Germany′s Volkswagen law in line with EU rules | Business| Economy and finance news from a German perspective | DW | 29.05.2013
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Germany's Volkswagen law in line with EU rules

A senior lawyer at the EU's top court has found a law granting German state authorities special shareholder rights in carmaker VW to be lawful. The judgment could end a long legal battle between Brussels and Berlin.

A legal challenge launched by the European Commission against German state authorities' special shareholder rights in carmaker Volkswagen (VW) had no basis, the EU advocate general Nils Wahl wrote in a judgment released May 29.

The senior lawyer at the European Court of Justice in Luxembourg recommended that the court throw out a complaint by the EU's executive body. Wahl said that Germany did fully comply with a previous ruling by the court when it changed the controversial so-called Volkswagen law.

In its initial form, the VW law had granted the German federal state of Lower Saxony mandatory representation on the company board as well as a blocking minority of 20 percent in Germany's biggest carmaker.

The arrangement was declared illegal by the Luxembourg-based court in 2007 on grounds that the state's veto powers curtailed the rights of existing or potential investors, thus violating the principle of free movement of capital within the EU.

As a result, Germany has changed the law to the effect that state authorities lost their automatic seat on the VW board, but maintained their blocking minority rights.

However, the EU Commission again filed a complaint against the amended law in 2012 and requested a daily fine of 31,114 euros ($40,048) to be imposed against Germany for failing to comply with the court's initial ruling. If applied the fine would amount to 63 million euros at the moment.

In his judgment, advocate general Wahl said Germany complied with the ruling as it had done away with the combination of several state shareholder privileges. At the same time, he warned that his findings didn't extend to the question of whether the blocking minority rights violated EU laws.

He suggested that if the court would choose not to follow his advice, the fine against Germany should be substantially lowered, preferably to around 8,800 euros a day.

The judges at the European Court of Justice usually follow the advice of their advocate generals although their judgments are not binding for the court.

uhe/dr (dpa, Reuters)