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UPDATE 2-EU's McCreevy wants Germany facing court over VW law

(Adds reaction from Germany, union)

BRUSSELS/FRANKFURT, Sept 9 (Reuters) - The EU Internal Market Commissioner wants Germany to face the bloc's top court for failing to properly amend a law shielding Volkswagen VOWG.DE from takeover, officials at the EU executive said on Tuesday.

The European Commission launched legal action against Germany in June but amendments proposed by Germany to the so-called “VW law” have been rejected by Charlie McCreevy, whose job is to ensure the free flow of capital across borders within the EU.

“Commissioner McCreevy will recommend to the college (European Commission) that this issue is being sent to the Court of Justice,” his spokesman, Oliver Drewes, said.

“The German authorities have disregarded a court ruling and the European Court of Justice has now to define the consequences of this,” Drewes said.

The Commission is first expected to give Germany a final warning and then take the country to the Luxembourg court, he added.

In Germany, the justice ministry said it could not comment in detail because it had not seen the Commission’s statement.

The top court ruled last year that the VW law, in place since the carmaker’s privatisation, violated EU rules on the free flow of capital.

German sports car maker Porsche PSHG_p.DE has already won permission from the Commission to acquire control of VW.

The German state of Lower Saxony, VW’s second-biggest shareholder with just over 20 percent of the votes in Europe’s biggest carmaker, has said it would keep its stake.

An amendment to the VW law -- yet to be formally adopted by Germany -- still preserves a strong say for VW staff and its home state of Lower Saxony, something Porsche is fighting.

A Lower Saxony state government spokesman called McCreevy’s position old news, noting that the points the court had objected to were addressed in the new law and that the Commission had no jurisdiction over VW corporate statutes.

The IG Metall labour union, which represents the carmaker’s employees, said it hoped 30,000 VW workers would rally in front of the company’s head office on Friday in support of the law.

IG Metall district leader Hartmut Meine called McCreevy’s latest broadside “completely incomprehensible” because the draft VW legislation conformed to EU law.

“It seems the European Commission wants to keep filing lawsuits until it has eliminated all worker rights. Volkswagen staff will put up stiff resistance to this neo-liberal stance, including on Friday,” Meine said. (Reporting by Huw Jones, additional reporting by Michael Shields in Frankfurt and Markus Wacket in Berlin; editing by Simon Jessop)

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