Volkswagen Seeks To Avoid EC Charges

by Ulrika Lomas, for LawAndTax-News.com, Brussels

22 October 2004

Speaking to the German media following the European Commission's decision earlier this month to refer a dispute over the country's so-called VW law to the European Court of Justice, Chief Minister of Lower Saxony, Christian Wulff expressed the hope that Volkswagen AG may yet escape formal charges.

Under the terms of the legislation in question, the federal authorities, in conjunction with the Lower Saxony government, hold a 20% minority vote in Volkswagen. This effectively blocks other shareholders from making important decisions without their approval, as more than 80% of the vote is required to pass important board decisions.

In addition, the voting rights of other shareholders in the firm are capped by law at 20%, a provision designed to prevent them from gaining control of the firm.

Speaking to the Dpa news agency, Mr Wulff explained that:

"The state government and the federal government will very carefully examine the complaint to see whether the Commission's concerns can be dispelled by clarifying federal laws, thereby averting a formal charge."

He went on to suggest that in order to resolve the dispute:

"The federal government could, for instance, give up its mandates for the supervisory board, which it has not been using for years anyway."

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