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European Commission

Press release

Brussels, 1 October 2014

State aid: Commission decides Nürburgring racetrack in Germany received incompatible state aid

After an in-depth investigation, the European Commission has concluded that public support measures in favour of the racetrack, leisure park and hotels at Nürburgring in Germany were incompatible with EU state aid rules and gave the companies then owning or operating them an undue competitive advantage. The beneficiary companies are all in insolvency proceedings. The Commission has also found that their assets have been sold in an open and transparent tender at their market value. The buyer is therefore not liable to pay back the incompatible aid.

Commission Vice President Joaquín Almunia in charge of competition policy said: "Governments are entitled to help firms in difficulty provided that they respect the EU's state aid rules, which aim at avoiding the waste of taxpayers' money and undue distortions of competition. Such aid must be used to restructure companies and make them viable again, rather than keeping them artificially alive. In the case for Nürburgring, the support measures clearly breached the rules."

In March 2012, the Commission opened an in-depth investigation into a set of aid measures totalling €456 million granted mainly by the Land Rheinland-Pfalz to the Nürburgring companies in the period 2002-2012 (see IP/12/263). The investigation was extended in August 2012 to cover additional measures aimed at avoiding the immediate insolvency of the companies concerned (see IP/12/891). Germany did not notify the measures to the Commission for prior state aid scrutiny, as required under EU rules.

The investigation has shown that no private player would have invested in the Nürburgring companies under similar terms. The measures therefore constitute state aid within the meaning of the EU rules.

The three companies previously owning Nürburgring were in difficulty at least since 2002, 2007 and 2008, respectively. Under EU rules such companies can only receive state aid within the framework of a restructuring plan to restore the company's long-term viability. This is to ensure that the amount of public money spent is kept to the necessary minimum and not wasted to artificially keep in the market non-viable companies. However, the German authorities did not provide a restructuring plan for the Nürburgring companies. Therefore, the aid cannot be justified under EU rules and needs to be paid back in line with national insolvency procedures.

The three companies previously owning Nürburgring, which are all ultimately State-owned, are currently the subject of insolvency procedures. The tender procedure for their asset sale on the open market was launched in May 2013 and concluded in March 2014. The Commission found that the tender was open, transparent and non-discriminatory and that the sale has taken place at market value. The Commission has therefore concluded that the buyer of the assets cannot be held liable for paying back the aid.

Background

The various facilities of the Nürburgring complex, near the German town of Nürburg, mainly include a racing track, a leisure park and hotels. The complex benefited from several support measures, mainly in the form of capital injections, loans, public guarantees, letters of comfort, subordination of debts, rent below market rate, service fees and grants. These measures were granted predominantly by the German Land Rheinland-Pfalz and through public undertakings controlled by the Land. The support related to expenses for the construction and operation of facilities directly linked to the race track (mainly a grandstand), for the construction and operation of facilities for the promotion of tourism (leisure activities, accommodation, events, shopping, dining and gambling) and for the organisation of Formula 1 races.

The Commission having considered all aid measures in its investigation, has decided that all measures that qualify as State aid at the time they were granted added up to at least €1.278 billion in state aid. This amount does not take account of sums already repaid to the State by the beneficiaries, which, according to the information provided by the German authorities, reach a total of €500 million.

Public interventions in companies that carry out economic activities can be considered free of State aid in the meaning of the EU rules when they are made on terms that a private player operating under market conditions would have accepted (the so-called "market economy investor principle" – MEIP). If the MEIP is not respected, the public intervention constitutes State aid within the meaning of the EU rules (Article 107 of the Treaty on the Functioning of the European Union – TFEU), because it gave an economic advantage to the beneficiary that its competitors did not have. The Commission then assesses, whether such aid can be found compatible with the common EU rules that allow certain categories of aid, such as the 2004 Guidelines on state aid for the rescue and restructuring of companies in difficulty (see MEMO/04/172).

To determine whether aid has been passed on to new owners in an asset sale, the Commission assesses whether there is economic continuity between the new and previous owner. The Commission uses a set of indicators, such as the scope of the sold assets (assets and liabilities, maintenance of workforce, bundle of assets), the sale price, the identity of the buyer(s), the moment of the sale and the economic logic of the operation. In this case it appears that no such economic continuity existed. Furthermore, as the assets were sold on the basis of an open, transparent and non-discriminatory tender process, the new owner has received the assets at their market value and hence 'free of aid'.

The non-confidential version of the decision will be made available under the case number SA.31550 in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Contacts:

Antoine Colombani (+32 229 74513, Twitter: @ECspokesAntoine)

Maria Glowacka (+32 229 52530)


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