Germany Prevails in “VW Law” Challenge

The EU Court of Justice has ruled that Germany "complied in full" with a 2007 order to revise its so-called Volkswagen Law, which has protected VW from takeover bids since 1960.

The VW Law gave the German state of Lower Saxony, which owns slightly more than 20% of the carmaker, power to block any shareholder-led changes. The law capped voting rights for all other shareholders at 20%, regardless of their actual holding.

The European Commission filed lawsuits in 2007 and 2012 to challenge the Court of Justice ruling. The EC claimed that Germany's "piecemeal" adjustments to the law preserved Lower Saxony's veto right by requiring an 80% shareholder approval of any major decision.

The EC petitioned the court to impose a fine on Germany of more than €31,100 per day from 2007 until the law was properly revised.

The court's rejection of the EC lawsuit has been expected after the court's Advocate General recommended in May that the original ruling stand.