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Merkel Affirms Support for Volkswagen Veto

German Chancellor Angela Merkel said Tuesday she would fight pressure from the European Union to curb state influence over Europe's biggest carmaker, Volkswagen.

One of some 30,000 demonstrating workers of Volkswagen protests in front the VW headquarters in Wolfsburg

The "Volkswagan Law" has the support of the unions and federal government

The government has drafted a reform of legislation on Volkswagen which it believes satisfies EU law while also cementing veto powers asserted by the state of Lower Saxony, which holds just over 20 percent of VW shares.

"The federal government is on the side of VW," the chancellor told an assembly of 18,000 workers at the company's main plant in Wolfsburg, Lower Saxony on Tuesday, Sept 23.

Merkel said the state must be allowed to retain its veto rights. "We will present this view forcefully and in all clarity to the European Commission," she said.

The German government and trade unions see political influence at the huge company as a guarantor of jobs.

Lower Saxony state Premier Christian Wolf, who was present at the assembly, said Volkswagen had become "Germany's most valuable company," partly as a result of participation by his state.

He said demands from Brussels -- which has threatened to fine Germany if it does not repeal the veto law it says breaks European Union competition rules -- were placing a burden on the company.

VW shareholder Porsche supports law

Martin Winterkorn, CEO of Volkswagen, left, and Wendelin Wiedeking, CEO of Porsche

Porsche, under CEO Wendelin Wiedeking, right, is seeking more control over VW

Volkswagen employees support the law, but it is opposed by luxury carmaker Porsche, the company's main shareholder, which is seeking to cut down the influence of Lower Saxony and VW unions.

Only the state of Baden-Wuerttemberg, home of Porsche, has spoken up in favour of the EU. But on Friday it quietly dropped a challenge in the Bundesrat upper chamber to the German legislation.

The two states squabbled Friday in the Bundesrat, but the chamber then voted its blessing to the Merkel government's reform law, which will be debated next in parliament's lower chamber.

"German company law is no business of the EU," said Wulff in the debate.

Porsche proclaimed last week its effective majority control of its larger competitor with 35 percent of the shares, enough to dominate shareholder meetings where fewer than 70 percent of shares are ever represented.

VW's powerful works council earlier this month organized a massive protest of tens of thousands of workers against the European Commission action to abolish what it called the "VW law."

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