EU Clash with Germany Over So-Called VW Law Intensifies
November 27, 2008
"In the absence of a satisfactory reply from Germany within two months of receiving the reasoned opinion, the commission may decide to refer the matter to the European Court of Justice," a statement from the EU executive said.
A 1960 law paving the way for VW's privatization gives the state of Lower Saxony a powerful say and even veto powers in the running of the car manufacturer.
But in 2007, the Luxembourg-based European Court of Justice ruled that this provision violates EU rules on the free movement of capital.
New law drafted to satisfy EU rules
German Chancellor Angela Merkel has said she will fight pressure from the EU to curb state influence over Europe's biggest carmaker.
The government has drafted a new law which it believes satisfies EU rules while cementing veto powers asserted by Lower Saxony with just over 20 percent of VW shares.
Officials in Brussels say the draft is not good enough, partly because it "does not modify the provision establishing a 20 percent blocking minority."
Tens of thousands of VW workers have been holding protests in favor of maintaining Lower Saxony's political influence and against the European Commission's efforts to curb it.