Volkswagen ruling may spur EU battle

A German court may put the country back on a collision course with the EU after refusing to dismantle protectionist rules shielding Volkswagen from takeovers.

A lawsuit from Porsche, which wants to overturn a corporate rule at VW that allows shareholders with a 20% stake to block major company decisions, was rejected by judge Reinhard Saathoff.

Porsche is seeking to scrap protections for the German state of Lower Saxony which owns 20.1 % of VW stock, as it proceeds with its plan to take control of Europe's largest carmaker.

Porsche said yesterday it will slow up purchases of Volkswagen stock as the credit crisis and recession hurt sales.

The European Court of Justice last year ordered Germany to modify the country's so-called Volkswagen law that granted Lower Saxony special rights. Porsche is baffled by the latest ruling in Hanover, the capital of Lower Saxony, and plans to appeal.