EU Pressures Germany To Amend Volkswagen Law

June 5, 2008 2:09 p.m. EST

Brussels, Belgium (AHN) - The European Union threatened on Thursday to file a lawsuit against Germany over the Volkswagen law. Germany has not amended a law protecting the German auto manufacturer from a takeover in a legal battle over the future ownership of the vehicle firm.

Berlin wants to keep a vital provision of the law that protects the state's role in Volkswagen, Europe's largest car manufacturer.

The European Court of Justice in October 2007 ordered the revocation of the 1960 law, which granted Lower Saxony veto powers, through a vote.

Rival carmaker Porsche is interested in gaining a majority control in Volkswagen and has held a 31 percent stake over the past two years. Porsche said the Volkswagen law is outdated and the German firm should be open to takeovers by other firms.

The commission gave Berlin two months to answer or face a final warning. German Justice Minister Brigitte Zypries said Berlin had already crafted a new draft bill in January, which she hoped would comply with the EU's legal requirements.

The draft took away an old cap on any large shareholder's voting rights at 20 percent, but it kept a veto power.