The European Commission (EC) has announced its decision that state aid rules in the European Community Treaty will not allow EUR500 million (US$783 million) in government guarantees to be given to express provider DHL to cover the possibility of Leipzig airport failing to meet its obligations to create a European hub as promised.
Such state spending, said the EC, would not be compatible with the European Union Single Market because it allowed DHL to hedge business risks on terms which a private investor would not have accepted and would thus distort competition, reported UK Transport Intelligence.
But the EC would allow for the EUR350 million (US$548.5 million) government spending on the airport's a new southern runway.
"As DHL has already benefited from the maximum amount of investment aid permissible under EC Treaty rules allowing state aid for regions with an abnormally low standard of living and high unemployment, the commission considers that DHL may not benefit from any further aid," said an EC statement.
Such state spending, said the EC, would not be compatible with the European Union Single Market because it allowed DHL to hedge business risks on terms which a private investor would not have accepted and would thus distort competition, reported UK Transport Intelligence.
But the EC would allow for the EUR350 million (US$548.5 million) government spending on the airport's a new southern runway.
"As DHL has already benefited from the maximum amount of investment aid permissible under EC Treaty rules allowing state aid for regions with an abnormally low standard of living and high unemployment, the commission considers that DHL may not benefit from any further aid," said an EC statement.