Europe court advisor rejects German VW anti-takeover law as protectionist

[JURIST] A top legal advisor to the European Court of Justice (ECJ) [official website; JURIST news archive] reported Tuesday that a German law protecting Volkswagen [official website], Europe's largest carmaker, from takeovers is protectionist and should be repealed. Advocate General Damaso Ruiz-Jarabo said a law that prevents any shareholder from exercising more than 20 percent of the carmaker's voting rights, no matter how large their stake is, restricts the free movement of capital [press release, PDF] and "strengthens the position of the Federal Government and the Land, preventing any intervention in the management of the company." The European Commission [official website] initially challenged the German law in March 2005.

Although an Advocate General's opinion is not binding, the ECJ has followed it in more than half the times it has been offered. ECJ judges will now begin deliberations. There are eight Advocate Generals in the ECJ, who work to present impartially reasoned opinions [ECJ backgrounder] on cases brought before the Court. France and Germany, Italy, Spain and the United Kingdom each appoint one, while the others are appointed on a rotating basis by other member states. Reuters has more.

 

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