June 12 (Bloomberg) -- Deutsche Bahn AG's initial public offering may be threatened by possible violations of European Union law, the Financial Times Deutschland reported, citing Juergen Basedow, head of the Bonn-based Monopolies Commission.

Supplying revenue from the share sale to the DB Mobility and Logistics division would equate to government aid, the newspaper said. This money should flow to the country's Finance Ministry or Deutsche Bahn's holding company, FTD reported, citing Basedow.

The European Union Commission will watch whether the German government acts differently than a private backer would, the newspaper said. It is not ``unusual'' for private sector companies to finance subsidiaries through share sales, the FTD reported, citing people close to the executive arm of the E.U.

To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

Last Updated: June 12, 2008 01:27 EDT