EU Commission opts for court testof German VW protection law

13th October 2004, Comments 0 comments

13 October 2004, HANOVER/BRUSSELS - The European Commission on Wednesday opted to contest the German law protecting Volkswagen against foreign takeovers, a decision that was taken calmly in the state of Lower Saxony, where the automotive giant is headquartered. "We believe that the European Court of Justice will decide in our favour," state government spokesman Volker Benke said in the state capital Hanover. He said the Lower Saxony government's view is that the VW law does not hinder either investment in

13 October 2004

HANOVER/BRUSSELS - The European Commission on Wednesday opted to contest the German law protecting Volkswagen against foreign takeovers, a decision that was taken calmly in the state of Lower Saxony, where the automotive giant is headquartered.

"We believe that the European Court of Justice will decide in our favour," state government spokesman Volker Benke said in the state capital Hanover.

He said the Lower Saxony government's view is that the VW law does not hinder either investment in Volkswagen by foreign investors or the free flow of capital in the EU.

The spokesman's remarks came as the EU Commission announced it would file suit in the European Court of Justice against Germany for refusing to knock down a 44-year-old law which Brussels has charged violates the EU's investment and privatisation rules.

The VW law, going back to 1960, effectively thwarts any hostile bids for legendary German car concern by putting a cap of 20 percent on shareholders' votes regardless of the amount of shares they own.

It also accords a blocking minority to Lower Saxony, which currently holds 18.2 percent of the voting rights in VW, which is based in the city of Wolfsburg, near Hanover.

The conflict between Germany and the EU over the VW law has taken on political overtones, with Chancellor Gerhard Schroeder having personally argued in Brussels in favour of the law. Schroeder, as a former premier of Lower Saxony, had once sat on the VW supervisory board in representing the state's share in the car giant.

Over the past few years, the EU Commission has successfully challenged so-called "golden share" arrangements used by countries to protect what they consider key companies.

Among others, the European Court of Justice ruled in 2002 against France being able to keep control of oil concern Elf Aquitaine. Last year, the court backed the Commission in ordering Britain to cede its golden share in airport concern BBA and in ordering Spain to scrap a law giving the state control over privatised firms.

DPA

Subject: German news
 

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