FRANKFURT, May 27: Germany has decided to back a new bill that would retain state influence over Europe’s biggest car maker, Volkswagen, despite staunch opposition from the European Commission.

Several months of talks that raised tension within Chancellor Angela Merkel’s ruling coalition ended in support for the state of Lower Saxony, which is also backed by the trade union IG Metall.

A draft law approved by the government on Tuesday would preserve Lower Saxony’s minority blocking position within VW since strategic decisions would require approval by a majority of 80 per cent or more, and the state where it is based owns 20 per cent.

German groups generally require shareholders to own 25 per cent before they are able to block major decisions such as plant relocations and job cuts.

But VW is an iconic German industrial group and has been protected from takeovers by an initial VW law since it was privatised in 1960.

Berlin was obliged to review that law following an October ruling of the European Court of Justice, which said it violated European Union competition regulations.

German officials removed provisions that limited the voting rights of shareholders and defined the make-up of the VW supervisory board.

But they tried to exploit what are considered ambiguous terms within the court ruling regarding the level of holding required to block major decisions.

“We want to conserve as much as possible the existing Volkswagen law and therefore to remove only the provisions declared contrary to European law,” a government statement quoted Justice Minister Brigitte Zypries as saying Tuesday.

The government’s interpretation has not convinced the European Commission however, nor the luxury sportscar maker Porsche which owns 31 percent of VW and intends to acquire a majority holding at some point.

Commission spokesman Oliver Drewes told journalists in Brussels: “If the current situation is formalised, the European Commission has to start a procedure for non-respect of a court ruling on this matter.”—AFP