State aid for Icelandic submarine cable project cleared
The EFTA Surveillance Authority (ESA) has concluded its formal investigation concerning alleged aid measures granted by the Icelandic authorities to the telecommunications provider Farice finding the measures to be compatible with EEA rules.
The case concerned aid notified in 2021 in the form of a capital increase to finance investments in a third submarine communications cable (IRIS), aimed at strengthening Iceland’s digital resilience. Although ESA initially approved the measure, that decision was annulled by the EFTA Court, prompting a formal investigation.
ESA assessed two alleged aid measures: compensation for seabed research and the capital increase related to the IRIS cable. It concluded that the seabed survey compensation did not confer an economic advantage and therefore did not constitute State aid. By contrast, the capital increase was found to constitute State aid but was deemed compatible with the EEA Agreement, as the Icelandic authorities demonstrated that the socio-economic benefits of the project outweighed any potential distortions of competition.
ESA considered that the measure facilitated the construction of a third submarine cable, thereby enhancing Iceland’s digital connectivity and supporting its participation in the global economy.