BRUSSELS (AFP) - The European Commission decided to take Germany to the European Court of Justice for not having modified its so-called Volkswagen law, which shields the carmaker from hostile takeovers, an EU source said.
The law, which gives special rights to the state, forbids shareholders from having more than 20 percent of the company's voting rights even if the shareholder has a bigger stake in the group's capital.
In addition to limits on voting rights, the European Commission is wary of a part of the law under which important corporate decisions require the approval of at least 80 percent of shareholders.
The commission, the European Union's executive arm, is concerned that theses two elements of the law give the minority blocking powers to Volkswagen's biggest shareholder, the federal sate of Lower Saxony.
A Volkswagen spokesman at the company's headquarters in Wolfsburg, Germany declined to comment on the commission's action, saying: "We have nothing to say on the matter. We are not the party involved in the whole procedure," a VW spokesman told AFP's financial news subsidiary AFX News.
The federal state of Lower Saxony has a 18.1 percent stake in Volkswagen.