Brussels, 22/10/2013 (Agence Europe) - In a ruling in Case C-95/12 on Tuesday 22 October, the European Court of Justice ruled in Germany's favour against the European Commission, stating that Germany's Volkswagen Law complied with the Court of Justice's 2007 ruling in Case C-112/05.
The German motor vehicle manufacturer Volkswagen was turned into a public limited company in 1960 by a federal Law, the “Volkswagen Law.” At the time that Law was adopted, the Federal Republic of Germany and the Land of Lower Saxony were the two main shareholders in Volkswagen, each holding 20% of its capital. While the Federal Republic of Germany is today no longer a shareholder in Volkswagen, the Land of Lower Saxony still retains a shareholding of approximately 20%. Initially, the Volkswagen Law allowed the Federal Republic of Germany and the Land of Lower Saxony each to appoint two members to the supervisory board on condition that the Federal Republic and that Land held shares in the company. That law also capped the voting rights of any shareholder to the number of votes conferred by a 20% shareholding in the share capital. In addition, the Volkswagen Law provided for a lower blocking minority which enabled a minority holding of only 20% of the share capital to oppose important resolutions of the company, whereas the German law on public limited companies requires 25%. Following the 2007 ruling (see EUROPE 9529) that the law conflicted with the free movement of capital, Germany repealed the first two provisions, but maintained the provision on the lower blocking minority. The Commission argued that under the 2007 ruling, all three measures violated the free movement of capital and therefore the final measure also needed to be repealed, and it took the case to the European Court of Justice, asking for fines to be applied for incomplete implementation of the 2007 ruling. The fines were specified as a payment of €31,114.72 a day for the period of non-compliance since 2007 until the date on which judgment is delivered, and a fine of €282,725.10 a day from the date on which judgment is delivered until the date of compliance with the 2007 judgment.
The Court of Justice rejected the Commission's case, saying that the 2007 ruling did not establish that there had been a failure to fulfil obligations resulting from the provision relating to the lower blocking minority, considered in isolation, but established that there had been such a failure solely as regards the combination of that provision with the provision relating to the cap on voting rights: “Consequently, by repealing both the provision of the Volkswagen Law relating to the appointment, by the Federal Republic of Germany and the Land of Lower Saxony, of members to the supervisory board and the provision relating to the cap on voting rights, thereby putting an end to the combination between that latter provision and the provision relating to the lower blocking minority, Germany did fulfil, within the period prescribed, the obligations that follow from the 2007 judgement.” The Court of Justice rejects as inadmissible the Commission's complaint that Germany should also have amended Volkswagen's Articles of Association, which still contain a clause relating to the lower blocking minority, which is essentially analogous to that in the Volkswagen Law, on the ground that the 2007 judgment related exclusively to the compatibility of certain provisions of the Volkswagen Law with EU law and did not relate to that company's Articles of Association. The Court of Justice says the case is now closed. (FG/transl.fl)