The battle over Volkswagen’s contentious corporate governance arrangements looked set to end up in court once again after a German government official on Thursday said Berlin had failed to reach an agreement with the European Commission over a law that shields Europe’s largest carmaker from a full takeover.
Brigitte Zypries, Germany’s justice minister, told Reuters yesterday that, in a last attempt, no agreement had been reached with the European Commission.
Charlie McCreevy, the European Union’s internal markets commissioner, launched legal action in June over the so-called VW law that gives shareholders with a 20 per cent stake a blocking minority.
Last year, the European Court of Justice ruled that the VW law violated EU rules on the free flow of capital. Subsequently, the German government approved amendments to the law, but retained the section with the blocking minority.
This prompted the Commission to open legal proceedings against the watered-down version of the law.
The regional Land government of Lower Saxony holds just above 20 per cent of Volkswagen’s shares and is the beneficiary of the law.
But the regional state’s blocking minority is a thorn in the side of Porsche, the luxury sports carmaker that owns more than 50 per cent of VW’s shares and intends to lift that stake further as early as this year.
The VW law dispute has become a proxy for a fierce battle for control of Europe’s largest carmaker. The law’s supporters – VW workers and Lower Saxony – are keen to see a counter-weight to Porsche.
But the power struggles between Porsche’s and VW’s works councils have calmed down in recent weeks after the sports carmaker formed a new holding company where both sides are represented on the supervisory board.
Bernd Osterloh,. head of VW’s works council and a bitter opponent of a full takeover, had recently struck an more conciliatory note towards Porsche’s management.