Brussels, 29/03/2004 (Agence Europe) - On Wednesday, the European Commission is expected to send Germany a Reasoned Opinion over the Volkswagen law, whereby the Land of Lower Saxony can keep control over the car manufacturer Volkswagen while holding only 21% of its shares.
Unless there are last-minute changes under pressure from the Geman Commissioners, the Commission will move to the last stage in the proceedings before sending the case to the Court of Justice. The decision will be taken more than a year after the first warning letter was sent, follwoing protracted negotiations with the German government and the passing of EU legislation on public procurement, which had long been blocked by Germany.
The Commission argues that the 1960 Volkswagen law contravenes free circulation of captial and the freedom of establishemnt because it discourages investors from increasing their stake in Volkswagen because: 1) a shakreholder holding more than 20% of voting rights cannot exercise more than 20% of those voting rights in the AGM; 2) imppotant company decisions have to be approved by at least 80% of shareholders; and 3) the Land of Lower Saxony sends two of the ten shareholder representatifves on the board.
The views defended by Internal Market Commissioner Frits Bolkestein are based on a series of rulings by the Court of Justice, defining case law governing special powers and golden shares held by public authorities in comapnies. The Commission quotes the case of the 23 May 2000 ruling challening masures in the Italian privatisation law whereby public authorities can appoint members of companies' boards of directors. It also quotes rulings concerning France, Begliuma dn Portugal, stipulating the nationa interest and transparency ccriteria for a state holding special voting rights in a company.
In December, the Commission decided to take the Netherlands to the Cout of Justice over similar cases concerning KPN (Koninklijke KPN N.V) and TPG (TNT Post Groep N.V.), companies formed following the privatisation of the Dutch post and telecommunications utility.