EU Seeks Fines Against Germany Over VW Law

The European Commission has asked the EU Court of Justice to impose heavy penalties on Germany for allegedly defying the court's order in 2007 that the country change its so-called "VW Law."

The law protects Volkswagen AG from a hostile takeover or other shareholder-led changes by giving blocking power to a minority shareholder: the government of Lower Saxony. The state, where VW is based, maintains a stake of just over 20%.

The court ruled that the VW Law restricts free movement of capital. The judge told Germany to make changes to end that protectionism.

The country scrapped the law's provision that capped a shareholder's voting rights at 20%. But it but retained a rule that requires 80% shareholder approval of any major decision.

The EC sued Germany last year, claiming that because Lower Saxony still has blocking rights, the country hasn't complied with the court order. Germany insists its revisions meet the ruling's terms.

The commission wants the court to levy a fine of €31,100 per day against the country, retroactive to the 2007 decision. A final judgment is expected by autumn.