Brussels is taking Germany to court this Wednesday over its law protecting carmaker Volkswagen from hostile takeover bids.
The internal market commissioner considers the law, in existence since 1960, a brake on investment. It gives VW’s headquarters state of Lower Saxony control of the company with just 20% of the capital, a legal blocking minority in the hands of the public authority, known as ‘golden share’. Other shareholders may own more of the capital but the law lets none have more than one fifth of the voting rights. This goes against European Union rules on freedom of movement of capital. The European Court of Justice has in the past ruled against golden shares in France, Britain and Spain; The European Commission is also taking action to enforce the internal market rules in this domain in the Netherlands, Denmark and Austria. Meanwhile, VW in the city of Wolfsburg says it intends to cut 30,000 jobs in Germany. It is struggling to reduce costs in an effort to claw back losses in market share around the world.