Brussels, 19/03/2003 (Agence Europe) - On Wednesday, the European Commission decided to send Germany a formal request to provide justification concerning the "Volkswagen law", which allows the Land of Lower Saxony to keep control of the automobile manufacturer. This long-awaited decision had again been deferred two weeks ago (see EUROPE of 6 March, p.14).
The Commission explains in a press release that it challenges the provisions of the 1960 Volkswagen law which provides that: 1) A shareholder holding more than 20% of the shares with voting rights in VW cannot exercise more than 20% of voting rights at the general shareholders' assembly; 2) Key decisions for the company must be approved by at least 80% of the votes; 3) The Land of Lower Saxony has two seats out of the ten seats for shareholder representatives on the supervisory board.
The Commission bases its argument on the Court of Justice ruling of 23 May 2000, which challenges the provisions of the Italian privatisation law allowing public authorities to nominate members of a company's administrative board.
The Commission considers that the provisions in force in Hanover limit investment possibilities in so far as the Land of Lower Saxony, which holds 21% of VW shares, thus has a de facto voting right. "It is not strictly speaking a 'golden share', but other forms of restriction limiting the free movement of capital", the spokesperson for Commission Frits Bolkestein said, stressing that it is Germany that has called for the investment barriers to be lifted in the context of discussions on the takeover directive.
According to the German government, there is no doubt that the Volkswagen law is compatible with European law, it was declared in Berlin by the government spokesperson, Bela Anda. The president of the Volkswagen Board, Bernd Pischetsrieder, said in an interview published on 5 March in Le Figaro that the "abolition of this law would not change the facts for Volkswagen, which would continue to be a profitable enterprise". Furthermore, he said, "if a company were contemplating a hostile takeover, it would be easy to call on investors or friendly bankers to take 40% of the capital, who, with the Land of Lower Saxony, would hold more than the majority of voting rights".