The European Commission will focus on the Nürburgring
The European Commission had already refused to grant a new public loan to the company managing the Nürburgring. Now that the state of Rhineland-Palatinate has decided to guarantee an existing loan, the European bodies are still not satisfied since this would amount to public subsidies contrary to competition rules.
The guarantee provided by the Land amounts to 254 million euros on a total loan of 330 million euros granted by its regional bank. However, the European authorities believe that this will allow the entity to survive artificially while its economic foundations would not be viable in their current state.
This is the reason why she announced that she would deepen the investigation she began last March into the public aid received by the Nürburgring: On May 15, 2012, new public support measures were decided for the companies operating the Nürburgring circuit and leisure park in Germany and partially implemented to avoid their immediate bankruptcy. These measures consist of rescheduling interest due on previously granted loans, subordinating claims, and possibly providing an additional shareholder loan to keep the companies operational for six months. During this period, a restructuring or liquidation plan will be established. The Commission considers these additional measures to be closely linked to the other aid measures it has been investigating since March 2012 due to doubts that they were granted under market conditions.
The entire question now is to determine whether the German circuit was already experiencing financial difficulties in 2008 when it received its loan from the regional bank of Rhineland-Palatinate. Indeed, according to European legislation, due to their significant distortion effects on competition, rescue or restructuring aid to companies in financial difficulty can be granted to a given company only once over a period of ten years (non-recurrence principle of aid as stated in the EU guidelines on state aid for rescuing and restructuring firms in difficulty).
This means that the 2008 aid might be accepted as it stands, but the new aid from 2012 would be inapplicable since it occurred less than ten years after the first public subsidy. Last March, the Commission clearly stated that it did not consider the Green Hell as a public utility: « At this stage, the Commission seriously doubts that a motorsport infrastructure can be exempted from State aid rules and that a leisure park and a racing circuit can be considered as services of general economic interest that cannot be provided by market forces alone. The Commission cannot exclude that the beneficiaries were in financial difficulty at the time of the measures. If confirmed, this would mean that none of the measures could be considered compatible with the temporary rules then applicable to support businesses during the crisis. »
If the guarantee provided by the Land were deemed illegal, the future of the legendary circuit, and thus that of F1 in Germany, would be at stake. We will have an initial indication of the trend when the FIA publishes its first provisional calendar for the next season, which traditionally happens around the time of the Belgian Grand Prix.
With the participation of RacingBusiness.fr
