German Chancellor defends VW from Brussels
Chancellor Schröder is determined to resist pressure from the European Commission in Brussels to change the ownership structure of the Volkswagen car plant. Brussels wants the state of Lower Saxony, the state of which Schröder used to be prime minister, to cease being the privileged shareholder in VW.
,,Whoever tries to smash this culture,"said Schröder at a meeting in the VW plant in Kassel, ,,will have to reckon with the resistance of the government, for as long as we are here to have a say in the matter."The Chancellor was thus declaring war on a proposed new EU directive on take-overs which, in the words of the Commissar Frits Bolkestein, would mean Lower Saxony losing its privileged role. Schröder said in his speech that it was unfair to pick on VW since similar golden shares and other arrangements obtained in the automobile industry in Sweden, Great Britain, Spain and Italy.
Lower Saxon owns 20% of VW's shares but enjoys rights of veto on the board, including against take-over bids. VW also owns 10% of its own shares and can purchase 10% more. The new EU directive would remove all privileged votes if a hostile bidder gains control of 75% of a company's shares.
Last year, Germany succeeded in scuppering an EU take-over directive by a vote against it in the European Parliament. This directive had been under discussion for 10 years. According to Bolkestein, the new directive will be published in April or May.
The European Foundation Intelligence Digest, No. 137, 7th March 2002