EU Sues Germany Over VW Law
May 29th, 2013 8:07 AM
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The EU Commission in Brussels made good on its Automobilwoche [sub], Brussels has filed suit in Luxemburg. Brussels demands that the “special treatment” for Volkswagen is to be dropped. If the suit is successful, and if Germany remains obstinate, then a penalty of at least €46.6 million ($62.2 million) is demanded. The fine would have to be paid by the German government, not by Volkswagen.
Volkswagen’s home state of Lower Saxony is holder of 20 percent of Volkswagen shares. The state has a veto right, courtesy of the VW law. That veto right protects Volkswagen from unwanted takeovers. Usually, such a veto right needs 25 percent, and Brussels insists on putting Volkswagen and Germany in compliance.
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So they can remove the law or buy more shares of VW. No reason that they shouldn't play by the same rules.
"then a penalty of at least €46.6 million ($62.2 million) is demanded" VW's market cap is currently 58.7 billion Euros, so that 62.2 million fine buys 2.9 billion worth of voting rights.
The EU seems to forget that the EU exists for the benefit of Germany, not the other way around. If this suit goes through the German government will just pay the fine and continue doing what they've always done. Protecting German industry. Whilst not necessarily within the confines of EU rules, Germany will do it anyway. Why? Well lets name a couple of European car manufacturers which were left to fend for themselves with little to no protection from their governments. Rover, Saab, anyone?
Just out of curiosity.. if Germany refuses to rescind the VW Rule, and refuses to pay fines levied upon it... what happens? Historically, Belgium has a poor track record when it comes to having conflicts of interest with Germany.