EU Launches Action Against 'Volkswagen Law'

By Agence France-Presse The European Commission on March 19 launched action over Germany's failure to change a 43-year-old law that protects Volkswagen from hostile takeover. After months of deliberation on the sensitive issue, the European Union's executive arm said it was giving the German government eight weeks to provide justification for the law. "In the absence of a satisfactory reply within two months, the commission may decide to issue a formal request to the German government to amend the law in the form of a so-called 'reasoned opinion'," it said. The 1960 "VW law" guarantees the state of Lower Saxony control of Volkswagen, even though it owns only 18.5% of the company. Four of the 10 Volkswagen board members are in affect appointed by public authorities. That, according to the commission, violates EU competition law by impeding the free flow of capital and scaring away investors from other EU states. The German government expressed "incomprehension" at the decision by Brussels. Official spokesman Bela Anda said Berlin had "no doubt" that the VW law was compatible with EU legislation. It did not provide "any obstacle to the free flow of capital", he added. Copyright Agence France-Presse, 2003