Germany Still in Trouble Over the Volkswagen Law

The European Commission is looking into increasing the pressure on Germany over the so called "Volkswagen Law", a legislative act which gives special rights to the state and prevents any shareholder from acquiring more than 20 percent of the voting rights in the German manufacturer.

First steps towards this goal were taken last June, when Internal Market Commissioner Charlie McCreevy launched legal action against Germany for failing to properly amend the law, considered by the European Court of Justice as breaking the rules on the free movement of capital, Autonews reported.

Germany was given two months to amend the law. So far, the legal action was put on hold, as "the European Commission is studying the response from Germany in order to take a decision on this matter," the commissioner was quoted as saying by the aforementioned source.

In addition, the European Commission considers the matter as a "difficult issue. "It raises highly complex legal issues. It's still being examined," a spokesman said in a news briefing.

Porsche Automobile Holding SE claims the law blocks its attempt to take full control of Volkswagen. Porsche has a stake of 50.76 percent (Porsche exceeded the threshold in January, giving birth to the Scania takeover saga) in Volkswagen and said it could boost the stake to 75 percent this year if the economic conditions were right.

Porsche has plans to raise the stake in Volkwagen to about 75 percent in 2009, should the economic conditions allow it. If it does so, Volkswagen will become Porsche's playground, as it will appoint board members, decide on new models and which plants would get those models and, most importantly, receive all the profits.