The European Commission is raising pressure on Germany to do away with a controversial law protecting Volkswagen from a hostile takeover, a German magazine said on Sunday.
EU Internal Market Commissioner Frits Bolkestein plans to give the German government an ultimatum by the beginning of April to scrap the so-called "VW law", which caps shareholder voting rights at 20 per cent regardless of the size of their stake, Focus magazine said, citing sources close to the commissioner.
If Germany failed to show willingness to change the law giving the state of Lower Saxony, which holds just under 20 per cent of VW shares, a veto over any unwanted takeover, he would take legal action, Focus said.
In January the EU delayed indefinitely a decision on whether to pursue legal action against the law, as it sought to avoid another damaging row with Germany after disagreement with Berlin on rules to limiting budget deficits. At the time, sources said that the EU was worried about the social impact of a move against the law, which Germany, the EU's biggest member, says protects jobs.
The EU had been expected to launch a second phase of legal action, which involves a formal warning to Germany to change the law or face legal proceedings at the European Court of Justice. The Commission has taken action against a range of countries over rules which give governments blocking stakes in so-called golden shares in key, formerly state-owned firms.