EU to investigate Nurburgring bail out

08/08/2012

The EU is to investigate a government scheme to bail out the Nurburgring amidst fears it may have breached the community's strict free market rules.

Owing the Rhineland-Palatinate bank almost £235m for redevelopment work carried out in 2009, the Nurburgring, which shares the German Grand Prix with Hockenheim on a rotating basis, faced insolvency.

When Nurburgring GmbH applied to the European Union's Executive Commission for an emergency loan of £10m to cover interest repayments it was refused, however, the state of Rhineland-Palatinate subsequently announced that it was releasing €254M (£192m) to guarantee a loan for the circuit by which it could service a €330M (£259m) loan and stay afloat.

However, in a statement issued earlier today, the European Commission announced that it is to investigate the move.

"At this stage, the Commission has doubts that the measures were granted on market terms and that the companies are viable without continued state support," read the statement.

"The extension of an in-depth investigation gives interested third parties an opportunity to comment on the additional measures under assessment; it does not prejudge the outcome of the investigation.

"The Commission is concerned that Nurburgring may already have been a company in difficulties in 2008, when it received the previous aid. Because of its highly distortive effects on competition, rescue or restructuring aid to a company in financial difficulties may be granted to a given company only once in a period of 10 years.

"The Commission will now investigate whether these repeated public interventions were in line with EU state aid rules."