengtsfors, Dals-Ed and Åmål is about 140% of the national average. Örebro has an unemployment figure of 127% of national average and all proposed municipalities have an equivalent or higher unemployment figure, with Karlskoga at 137% and Laxå at 143%. Also Värmland has an unemployment figure above the national average (114%) and the municipality of Munkfors has even an unemployment figure of 153% of the national average.

(37) Although the Västra Götaland County shows a positive population growth of 103.0% since 1995, all the proposed municipalities have a negative population growth varying from 85.6% for Gullspång to 96.5% for Mariestad. On the other hand the Counties of Örebro and Värmland have a negative population growth with 98.9% and 95.8% respectively.

(38) Further, 34% of population in the Västra Götaland County has received a post- secondary education, which is similar to the national situation (35%). However, all the proposed municipalities have a lower proportion of the population with a post- secondary education varying from 17% in Gullspång to 26% in Karlsborg. As far as the Counties of Örebro and Värmland are concerned, this proportion is below the national average with 30% and 29% respectively and all proposed municipalities are well below this figure, varying from 15% for Ljusnarsberg to 26% for Arvika.

(39) All the designated municipalities of Västra Götaland, Värmland and Örebro form one contiguous zone and are in a very similar situation.

(40) Furthermore, the Swedish authorities correctly apply the reduced aid intensity of 10% foreseen in paragraph 47 of the RAG for the municipalities situated in Västra Götaland as this NUTS-III region has at the same time a GDP above the EU average and an unemployment figure below the EU average.

3.4. General provisions of the map

(41) The overall population proposed for the entire map for eligibility for the period 2007-2013 amounts to 1,383,243, which represents 15.288% of the Swedish population and respects thus the population ceiling of 15.3% attributed to Sweden in Annex V of the RAG.

(42) In accordance with paragraph 49 of the RAG, except for aid awarded in the transport sector, the preceding aid ceilings can be increased by 10% GGE for medium sized enterprises and 20% GGE for small enterprises. However, in accordance with paragraph 67 of the RAG no SME bonuses are allowed for investment projects with eligible expenditure exceeding EUR 50 million.

(43) Following the assessment above, the aid ceilings for regional investment aid notified by Sweden for the period 2007-2013 are in line with the aid ceilings allowed for under the RAG.

(44) The Commission recalls that in accordance with paragraph 8 of the RAG, these aid ceilings apply to the processing and marketing of agricultural products only to the extent laid down in the Community guidelines for State aid in the agriculture sector12, or any replacement guidelines.

(45) The Commission takes note of the following commitments given by the Swedish authorities in the notification:

(a) The Swedish authorities confirmed that only the regions defined in the regional aid map published by the Commission pursuant to this notification will be eligible for regional investment aid in accordance with the RAG, or any state aid block exemption regulation relevant for regional aid.

(b) The Swedish authorities confirmed that only small enterprises with their economic activity in the regions identified in the regional aid map published by the Commission pursuant to this notification will be eligible for aid for newly created small enterprises as provided for in section 6 (paragraphs 84-91) of the RAG.

(c) The Swedish authorities confirmed that all plans to grant regional aid will be notified to the Commission in accordance with Article 88(3) of the EC Treaty, either as an aid scheme, or as an individual notification unless a State aid exemption regulation applies.

(d) The Swedish authorities confirmed that all regional investment aid will respect the ceilings defined in the region concerned in the regional aid map published by the Commission pursuant to this notification.

(e) The Swedish authorities confirmed that for large investment projects the upper ceilings defined in respect of the region concerned in the regional aid map published by the Commission pursuant to this notification will be adjusted according to the formula in paragraph 67 of the RAG.

(f) The Swedish authorities confirmed that all large investment projects for which the amount of aid proposed is more than the maximum allowable amount of aid an investment with eligible expenditure of EUR 100 million can receive under the scale laid down in paragraph 67 of the RAG, will be notified individually to the Commission.

3.5. Appropriate measures

(46) By letter of 6 March 2006, reference D/(06)234, the Commission proposed appropriate measures to the Swedish authorities by which, inter alia, the application of their existing regional aid schemes is limited until 31 December 2006. The

12 OJ C 28 of 1.2.2000, p.2. Corrigendum OJ C 232, 12.8.2000 p. 17.

Swedish authorities accepted these appropriate measures unconditionally by letter of 5 April 2006, registered at the Commission on 10 April 2006 (A/32803).

4. DECISION

(47) The Commission has accordingly decided:

– to consider the Swedish regional aid map for 2007-2013 as set out in the Annex to be compatible with the EC Treaty as it fulfils the conditions as stipulated in the Guidelines on national regional aid for 2007-2013. This map is valid from 1 January 2007 until 31 December 2013.

– to publish the map as presented in the Annex to this decision in the Official Journal of the European Union. The full text of this letter in the authentic language will be published on the Internet site: http://ec.europa.eu/community_law/state_aids/index.htm.

Any request concerning this letter should be sent by registered letter or fax to:

European Commission Directorate-General for Competition Directorate for State Aid I State Aid Greffe B – 1049 Brussels Fax No: 0032.2.296 12 42

Yours faithfully, For the Commission

Neelie KROES Member of the Commission

Annex to the decision on case N 431/2006 Guidelines on National Regional aid for 2007-2013 (OJ C 54, 4.3.2006, p. 13) N431/2006 - SWEDEN - National regional state aid map 1.1.2007-31.12.2013 (Approved by the Commission on …) (NUTS ΙΙ REGION) Ceiling for regional investment aid13 (NUTS IΙΙ REGION) (Applicable to large enterprises) 1.1.2007-31.12.2013 1. Regions eligible for aid as regions of low population density regions under Article 87(3) (c) of the EC Treaty for the whole period 2007-2013

SE082 Norrbotten 15% (except the population centre of Luleå)

SE081 Västerbotten 15% (except the population centre of Umeå) SE072 Jämtland 15%

SE071 Västernorrland 15% (except the population centre of Sundsvall) 2. Regions eligible for aid under Article 87(3) (c) of the EC Treaty for the whole period 2007-2013 SE062 Dalarna (partly) Only the municipalities of Malung, Orsa, Vansbro, Älvdalen, 15% Mora, Ludvika, Smedjebacken, Rättvik, Avesta and Hedemora. SE063 Gävleborg (partly) Only the municipalities of Ljusdal, Bollnäs, Hudiksvall, 15% Nordanstig, Ovanåker,Söderhamn, Hofors and Ockelbo. SE061 Värmland (partly) Only the municipalities of Torsby, Arvika, Eda, Filipstad, 15% Hagfors, Munkfors, Sunne, Kristinehamn, Stofors, Årjäng and Säffle. SE024 Örebro (partly) Only the municipalities of Hällefors, Ljusnarsberg, Karlskoga, 15% Degerfors and Laxå. SE025 Västmansland (partly) Only the municipalities of Fagersta, Norberg and 15% Skinnskatteberg SE093 Kalmar (partly) Only the municipalities of Västervik, Vimmerby, Hultsfred 15% and Högsby. SE0A2Västra Götaland (partly) Only the municipalities of Bengtsfors, Dals-Ed, Åmål, 10% Mellerud, Färgelanda, Karlsborg, Töreboda, Gullspång and Mariestad.

1 For investment projects with eligible expenditure not exceeding EUR 50 million, this ceiling is increased by 10 percentage points for medium sized companies and 20 percentage points for small companies as defined in the Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36). For large investment projects with eligible expenditure exceeding EUR 50 million, this ceiling is subject to adjustment in accordance with paragraph 67 of the Guidelines on national regional aid for 2007-2013.