German upper house approves new VW law

The German parliament's upper house on Friday approved a planned law governing automaker Volkswagen AG that has put Berlin at odds with the European Commission.

The government's plan would allow Volkswagen's second-biggest shareholder, the state of Lower Saxony, to retain its right to block important decisions — a provision over which Brussels is threatening to take legal action.

In the upper house, which represents Germany's state governments, all but one of the 16 states backed the plan Friday. The lone holdout was Baden-Wuerttemberg — home to Porsche SE, Volkswagen's biggest shareholder.

A European court last year overturned a long-standing original version of the Volkswagen law, which effectively protected the automaker from hostile takeovers.

Chancellor Angela Merkel's government insists that its new version takes into account European Union concerns. But it and the commission differ whether Germany can keep a provision that allows a shareholder with 20 percent of Volkswagen's stock to block major decisions.

Lower Saxony, where VW's Wolfsburg headquarters is located, holds just over 20 percent. Porsche, which holds more than 40 percent and plans to take a majority, argues that the threshold for a blocking minority should be 25 percent, in line with standard German securities laws.

The European Commission is threatening to challenge Germany over the legislation at the European Court of Justice in Luxembourg.

On Thursday, it gave Berlin two months to implement the court's previous ruling fully or face new legal action.

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Porsche suffers court setback on VW

Associated Press

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