European Union regulators on Wednesday forbade Germany to give loan guarantees of up to 500 million (US$796 million) to express delivery company DHL to help shield it from problems setting up a new hub at Leipzig-Halle airport.
The European Commission said an unlimited guarantee offered by the Sachsen government in eastern Germany would allow DHL _ a division of state-owned mail and logistics company Deutsche Post AG _ to hedge business risks on terms a private investor would not have accepted.
It said the offer of public money also gave DHL an unfair advantage over rivals and the company had already got the maximum amount of public investment allowed for businesses investing in problem regions with high unemployment.
The EU, however, will allow a 350 million (US$557 million) state subsidy to help pay for a new southern runway at the airport which helped the company run more flights to the area.
DHL decided to move its European hub from Brussels to Leipzig-Halle airport in 2004. The new hub opened in May.
Earlier this month, the EU refused to allow DHL receive 6.1 million (US$9.7 million) in training aid that it said would have paid the company's running costs. It gave the go-ahead for a smaller 1.6 million (US$2.55 million) public payout to help train workers.
