LUXEMBOURG/FRANKFURT (Reuters) - Germany won the right to retain key veto power at carmaker Volkswagen VOWg_p.DE on Tuesday after Europe’s top court turned down the European Commission’s bid to abolish its “VW law”.
The ruling means Germany avoids fines worth tens of millions of euros and leaves the regional state of Lower Saxony, where Volkswagen is headquartered, with the power to block takeovers and other key decisions such as factory closures.
The Luxembourg-based EU Court of Justice (ECJ) said in a ruling on Tuesday that Germany had complied with a 2007 court ruling ordering it to water down a 1960 law that gave Lower Saxony a de facto golden share in Europe’s biggest carmaker.
Under German financial market rules, shareholders need at least 25 percent to hold a blocking minority, but the VW law gave Lower Saxony, with just 20 percent in the carmaker, this prerogative.
After the 2007 ruling, Germany scrapped elements of the law but kept untouched the right of any shareholder with a 20 percent stake to veto strategic decisionS. That prompted the Commission to pursue Germany again, on the grounds of protectionism.
The EU Court of Justice said on Tuesday that “Germany complied in full with the initial judgment of the court delivered in 2007” and found its amendments to the original law had been sufficient.
Sports-car maker Porsche found the VW law a barrier when it sought to take over much-bigger VW in 2008. Porsche’s bid foundered and it was subsequently bought by VW last year.
Writing by Foo Yun Chee, Ludwig Burger and Andreas Cremer; Editing by Sophie Walker