Europe’s top court dismissed the European Commission’s bid to axe Germany’s “VW law” as the country won the right to retain key veto power at Europe’s largest automaker, Volkswagen AG.
The Luxembourg-based EU Court of Justice said in a ruling on Tuesday that Germany was in compliance with a 2007 court ruling ordering it weigh down a 1960 law that gave Lower Saxony the same controlling power as a major stakeholder in Europe’s biggest carmaker. Under usual German financial market rules, shareholders would need to have at least 25% to gain veto power in minority, but the VW law allowed Lower Saxony, with just a 20% stake in the carmaker, power to use this prerogative.
After the 2007 ruling, Germany axed some parts of the law but left untouched the right of any shareholder with a 20% stake to veto strategic decisions. That made the Commission to attack Germany again, because of protectionism.
The EU Court of Justice said on Tuesday that “Germany complied in full with the initial judgment of the court delivered in 2007″ and considered the modifications to the original law to be adequate. The ruling also allows Germany to skip paying fines worth tens of millions of euros and allows the regional state of Lower Saxony, where Volkswagen is headquartered, to block takeover bids and other important decisions, like factory closures.