Studio complex funding investigated in Spain

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BRUSSELS -- The European Commission Wednesday launched an investigation into possible illegal government funding for the Ciudad de la Luz film studio complex in Alicante, southern Spain.

The probe will look into whether the funding by the Valencia regional authorities constitutes illegal state aid, and whether that gives the studio an unfair advantage over rivals.

"The commission is concerned that the substantial public funding may have allowed the Ciudad de la Luz complex to distort fair competition in the European market for film studio facilities," EU competition commissioner Neelie Kroes said.

The commission opened the investigation after receiving complaints from "two major players in the European film sector," which were not named.

Construction of the massive Ciudad de la Luz complex began in 2002. It opened for filming in 2005, and is due to be completed in 2009. The Valencia regional government, which is a co-owner via its Sociedad Proyectos Tematico de la Comunidad Valenciana vehicle, has invested 200 million euros ($292 million) in the studio, which cost a total of 300 million euros ($442.5 million) to build.

At the time, the Spanish authorities argued that the public support did not constitute state aid because it had been made on the same terms as a private investor. However, after a preliminary assessment, the EC said it doubts that a private investor would have provided 100% funding for such a new, large-scale entrant in a competitive market.

The complex already has hosted shoots including the $118 million "Asterix at the Olympic Games," Jean-Jacques Annaud's $53 million comedy "His Majesty Minor" and Donald Petrie's romantic comedy "My Life in Ruins."
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