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Christopher Bruce2013-03-14 15:40:44

Germany May Face EU Fine for Protecting VW

Government has refused to change a rule that allows it to block takeovers

 
 
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The EU court accuses VW of having government protection since 1960

Germany may be facing a fine in the millions of euros related to its refusal to change a rule that has guarded VolkswagenVolkswagenVolkswagenGermany, 1938 > present98 models
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from outside takeovers since 1960. VW is perhaps the least likely automaker to face a takeover today, but the EU court may still punish the government for not changing this rule. 

The German law meant that no shareholder could have a larger than 20% voting stake in VW, which is the amount of the company that the German state of Lower Saxony owns. The EU ruled that this was unlawful in October 2007. The government changed the rule so that shareholders could own 20%, but Lower Saxony still had the right to block takeovers under the revised law. Now, the government is facing the fine for not further revising the law. 

"The [European] commission has tried for more than 12 years to overturn this law. The court already clearly established in a first ruling that the contested provisions in the VW law were unlawful," said Gerald Braun, a lawyer for the EU.

The commission is asking for a fine of €31,114 ($40,365) per day since the 2007 ruling, plus a €282,725 ($366,805) per day fine since the March 12 hearing about the government's refusal to change the law. 

For reference, that means that the government's current fine would amount to €61,828,916 ($80,220,858) and will increase by €313,839 ($407,187) per day if the court accepts it in their final ruling.

According to Germany's lawyers, it has done nothing wrong. The 2007 ruling said that Germany may eliminate only portions of the law if it wanted to because the offending portions of the law were only unlawful given "in conjunction with" all of the other parts. Hence, by removing two provisions and keeping one, it followed the court's ruling. 

The court's final ruling is expected sometime between September and November 2013. 

Source: Automotive News Europe

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