29.6.2017   

EN

Official Journal of the European Union

L 166/58

(1)

By letter dated 5 July 2013 (1), tellUs IT AS (later merged with New Mind (2), and henceforth referred to as ‘New Mind | tellUs’ or ‘the Complainant’), made a State aid complaint to the Authority regarding Innovasjon Norge's (‘Innovation Norway’ or ‘IN’) economic activities in the market for web infrastructure and related services, within the tourism sector. The Authority received and registered the complaint on 8 July 2013.

(2)

After a preliminary examination of the complaint, on 16 July 2014, the Authority decided to initiate the formal investigation procedure provided for in Article 1(2) of Part I of Protocol 3 by adopting Decision No 300/14/COL (‘the opening decision’) (3). By means of this decision, the Authority called upon the Norwegian authorities and interested parties to submit their comments.

(3)

By letter dated 1 September 2014 (4), the Norwegian authorities provided comments to the opening decision. On 30 September 2014, the Authority met the Norwegian authorities and IN. On that occasion, the Norwegian authorities provided new information and clarifications on their submission dated 1 September 2014. The Authority also asked IN additional questions which were replied to by email dated 17 October 2014 (5).

(4)

By email of 9 October 2014 (6), the Authority received comments from one interested party, the Complainant. By letter of 10 October 2014 (7), the Authority forwarded these to the Norwegian authorities. The Authority had conference calls with IN on 27 October 2014 and 5 November 2014.

(5)

By letter dated 24 November 2014 (8), the Norwegian authorities submitted their comments on the Complainant's observations and further information on the case.

(6)

After this, the Authority has received additional information on the case from the Complainant and IN (9). The information received from the Complainant was forwarded to the Norwegian authorities.

(7)

The present decision concerns IN's activities within the tourism sector.

(8)

IN is a public company, entrusted with the mandate to support innovation and development of Norwegian enterprises and industry. IN supports the national tourism industry. IN has established and manages the website visitnorway.com, the most visited Norwegian tourism website (10).

(9)

Through visitnorway.com, IN provides services to regional tourist boards (‘RTBs’) (11) and destination management organisations (‘DMOs’) (12). The RTBs and the DMOs are local/regional entities promoting tourism in their respective geographic areas.

(10)

Those services include (i) web infrastructure and related services and (ii) marketing and promotion services in the tourism sector (13).

(11)

The Complainant and the opening decision refer to possible State aid measures regarding the web infrastructure and related services. Specifically, Article 1 of the opening decision refers to three possible State aid measures.

(12)

The first alleged State aid measure concerns State aid in favour of IN by means of foregoing of profits when providing web infrastructure and related services to the RTBs and DMOs.

(13)

The second measure is the alleged lack of accounting separation and a transparent cost allocation methodology separating IN's economic and non-economic activities. In particular, a relevant question is whether IN's provision of web infrastructure and related services are cross-subsidised with public funds received to carry out a non-economic service, i.e. the general promotion of Norway as a tourism destination.

(14)

The third alleged State aid measure concerns State aid in favour of the RTBs and DMOs, in the form that prices charged for web infrastructure and related services are not sufficient to create a reasonable return for IN on its investments.

(15)

IN was established in 2003 by the Norwegian Government through the Act on Innovation Norway (14) (‘the Act on IN’). The State owns 51 % of the company, and the counties own the remaining 49 % (15).

(16)

The company was established with the purpose to be the Norwegian Government's instrument to promote value-generating business development throughout the country (16). IN manages and implements several Norwegian aid schemes. IN supports the national tourism sector. According to the Norwegian authorities: ‘IN is amongst others entrusted with the task of offering web marketing services to reach the international and national population on the official website visitnorway.com’ (17).

(17)

Local and regional tourism promotion is ensured by the RTBs and the DMOs. According to the information provided by the Norwegian authorities (18), in Norway there are around 300 regional and local tourism organisations, i.e. RTBs and DMOs. Their main objective is to arrange tourism activities and offer tourism information. The RTBs' focus is on marketing the region internationally, while the DMOs work both internationally and nationally to market specific destinations (19). In general, their shareholders are both public and private companies (20). The RTBs are generally organised as limited liability companies, whose shares are owned by the county authorities and representatives of the tourism industry. The DMOs are local and their shareholder structure varies. However, they are generally owned by local authorities and local tourism businesses.

(18)

The RTBs and DMOs do not seek to maximise profit for their owners. Their objective is rather to stimulate the economic activity of the tourism sector in their respective geographical areas (21).

(19)

Web infrastructure and related services in the tourism sector are provided through a ‘Destination Management System’ (‘DMS’) (22).

(20)

Through a DMS, an IT company offers a service where its clients (destination management companies (23)) can submit and regularly update information about tourist sites, hotels, restaurants, events and similar information simultaneously on their own webpage, and on external channels such as visitnorway.com, Google Maps, tourist information kiosks, mobile portals, and printed newspapers. The information is used by the general public for booking or other purposes.

(21)

A DMS can provide different functionalities: (i) a destinator functionality (i.e. the creation of a database of points of interest or information flash concerning events, hotels, restaurants, art expositions, etc.); (ii) a distribution functionality (i.e. the information stored in the database is distributed to different channels and platforms); and (iii) a search functionality (i.e. used on websites to search and present tourism products).

(22)

A graphic illustration of these services is included in recital 43 below.

(23)

Tourism marketing and promotion services can refer to the general promotion of a geographic area or to the promotion of specific businesses.

(24)

General promotion implies offering to the visitors general tourism information regarding landscapes, culinary traditions, weather, etc. Specific business promotion refers to the marketing of specific contents (i.e. information regarding hotel, restaurants, cultural events, etc.).

(25)

Furthermore, when promoting specific contents on visitnorway.com, two different possibilities can be identified, either the information is directly published on the website (i.e. the information is hosted within the website), or a link to an external website that publishes the specific information.

(26)

It is within the scope of IN's mandate to promote the tourism industry at a national level. The Norwegian Government has been an active stakeholder in the tourism sector since 1903 (24). As indicated in recital 17 above, at the regional and local levels, tourism promotion is performed by the RTBs and the DMOs. The State annual Budget letters, in the chapter devoted to IN, provide instructions for IN's activities in the tourism sector (25).

(27)

In 2007, the Norwegian authorities adopted a national strategy for the tourism industry, establishing the Governments' main objectives for the sector (26). One of these objectives was to strengthen the recognition of Norway as a tourism destination. In this respect, in 2007, IN developed and established the website visitnorway.com. According to the strategy for the tourism industry ‘[t]he website shall compel visitors to travel to Norway and provide good and comprehensive information about Norway and what the tourism industry has to offer’ (27).

(28)

Since the establishment of the visitnorway.com website, IN has in addition to providing general content about Norway (non-economic activity), also offered to RTBs and DMOs the ability to promote their specific tourism content (i.e. information on events, hotels, transport, etc.) on the visitnorway.com website. IN has signed standard agreements with RTBs and DMOs by means of which the tourism specific content of the RTBs and DMOs is published on visitnorway.com (directly or through hyperlinks) against an annual subscription fee calculated on the basis of the annual turnover of the respective RTBs and DMOs. The RTBs and DMOs have historically also had their own websites where they provide general information about their respective geographical areas, as well as promote specific tourism products, i.e. economic services on behalf of their stakeholders and owners.

(29)

In 2012, the Norwegian Government adopted a new tourism strategy aimed at improving the national tourism structure (28). The objectives of the new strategy were to render the public support to the sector more efficient, reduce the number of actors involved and ensure more coordination amongst them. Moreover, the Norwegian authorities have stated their aim to avoid a diversification of websites dealing with tourism in Norway, with different structure and layouts, booking engines, languages and so on, which are all partly funded by various Government bodies, counties or municipalities.

(30)

Following this, in 2013, the Ministry of Trade, Industry and Fisheries adopted a ‘new tourism structure’ with the objective to make it easy to select Norway as a tourism destination for tourists (29).

(31)

IN's budget letter of 2013 (the ‘2013 Budget letter’ (30)) states that: ‘Innovation Norway is to ensure a good distribution of Norwegian travel experience through visitnorway.com, and help to make the players in the tourist industry […]’. visitnorway.com was thus identified as a key element of the Norwegian tourism promotion strategy (31). IN was asked to expand the website and increase its support to the tourism industry. The objective was to offer web marketing services to reach both national and international audiences on the official website visitnorway.com  (32).

(32)

Taking into account this objective, IN initiated a project called ‘visitnorway's new structure’ (the ‘new structure’) (33). The new structure offered the RTBs and DMOs not only marketing and promotion services (as done through the standard agreements, see recital 28), but also additional services.

(33)

IN has made a number of necessary changes to features and functionalities on the visitnorway.com platform, in order to remain up to date on technology and to be able to efficiently operate the platform over time. In 2013, IN started to offer some of the DMS functionalities (hereby collectively defined as ‘web infrastructure and related services’) to Norwegian RTBs and DMOs, that wished to migrate the content from their own websites to visitnorway.com. This integration of content on the visitnorway.com platform is in line with the objectives laid down by the Norwegian authorities in their new tourism strategy, inter alia, to avoid a diversification of websites dealing with tourism in Norway (see recital 29 above).

(34)

Consequently, in 2014 all RTBs and DMOs were offered premium partnership agreements with the possibility to use visitnorway.com as their homepage instead of developing or maintaining their own homepage. Migrating to visitnorway.com implied terminating their own websites. These services were only offered to RTBs and DMOs and not to the general market; i.e. not to all potential users including the shareholders or external customers of the RTBs and DMOs (34).

(35)

Once migrated, some of the services that the RTBs and DMOs had previously purchased from companies such as the Complainant, became redundant. In particular, the search functionality would be redundant for the RTBs and DMOs, and the licensee contracts with companies such as New Mind | tellUs would normally be terminated. On the contrary, other functionalities — such as the destinator functionality — were still required to create and maintain the points of interest or information flash to be published on visitnorway.com.

(36)

Despite premium partnership agreements having been offered to all RTBs and DMOs, not all of them were/are interested in the new services, since migrating to visitnorway.com implied, inter alia, accepting the editorial conditions and restrictions imposed by IN (35). Therefore, some of the RTBs and DMOs maintain standard agreements by means of which IN provides to them promotion and marketing services (see recital 28 above).

(37)

The tourism ‘new structure’ project within visitnorway.com (see recital 32 above) also encompassed two pilot projects — Alfa and Beta — in 2013, prior to the signing of the premium partnership agreements in 2014 as described in the recital 34 above. This will be further described in the following.

(38)

In March 2013, IN launched a project called ‘Pilot Alfa’ together with two pilot customers — VisitSørlandet and VisitTrondheim. Pilot Alfa refers to the migration of the websites of Visit Sørlandet AS (36) (RTB) and Visit Trondheim AS (37) (DMO) to the visitnorway.com platform.

(39)

The two undertakings were selected as pilot project participants and signed a premium partnership agreement with IN in order to use visitnorway.com. As a consequence of those agreements, both companies redirected their URL (38) to visitnorway.com and discontinued the use of their own homepages. The information available on those pages (i.e. general tourism information and specific tourism contents) migrated to visitnorway.com.

(40)

When the two companies operated their own websites, they were clients of the Complainant. Accordingly, they used tellUs destinator and tellUs search functionalities and paid a licence fee to the Complainant for this use. However, upon redirecting their URL to visitnorway.com and terminating their own websites, these companies ended their contracts for the search functionality, since, for technical reasons, only IN's search functionality can be used on visitnorway.com (the only search engine on the website is the one developed by IN and installed on the platform).

(41)

Both companies still had to contract with the Complainant or a similar firm for the destinator functionality. IN is not providing this functionality. The Complainant used to be the sole supplier of DMS services on the Norwegian market. However, in 2012-2013, an international competitor, Citybreak, entered the market offering the destinator functionality, i.e. allowing tourism providers to create a database of points of interest (39).

(42)

The RTBs and the DMOs which migrated to visitnorway.com could therefore choose among different companies offering the destinator functionality (New Mind | tellUs or CityBreak or any other operator which might enter the market), while customers using tellUs search services could only use tellUs destinator functionalities. When New Mind | tellUs was the only provider of web and infrastructure services, all RBTs and DMOs had to contract with New Mind | tellUs for both the search and destinator functionalities.

(43)

The uses of the different functionalities, before and after Pilot Alfa, are presented in the following graphic:

Source: the Authority, based on the information provided by the Norwegian authorities (Document No 688213).

(44)

The services that IN was offering to RTBs and DMOs before the implementation of the new structure project (i.e. online marketing and promotion services on the visitnorway.com website), were offered for a fee calculated on the basis of their annual turnover rather than on the market price of the services obtained (see recital 28 above). This pricing system was also applied under Pilot Alfa, with no additional charges made for the additional services provided by IN (web infrastructure and related services).

(45)

The Norwegian authorities have explained (40) that the reason for not charging extra for the additional services was that the new services were under development, and that the two companies involved in the pilot project invested significant time and effort in helping to develop IN's new functionalities, thereby compensating IN by providing valuable feedback and input on the new services.

(46)

From July 2013 to November 2013, IN undertook ‘Pilot Beta’. During this pilot project, IN studied new business models, including the possibility of promoting new premium partnership agreements to all RTBs and DMOs.

(47)

From 1 January 2014, IN offered premium partnership agreements to all interested DMOs and RTBs on a non-discriminatory basis. IN introduced a new pricing model for these services, where, according to the Norwegian authorities, the price charged was intended to reflect the costs of the services provided by IN, plus a reasonable profit. The new price model also applied to the two pilot projects, i.e. VisitSørlandet and VisitTrondheim as of 1 January 2014.

(48)

Consequently, as illustrated in figure 2 below, IN offered two different possibilities to the RTBs and the DMOs (41): (i) services under the premium partnership agreements (42), and (ii) promotion under non-premium agreements (43). Irrespective of its relationship with the RTBs and the DMOs, visitnorway.com promotes Norway as a tourism destination, providing general information on the country (44).

(49)

Premium partnership agreements were signed with RTBs and DMOs that wanted to migrate to visitnorway.com. In relation to those RTBs and DMOs that did not want to migrate their websites to visitnorway.com (non-premium partners), IN offered the same promotion and marketing services as before by means of the standard agreements.

Figure 2

Current structure of visitnorway.com

(Source: IN)

(50)

New Mind | tellUs argues in its complaint that IN's promotion activities and its tasks in relation to visitnorway.com, as a national tourism portal, can be considered a service of general economic interest (‘SGEI’) in line with the EEA State aid rules.

(51)

However, in 2013, IN entered a new market (45), offering new economic services to the RTBs and the DMOs allowing them to migrate their websites to visitnorway.com (i.e. the web infrastructure and related services). New Mind | tellUs considers that those services are not part of the mandate received by IN and are not provided in line with the Altmark  (46) case-law.

(52)

The Complainant underlines that while providing economic services, IN should not receive State aid (47).

(53)

In particular, the complaint refers to four different forms of alleged State aid:

(54)

Finally, New Mind | tellUs also alleges that IN encourages its clients to terminate their previous contracts with New Mind | tellUs, offering free translation services to the RTBs and DMOs migrating to visitnorway.com  (48).

(55)

On 16 July 2014, the Authority decided to initiate the formal investigation procedure provided for in Article 1(2) of Part I of Protocol 3.

(56)

However, the Authority limited the scope of the formal investigation to three of the measures identified by the Complainant: (i) the non-implementation of a separation of accounts for commercial activities within IN and the lack of a costs allocation mechanism, (ii) the profits foregone through the non-profit orientation of economic activity, and (iii) the alleged aid granted by IN to the RTBs and DMOs in form of prices not sufficient to obtain a reasonable return on investment, while providing them web infrastructure and related services.

(57)

The general exemption from the income tax granted to IN was excluded from the opening decision (49). An existing aid procedure has been initiated regarding this issue.

(58)

Regarding the measures within the scope of the opening decision, the Authority considered, on a preliminary basis, that the provision of web infrastructure and related services constituted an economic activity, separable from the mere promotion of Norway as a tourism destinations. These new services were offered to all the RTBs and DMOs only as of 1 January 2014. Hence, the Authority concluded that if the measures were to constitute State aid, they would amount to new aid (50).

(59)

Moreover, the Authority was also of the opinion that if it were established that IN was not charging a competitive market price for the services provided to the RTBs and DMOs, the existence of new State aid in favour of those entities could not be excluded.

(60)

Finally, the Authority doubted that the alleged State aid measures could be considered compatible with the EEA Agreement under Article 61(3)(c) as aid to promote tourism activities (51).

(61)

Taking into account these preliminary conclusions, the Authority considered that it did not have sufficient information to exclude the existence of State aid or its incompatibility with the EEA Agreement. The formal investigation procedure was therefore initiated.

(62)

Only New Mind | tellUs, the Complainant, submitted observations on the opening decision.

(63)

On the substance, the Complainant underlines that IN has entered into an already well-functioning market for web infrastructure and related services, which are economic services. The entrance into this market does not respond to an instruction from the State and would be in conflict with IN's main task of promoting private entrepreneurship.

(64)

New Mind | tellUs subscribes to the Authority's preliminary findings on the presence of state resources, imputability, selectivity and potential distortion of competition.

(65)

On the existence of an advantage, the Complainant considers that IN has cross-subsidised their web infrastructure and related services. This is so because within IN there is no proper separation of accounts, and because IN is foregoing profits when providing these economic services to RTBs and DMOs. The Complainant insists also that IN offers translation services free of charge (see recital 54 above).

(66)

Regarding the alleged aid in favour of RTBs and DMOs, the Complainant argues that the Norwegian authorities have not informed them about the opening decision.

(67)

Furthermore, it is argued that during the pilot projects, the selected pilot customers were not paying for services obtained. The price model introduced later by IN does not cover all relevant costs nor give a reasonable profit. In particular, IN has not included in its calculations all development costs related to the infrastructure created for the new structure (NOK 18 million), and IN is not calculating ROI (‘return on investment’). Therefore, the RTBs and DMOs obtain an advantage.

(68)

As regards compatibility, the Complainant argues that there is no market failure in the market in question. Furthermore, the fact that IN offers free or subsidised translation services to the RTBs and DMOs migrating content to the visitnorway.com platform, constitutes a tie-in condition in breach of antitrust rules, and therefore the alleged State aid cannot be declared compatible.

(69)

On 13 January 2015, the Complainant sent to the Authority a copy of the 2015 State Budget letter (52). In its opinion, this letter confirms that IN's activities in the web infrastructure and related services are not within IN's mandate, which is limited to the general promotion of Norway as a tourism destination.

(70)

The Norwegian authorities replied to the opening decision (53) stating that the measures at hand do not constitute State aid, and that if any of the measures do constitute State aid, such aid would have to be classified as existing aid since the promotion of tourism of Norway was one of IN's predecessors' tasks from prior to the EEA Agreement being signed.

(71)

In the alternative, if new aid was to be found, it should be considered compatible with the EEA Agreement as compensation for an SGEI or under Article 61(3)(c) of the EEA Agreement, as aid to promote the tourism sector.

(72)

The Norwegian authorities state that ‘if an economic activity can be separated from the task of the public body, the body may be regarded as an undertaking in this function. All of the activities are, however, to be regarded as non-economic if the activities are not possible to separate from each other’ (54). On this premise, the Norwegian authorities consider that the Authority has misunderstood the facts, since the services at stake, i.e. web infrastructure and related services, are not provided on a stand-alone basis, but only as an integrated part of the services offered through visitnorway.com, which as a whole must be considered as non-economic activity. The provision of these services to RTBs and DMOs is part of IN's task of promoting Norway as a tourism destination, which is part of the national tourism strategy to promote business. Consequently, the web infrastructure and related services cannot be assessed on its own but only as part of IN's promotional activities.

(73)

In any event, when IN enters into agreements to provide paid services, it uses a basic cost model to ensure that all relevant costs of the services for IN is taken into account. This methodology was codified in the ‘Guidelines for user payments’ extracted from the IN 2011 Budget letter (55), and IN has applied it since 2011. IN has also used this cost allocation methodology in the premium agreements allowing IN to cover all costs related to the premium agreements. IN has also included in their budget and prices an expected profit of [… % to … %]. The Norwegian authorities have also explained that the tourism sector and, in particular, the web infrastructure services market, is a very dynamic sector. Consequently, IN and visitnorway.com must adapt the services that are being provided in line with technological and market developments.

(74)

As regards compatibility, the Norwegian authorities argue the application of the SGEI rules. According to the Norwegian authorities, if the services assessed in this case were considered as economic activities and aid was to be found, such aid should be assessed under the SGEI compatibility rules (56). It is the opinion of the Norwegian authorities that the provision of these services fulfils the spirit of Commission Decision 2012/21/EU (57).

(75)

The Norwegian authorities also argue that the measures at stake should be declared compatible with the functioning of the EEA Agreement, pursuant Article 61(3)(c) of the EEA Agreement as State aid to promote the tourism sector.

(76)

The Norwegian authorities underline that granting RTBs and DMOs access to the platform has increased competition in the downstream destinator services market. This has to be taken into account in order to balance any possible negative effect of the alleged aid. The Norwegian authorities explain that because visitnorway.com aggregates information about travel products from all possible competitors, i.e. New Mind | tellUs or Citybreak or any other company which might enter the market, the competitive pressure in this market has increased. In the past, New Mind | tellUs was the only provider in the market. Furthermore, IN offers the platform to RTBs and DMOs, which do not compete with undertakings outside the Norwegian borders.

(77)

The Norwegian authorities dispute that IN offers free translation services to RTBs and DMOs which have signed premium agreements and have explained how IN support translation costs in different scenarios. In general, IN covers a share of the translation costs of RTBs and DMOs regarding information of general interest as part of its task to promote Norway as a tourism destination. However, it only covers 50 % of the translation costs of RTBs' and DMOs' specific points of interest (58). This is the general rule towards all RTBs and DMOs. However, regarding RTBs and DMOs that have migrated to visitnorway.com (i.e. the premium partners), IN does not cover any translation cost. In other words, the premium partners lose the translation facilities. Therefore, contrary to the Complainant's allegations, there is no incentive to sign a premium partner agreement in order to receive compensation for translation costs.

(78)

Replying to the comments of the Complainant, the Norwegian authorities underline that IN is not a competitor of New Mind | tellUs. It is true that granting access to visitnorway.com to the RTBs and the DMOs has led to services previously offered by external IT companies becoming partly redundant, but IN is not competing directly with the Complainant. In other words, IN is not replacing New Mind | tellUs as an IT supplier, but some of the functionalities (such as TellUs search) are no longer needed or technically feasible.

(79)

The Norwegian authorities have also submitted to the Authority evidence to demonstrate that IN has informed the RTBs and the DMOs of the opening decision. IN sent e-mails to all premium partners (alleged beneficiaries of State aid) and IN's website also referred to the opening decision (59).

(80)

Finally, replying to the latest mail received from the Complainant (60) (cited in recital 69 above), the Norwegian authorities considered that the issue pointed out by New Mind | tellUs was already duly replied to. Therefore, there was no need for further clarifications (61).

(81)

Article 61(1) of the EEA Agreement reads as follows:

‘Save as otherwise provided in this Agreement, any aid granted by EC Member States, EFTA States or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Contracting Parties, be incompatible with the functioning of this Agreement.’

(82)

A measure constitutes State aid pursuant to Article 61(1) of the EEA Agreement if it fulfils four conditions. First, the measure must be funded by the State or through state resources and be imputable to the State. Second, the measure must confer an advantage. Third, the measure must favour selected undertakings or economic activities. Fourth, the measure must be liable to affect trade between Contracting Parties and liable to distort competition in the EEA.

(83)

For State aid to be present, all the cumulative conditions of Article 61(1) must be met (62).

(84)

The opening decision refers to alleged State aid in favour of IN as well as in favour of the RTBs and the DMOs. The Authority's concerns, following the information received by the Complainant and the Norwegian authorities, were focused on the web infrastructure and related services provided by IN to the RTBs and DMOs by means of the premium partnership agreements.

(85)

However, during the formal procedure, the Authority has concluded that in order to assess IN's behaviour in the web infrastructure and related services market, it is also necessary to assess the other commercial services provided by IN to RTBs and DMOs, i.e. the promotion and marketing of specific contents services. This is so because IN's business plan regarding the new structure refers to both types of services.

(86)

Consequently, even if specific promotion and marketing services were not covered by the opening decision and are not covered by the present decision, the Authority will refer to them to the extent needed to decide on the alleged State aid measures through web infrastructure and related services.

(87)

It follows from Article 61(1) of the EEA Agreement that in order to constitute State aid, the measures must favour certain undertakings or the production of certain goods. Article 61(1) of the EEA Agreement only applies where the recipient of an aid is an undertaking. Consequently, it is necessary to examine whether IN qualifies as an undertaking within the meaning of Article 61(1) of the EEA Agreement.

(88)

Undertakings are entities engaged in an economic activity, regardless of their legal status and the way in which they are financed (63). Economic activities are those consisting of offering goods or services on a market (64). All entities that are legally distinct from the State and which engage in economic activities are considered to be ‘undertakings’. Article 61(1) of the EEA Agreement covers all public and private undertakings (65).

(89)

If an entity is performing economic activities, it is to be considered as an undertaking in relation to those specific services alone, without reference to the way in which its other activities should be classified (66).

(90)

The Norwegian authorities have maintained that the provision of web infrastructure and related services cannot be defined as an economic activity. In their opinion, those services are not separable from the services offered to the RTBs and DMOs to promote Norway as a tourism destination through visitnorway.com. Since the development and management of this platform respond to the objective of promoting Norway as a tourism destination and this general task cannot be defined as an economic activity, nor can the IT services under scrutiny in this case be defined as such.

(91)

The Authority maintains the opposite conclusion, confirming its preliminary view expressed in the opening decision.

(92)

The Authority notes, firstly, that the 2013 Budget letter (67) allows IN to provide both economic and non-economic activities, given that a difference is established regarding the financing of those activities: the economic activities must be provided on market terms and therefore financed by the clients. Consequently, the legal possibility exists for IN to provide simultaneously economic and non-economic services.

(93)

Secondly, the Authority considers that the fact that IN on certain occasions acts as an instrument of the State to ensure a general promotion of Norway and in this respect does not provide services or goods on the market, is not sufficient reason to conclude that IN is not offering other economic services in the tourism sector.

(94)

Thirdly, the Authority agrees that the promotion of Norway as a tourism destination is not an economic activity. However, on the platform, IN offers different types of services. IN offers marketing and promotion of general contents regarding Norway, i.e. general information about the light nights, weather, geographic characteristics of the country, etc., but also specific tourism content, i.e. promotion of hotels, restaurants, or other business. Marketing general information on Norway is not an economic activity, but promoting specific tourism businesses constitutes an economic activity.

(95)

The Authority cannot accept the argument that providing web infrastructure and related services to the RTBs and DMOs does not constitute an economic activity because the final aim is to provide a non-economic activity, namely general promotion of Norway as a tourism destination. It is the Authority's view that the aim of the Norwegian authorities is not relevant when establishing whether IN provides an economic activity. The Authority considers that the promotion of private tourism business entails an economic activity.

(96)

The case-law has accepted in certain cases that ‘there is no need to dissociate the activity of purchasing goods from the subsequent use to which they are put in order to determine the nature of that purchasing activity, and that the nature of the purchasing activity must be determined according to whether or not the subsequent use of the purchased goods amounts to an economic activity’ (68). However, the Authority recalls that the recipients of IN's IT services, the RTBs and DMOs, are also using these services to carry out both economic and non-economic services. The RTBs and DMOs provide general tourism promotion of their respective geographic areas, but also specific tourism activities on behalf of their shareholders and clients. The Authority thus concludes that IN provides economic services.

(97)

Fourthly, the Authority considers that, contrary to the argument put forward by the Norwegian authorities, see recital 90 above, in order to promote Norway as a tourism destination it is not necessary also to provide web infrastructure and related services. In fact, until 2013, IN was successfully promoting tourism in Norway despite the fact that only from this date it offers those web services through the premium partnership agreements. The Authority underlines that the Norwegian authorities have not provided any evidence to conclude that unless the referred web services are offered through visitnorway.com, IN's efforts promoting tourism in the country will be inefficient. Therefore, the Authority does not accept that in order to promote Norway as a tourism destination it is necessary to also provide the web infrastructure and related services. The Authority thus fails to see that the services are inseparable.

(98)

Fifthly, the Authority recalls that in defining a service as economic, a significant factor is whether competition exists on the market in question, i.e. if there are other entities offering the same or substitutable goods and services (69). Web infrastructure and related services are also provided by private operators, such as the Complainant, and therefore the Authority concludes that this condition is met in the present case.

(99)

In its case-law, the CJEU has underlined that economic activities are normally offered against remuneration (70). Both the Complainant and IN provide web infrastructure and related services against remuneration, therefore the Authority considers this another reason why these services should be defined as economic.

(100)

It is the Authority's view that this conclusion holds even if IN does not provide the web infrastructure and related services as a stand-alone service; when the websites of RTBs and DMOs are integrated into visitnorway.com, the RTBs and DMOs receive services from the platform, which they previously used to purchase from private operators against remuneration. Consequently, it is not relevant whether the provision of these services is only offered to RTBs and DMOs and not to other destination management companies.

(101)

Consequently, the Authority concludes that IN is an undertaking within the meaning of Article 61(1) of the EEA Agreement when providing web infrastructure and related services.

(102)

As already stated, the Norwegian authorities have argued that the provision of web infrastructure and related services must be understood in the context of IN's activities to promote tourism, as part of the Norwegian objective to reduce the number of RTBs and DMOs and render the tourism industry more efficient. The Authority recalls that Article 61(1) of the EEA Agreement does not distinguish between State interventions by reference to their causes or their objectives but defines them by reference to their effects (71). The CJEU has stated that ‘it follows that the concept of State aid is objective; the test being whether a state measure confers an advantage on one or more particular undertakings’ (72). Therefore, the purposes of the new Norwegian tourism structure are not relevant in order to determine whether the alleged measures entail and advantage and a State aid.

(103)

In the present case, the existence of an advantage depends on (i) whether IN has cross-subsidised its economic activities with the public funds received to compensate its non-economic activities, and (ii) whether IN has required an adequate return on capital (reasonable profit) for the economic services provided to the RTBs and DMOs.

(104)

These two issues will be assessed in the next two subsections. For the purpose of the assessment, the Authority will determine whether the RTBs and DMOs were charged for the services purchased from IN a price below the level which would prevail in a competitive market setting (i.e. absent market power). The Authority considers that a reasonable proxy for such a competitive level is a price sufficient to cover the incremental costs, i.e. the directly attributable variable costs and an appropriate share of common (fixed) costs, plus an adequate return on capital (73).

(105)

When an entity carries out both economic and non-economic activities, a cost-accounting system should be in place to ensure that the economic activities are not subsidised through state resources allocated to the non-economic activities of that entity (74).

(106)

Objective and transparent cost allocation mechanisms should be in place to ensure that the state resources allocated to the non-economic activities of that entity do not cover incremental costs related to the economic activities. Without such mechanisms in place, the economic activities may gain advantages from the public funds granted to non-economic activities. Furthermore, internal accounts should allow for the identification of the costs and revenues corresponding to the different services (75).

(107)

Consequently, the Authority will check whether IN has had in place a methodology allowing it to separate costs and revenues of its economic and non-economic activities, as a means to exclude the risk of cross subsidisation between IN's different activities. The Authority will also assess IN's accounts regarding the economic services provided to the RTBs and DMOs.

(108)

As already stated, a public undertaking carrying out economic and non-economic activities must implement accounting systems and procedures which permit it to allocate all incremental costs incurred in providing the economic service to the accounts containing economic activities (76).

(109)

On the basis of the information provided by IN, the Authority has concluded that the common costs are the following (i) development costs of the new structure project, (ii) general operating costs, i.e. follow up and administration, webmaster support, etc., and (iii) technical operating costs of the platform, i.e. IT consultants, annual software licence fees, maintenance hardware and software, etc. (77).

(110)

The Norwegian authorities have explained that the development costs represent costs for the project management, concept development, technical development and improvements, testing and work done by consultants to prepare visitnorway.com for the new structure project. The development costs were approximately NOK 18 million in 2013 (78).

(111)

According to the reply from the Norwegian authorities to the opening decision (79), NOK 4 million were allocated to the economic services provided through the platform. According to the information provided, taking into account cost sharing based on full transparency between generic marketing and specific marketing (80), the large majority of the operating and technical costs of the new structure (approximately 89 %) is connected to generic marketing of Norway (non-economic activity). Therefore, IN's business model included NOK 4 million of the development costs as investments costs. The Norwegian authorities have provided information confirming that this is a reasonable allocation of development costs. In particular, IN has informed the Authority that by screening 15 766 editorial pages and 19 000 listings, it has been calculated that 84,3 % of all page views are defined as generic marketing and 15,7 % of all the page views are business listings in the period 23 March 2014 to 23 March 2015 (81). Therefore, the largest part of the development costs should be allocated to the non-economic services of the platform.

(112)

Based on the information provided and referred to above, the Authority notes that the percentage of development costs allocated to IN's economic services is over 20 %, which is larger than the actual share of costs related to the promotion of specific contents as referred to above. The Authority concludes therefore that the allocation of NOK 4 million to the business model of the premium partnership agreements is reasonable and justified.

(113)

The Complainant argues, however, that the development costs should also include parts of the costs related to the establishment of the platform itself in 2007.

(114)

IN confirms that these costs have not been included in the costs calculation. IN argues that the platform existed already before the premium agreements were signed, and the RTBs and DMOs already had cooperation agreements, paying an annual partner-fee, which contributed to the establishment of the platform (82). Furthermore, the initial costs were not included because they were not capitalised (83), as permitted by Norwegian accounting standards (NRS 19) (84). NRS 19 relates to relevant direct cost and capitalisation of costs. According to this standard, intangible assets, i.e. non-monetary assets without physical substance, which the company uses in the manufacture or sale of goods and services, do not need to be capitalised. Following these rules, in the case of visitnorway.com, none of the development costs have therefore been capitalised.

(115)

In addition, the Norwegian authorities explain that in 2015 a new cloud based DMS platform for visitnorway.com will be implemented. The current platform with all content, routines, software licences etc., will remain in place until the end of 2015 and then be discontinued. Only text and photos will be moved to the new platform and no value will remain with the old technical platform due to the technical evolution in the market. Therefore, according to IN, there is no economic reason to capitalise IT projects such as visitnorway.com.

(116)

The Authority accepts this argument given that the Norwegian accounting standards allow for the non-capitalisation of these types of costs. The Authority considers that to the extent that all companies in Norway are entitled not to capitalise these types of costs, even if this fact could be considered as an advantage, it is not selective. The measure (the possibility not to capitalise a cost) is open to all sectors of the economy, all forms of companies and all forms of production. Therefore, when incurring expenses covered by the NRS 19 rule, the measure would constitute neither a selective advantage nor State aid (85).

(117)

Regarding the general operating costs for the period 2013-2018, an hourly full cost methodology is applied by IN to allocate the different costs (86). This methodology is based on the guidelines cited in recital 73 above, adopted in 2011 and applied since. According to this methodology, the price for services is based on the number of hours devoted by employees to provide such services (87). IN's hourly costs contain direct personnel costs for the person carrying out the work, and the overhead costs that are necessary to ensure that that person is able to do his/her job (88). Overhead costs include rent, office, telephony, management, and joint services such as finance, IT, HR, etc. IN increases the cost per hour 3 % every year from 2014 onwards to ensure that all costs continue to be covered (89).

(118)

Applying this methodology, IN ensures that the different projects are funded by the remuneration from individual clients, covering the costs spent by IN on providing them with the service.

(119)

Accordingly, it is the Authority's view that this, at least in the present case, is a sufficient methodology for allocating common costs.

(120)

The Authority observes that during the pilot study (2012-2013), the hourly cost assigned to accounts of the two pilot studies was lower than the standard full cost hourly rate established by IN. (90) However, this reduced hourly fee was offset by taking into account the time devoted by the RTBs and the DMOs to provide content, feedback and assistance in developing the new structure (91).

(121)

Regarding the allocation of technical costs, IN uses a methodology based on ‘cost per page view’ (92). According to this methodology, IN calculates the cost per page view on the platform and thereafter calculates the share of the technical costs that should be paid by the RTBs/DMOs based on their actual share of page views. It is the Authority's view that this methodology enables IN to appropriately allocate costs between generic marketing and commercial services. IN's business plan foresees to charge for the economic services provided to the RTBs and DMOs according to this methodology until 2018.

(122)

Therefore, the Authority is of the view that there is an objective and transparent cost allocation mechanism in place which enables IN to safeguard that only revenues from economic activities is used to cover the costs related to their operations (including incremental costs and an appropriate share of the common costs).

(123)

During the formal investigation procedure, the Norwegian authorities have provided the Authority with further information on the accounting system within IN.

(124)

The annual accounts of IN contain consolidated accounts for the company, including profit and loss, balance sheet and notes pursuant to the Norwegian Accounting Act. These accounts are audited by an external auditor, approved by the general assembly of IN and filed with the Norwegian national business register. These consolidated accounts can be disaggregated into eight different sub-accounts, one for each of the activities/programmes carried out by IN (loans, funds, projects etc.). These sub-accounts have their own profit and loss as well as balance sheet accounts.

(125)

Visitnorway.com is included in the account for project activities. Furthermore, IN has explained that each individual project — like visitnorway.com — has a specific sub-account. In particular, the projects have separate project numbers for commercial external activities (93). In this manner, it is ensured that the revenues and costs of all activities of IN can be properly classified and allocated.

(126)

Visitnorway.com has four project accounts between which IN splits all costs and revenues relating to operating the platform (94). The four project sub-accounts are: (i) editorial operating services external consultants (ii) upgrade and maintenance services external consultants, (iii) technical operation external services, and (iv) new structure external services (95). The costs and revenues of premium agreements are codified in the new structure external services project account (96).

(127)

These four project sub-accounts contains costs and revenues for the visitnorway.com platform as a whole. Economic and non-economic services costs and revenues are clearly identified, but codified together. The Authority has not found any indication that costs and revenues have not been correctly identified as economic or non-economic. It can be concluded therefore, that there is no formal separation of accounts, but costs and revenues of the different kind of services can still be clearly identified.

(128)

During the formal investigation procedure (97), IN has committed to increase the transparency of its accounting system regarding economic activities related to the tourism sector and it has committed to maintain more detailed accounts as from 1 January 2014.

(129)

In order to ensure additional transparency in its current accounting system, IN will review the four accounts already existing within the visitnorway.com project account. The costs and revenues in each of the four accounts will be further separated between economic and non-economic activity. Consequently, formal separation of accounts will exist from January 2014.

(130)

The Authority considers that accurate and formal separation of account as of 1 January 2014 will be sufficient to prevent cross subsidisation of economic services provided through the premium partnership agreements. The Authority notes that prior to 2014, IN only provided economic services to the pilot project customers, and from 1 January 2014, IN offered the pilot project customers the same prices as those applicable in the rest of the premium agreements.

(131)

The Authority underlines that the fact that creating eight accounts is actually possible, illustrates that the current accounts are already sufficiently transparent. The Authority thus considers that the accounting system implemented by IN until the current date allows for the separation of the costs of the economic and non-economic services with a sufficient degree of accuracy, even though there is no formal separation of the accounts between the economic and non-economic services.

(132)

In conclusion, the Authority takes note of the proposal offered by the Norwegian authorities and it concludes that the current accounting system already allows to identify the different costs and revenues of the economic and non-economic services provided through visitnorway.com and that there is no evidence of cross-subsidisation from non-economic to economic activities.

(133)

Public companies must behave in the market as ordinary economic operators (98). No advantage within the meaning of Article 61(1) of the EEA Agreement is being granted by the State if a private investor can be expected to act in the same way, i.e. when a public company acts in line with the market economy investor principle (MEIP) (99).

(134)

Any business owner or investor will normally require a return on its investment in order to invest in a commercial undertaking (100). Such an expectation of profitability represents a normal and expected business cost for the undertaking. Consequently, no advantage financed by state resources is involved when a public company covers costs (variable and an appropriate contribution to common costs) plus an adequate return on the capital investment (101).

(135)

The Authority has already stated in its Manufacturing Guidelines that: ‘[i]f a public enterprise has an inadequate rate of return, the EFTA Surveillance Authority could consider that this situation contains elements of aid, which should be analysed with respect to Article 61. In these circumstances, the public enterprise is effectively getting its capital cheaper than the market rate, i.e. equivalent to a subsidy’ (102).

(136)

However, the Authority also recalls that according to the same Guidelines, the investor has a wide margin of discretion and ‘within that wide margin the exercise of judgement by the investor cannot be regarded as involving State aid’. It follows that ‘[o]nly where there are no objective grounds to reasonably expect that an investment gives an adequate rate of return that would be acceptable to a private investor in a comparable private enterprise operating under normal market conditions, is State aid involved even when this is financed wholly or partially by public funds’ (103).

(137)

Accordingly, the Authority has assessed the pricing policy of IN regarding the economic services provided under the pilot projects as well as under the premium partnership agreements through the platform visitnorway.com. The objective is to assess whether IN's business model for the IT services provided within the framework of visitnorway.com new structure (i.e. premium partnership agreements) included a reasonable profit expectation.

(138)

The Norwegian authorities have explained (104) that IN's pricing policy ensures that all relevant costs are covered and a reasonable profit obtained by the revenues from the economic activities (105). Even if they consider that IN's activities in this sector are not economic in nature, the commercial agreements are designed to cover all costs as well as to generate a profit for IN.

(139)

Based on the cost allocation methodology described above, see recitals 108 to 122 above, the Norwegian authorities have explained the price model used during the pilot projects and the premium partnership agreements, in order to show that the prices for the provision of web infrastructure and related services to the RTBs and the DMOs are sufficient to generate a reasonable return.

(140)

This profitability is not measured on the platform visitnorway.com as a whole (106), but rather on the profitability of the economic activities (economic services provided to the RTBs and DMOs though the premium and standard agreements). IN's initial business plan for the new structure included revenues from the services provided to RTBs and DMOs under the two types of agreements: (i) premium agreements and (ii) standard agreements.

(141)

Following a detailed assessment of the information provided, there is no evidence that IN does not attempt to obtain a reasonable profit from the commercial agreements, including the premium agreements. On the contrary, there is evidence that, in practice, IN expected to obtain a profit on these economic activities over the period 2013 to 2018. IN has provided a business case to the Authority based on the estimated costs and revenues associated with the commercial agreements, showing a positive net present value (107), using a discount rate of 7 %. In particular, IN's business model estimated a net profit between [… % and … %] (108).

(142)

During the formal procedure, IN has also explained (109) that it is changing to a new cloud-based destination management system (DMS) where it has […].

(143)

The Authority notes that the comparison between the conduct of a public and private operator must be made by reference to the attitude of a private operator at the time of the investment or development of the business plan, ‘having regard to the available information and foreseeable developments at the time’ (110). The changes to visitnorway.com that occurred after the business model of the new structure was drafted are therefore not relevant for the State aid assessment. The relevant issue is whether the original business model aimed to obtain profits from providing services to RTBs and DMOs.

(144)

In the analysis of the two pilot projects — during the Pilot Alfa phase — it is stressed by the Norwegian authorities that VisitSørlandet and VisitTrondheim intensively contributed to develop the model and invested significant time in the projects. Annex 6 to IN's reply to the opening decision (111) provides a concrete list of the types of extra work performed in the pilots during 2013, while planning a new structure for visitnorway.com. Among these extra works performed by the pilot customers, IN refers to: (i) evaluate what content should continue to be part of the platform, (ii) planning of the transition of links from existing solutions to preserve search engine ranking from existing content, (iii) set up/evaluate the basic structure, front page, subpages and folder structure for content that is not their own pages, etc.

(145)

As a consequence, the profitability of the pilot projects cannot be assessed in isolation but only as part of a long-term project. The issue is not whether IN would obtain profits in the short term from the pilot projects, but rather whether the new structure and the premium partnership agreements would ensure long-term profitability (112). In fact, pilot projects, by their very nature, are not carried out by public or private companies with an immediate expectation of profitability, but rather to assess their economic and business rationale (113). The case-law accepts that there is not automatically State aid every time the State foregoes revenues. In fact, following CJEU (114) and Commission practice (115), the Authority considers that reduced prices do not entail State aid, if they are objectively justified by economic reasons.

(146)

Furthermore, the Authority notes that since 2014, the two pilot project customers have been offered the same price structure on the premium partnership agreement as the remaining RTBs and DMOs (116). In fact, this explains the reference made by the Complainant when referring to a ‘raise of price’ between the old premium agreements and the new premium agreements. Indeed, the partnership agreements signed as of 2014 provide for higher fees than the fees requested during the pilot phases (see recital 44 above) (117).

(147)

The data sent to the Authority (118) demonstrates that the average profit initially foreseen from the premium partner agreements for the period 2013 to 2018 (between [… % to … %].) is in line with the margin obtained by private operators offering web services to the RTBs and the DMOs (119).

(148)

IN has explained in its reply to the opening decision (120) that even if it does not know its competitor's pricing models, it has nevertheless collected publically available annual accounts for the top web development companies providing services to the RTBs and DMOs. According to IN, private operators offering web services to the RTBs and DMOs have an average profit margin of […] (121). Therefore, IN maintains that its estimated profit margin between [… % to … %] is in accordance with the margins obtained in the market (122).

(149)

The Authority recalls that according to case-law, the average return of the sector can be used as an indicator of the absence of aid (123). Therefore, the Authority finds that as a profit margin of […] % when providing web infrastructure and related services would be acceptable for a market investor, IN's business model was in line with the market economic investor principle.

(150)

Finally, IN provided some information (124) on the argument put forward by the Complainant according to which visitnorway.com has a value in itself, because of the brand and the domain (being one of the most visited tourism platforms in Norway), that has not been taken into account. The Authority understands that the Complainant's argument is that because visitnorway.com brand has an economic value, the RTBs and DMOs should also pay for the indirect profit of the use of this brand.

(151)

IN considers that this value is negligible. To support its conclusion, IN hired an external consultant, NetNames, which estimated the value of the domain to USD 20 000 (125). The value of the domain was based on a comparison with different, but comparable, domains. Taking into account the costs of visitnorway.com, the external expert confirmed IN's conclusions that the value of the domain is negligible. The Authority can see no basis to question this conclusion.

(152)

Consequently, the Authority considers that IN acted correctly when not including the use of the brand visitnorway.com as an extra cost for the RTBs and DMOs.

(153)

The Authority concludes therefore that IN's commercial agreements, including the premium agreements, are undertaken with the expectation of long-term profitability and in line with the market economy investor principle (MEIP).

(154)

The Authority concludes that when providing web infrastructure and related services to the RTBs and DMOs, IN has in place a proper cost allocation mechanism and accounting system which allows it to accurately identify costs and revenues associated with those services.

(155)

It is also established that IN has not foregone profits from offering these services. IN has acted in line with the MEIP.

(156)

The Authority concludes accordingly that IN has not obtained State aid within the meaning of Article 61(1) of the EEA Agreement, when providing web infrastructure and related services to the RTBs and DMOs, through the premium partnership agreements.

(157)

As already explained above, see recital 87, Article 61(1) of the EEA Agreement only applies where the recipients of a State aid are undertakings.

(158)

As already stated in recital 18 above, the Authority notes that the RTBs and DMOs are not established in order to maximise profit for the entity itself or for its shareholders, but rather to increase and promote the business activities of their shareholders and clients.

(159)

The Authority recalls nevertheless that the application of the State aid rules does not depend on whether the entity is set up to generate profits. Based on the case-law, non-profit entities can offer goods and services on a market, too (126). Where this is the case, non-profit providers remain within the scope of State aid rules.

(160)

The Authority considers that similarly to IN, the RTBs and DMOs provide economic and non-economic services. The promotion of specific tourism services constitutes an economic activity, see recital 28 above. Therefore, those entities are considered undertaking regarding those services.

(161)

IN has demonstrated that even if it is a non-profit organisation, the premium partnership agreements are signed with reasonable long-term profitability expectations. IN pricing model foresees a return of [… % to … %] (see section 1.2.2.2 above). The data provided by IN demonstrates that in practice this expected profitability has also been achieved. The data indicates that IN's investment in the new structure of visitnorway.com has generated a profit in 2013. In 2014 and 2015 a negative profit is expected, but a stable and reasonable profit is foreseen for the period 2016-2018. The average profit is in line with the one of private operator offering web services to the RTBs and DMOs (127).

(162)

Consequently, the Authority concludes that there is no advantage in favour of the RTBs and/or DMOs by means of obtaining web infrastructure and related services below market price.

(163)

Furthermore, contrary to the Complainant's statements, see recitals 54 and 65 above, the Authority has been reassured that no free translation services are provided to the RTBs and DMOs which migrate to IN.

(164)

The Norwegian authorities have explained that the premium partners do not obtain free translation services, but on the contrary, their translation support is less than that offered to the non-premium partners, i.e. the RTBs and DMOs which do not migrate to visitnorway.com, see recital 77 above.

(165)

Based on the above, the Authority concludes that the alleged tie-in condition to subscribe to premium agreements does not exit.

(166)

On these premises, the Authority finds that the RTBs and the DMOs have not received State aid within the meaning of Article 61(1) of the EEA Agreement when receiving web infrastructure and related services from IN.

(167)

As the Authority has now concluded that there is no advantage in favour of IN, or the RTBs and DMOs, it is not necessary to assess whether the remaining conditions of Article 61(1) of the EEA Agreement are met,