EU: Germany must scrap VW law

13th February 2007, Comments 0 comments

13 February 2007, Brussels (dpa) - A top European Union lawyer on Tuesday said that Germany must scrap a controversial law that protects Europe's largest carmaker Volkswagen from hostile takeovers. The preliminary ruling, handed down by a senior adviser to the bloc's highest court, marks a crucial turning point in a legal battle between the EU and the German government. The advocate lawyer at the EU Court of Justice (ECJ) said the German legislation on Volkswagen was illegal because it blocked foreign inve

13 February 2007

Brussels (dpa) - A top European Union lawyer on Tuesday said that Germany must scrap a controversial law that protects Europe's largest carmaker Volkswagen from hostile takeovers.

The preliminary ruling, handed down by a senior adviser to the bloc's highest court, marks a crucial turning point in a legal battle between the EU and the German government.

The advocate lawyer at the EU Court of Justice (ECJ) said the German legislation on Volkswagen was illegal because it blocked foreign investors from buying shares and prevented them from winning control of the company.

This restricted the free movement of capital in the 27-member EU and violated EU rules, the court's advocate general said.

In addition, the law strengthened the position of the German government and the German federal state of Lower Saxony, where Volkswagen is based, the lawyer said.

The law reserves two seats each on the supervisory board of Volkswagen for the regional and federal government, irrespective of how many shares they hold.

"The provisions of the German (Volkswagen) law tend to keep property in the hands of those who own it in the face of a hostile takeover bid," the EU lawyer argued.

While the advocate general's opinion is not binding on the court, the judges follow the recommendation in a majority of cases.

The ECJ's final ruling is expected in the next four to six months.

DPA

Subject: German news

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