The German Volkswagengesetz and the free movement of capital
(2005)Department of Law
- Abstract
- My thesis deals with the VW-Gesetz and its compatibility with the free movement of capital (Art. 56 EC). The whole topic is highly political because Volkswagen is the biggest car-producer in Niedersachsen (Lower Saxony) and provides many jobs in that area. There have been attempts to takeover the company, which have not been successful because the VW-Gesetz includes several provisions, which make the takeover more difficult. Especially two of those have been criticised by the European Commission: That is the 20%-voting cap (§ 2 para. 1 VW-Gesetz) and the mandatory representation of public authorities on the board (§ 4 para. 1 VW-Gesetz). Both provisions detain foreign investors from taking over the company and can therefore be deemed to be... (More)
- My thesis deals with the VW-Gesetz and its compatibility with the free movement of capital (Art. 56 EC). The whole topic is highly political because Volkswagen is the biggest car-producer in Niedersachsen (Lower Saxony) and provides many jobs in that area. There have been attempts to takeover the company, which have not been successful because the VW-Gesetz includes several provisions, which make the takeover more difficult. Especially two of those have been criticised by the European Commission: That is the 20%-voting cap (§ 2 para. 1 VW-Gesetz) and the mandatory representation of public authorities on the board (§ 4 para. 1 VW-Gesetz). Both provisions detain foreign investors from taking over the company and can therefore be deemed to be an indirect restriction of the free movement of capital. The factual scope of the free movement of capital includes direct and indirect restrictions. There is a guideline in those matters from the recent judgements of the ECJ in the ''golden shares''-cases. There were proceedings the ECJ had to judge on in 2002 against France, Belgium and Portugal where the Commission had started an infringement procedure. In all three cases, the Member states reserved themselves priority rights during the process of legal estate privatisation, the so-called ''golden shares''. The formerly state-owned companies were part of the telecommunications, armament, aviation, and energy supply sector. The states wanted to justify those priority rights with the interest of the general public. They primarily wanted to prevent hostile take-overs of those companies by foreign competitors. The Court rules that all national rules are contrary to the free movement of capital besides those of Belgium. However the VW-Gesetz is of a slightly different character. It only stipulates obstacles for a foreign takeover which are not directly comparable with the ''golden shares''-cases. The 20%-voting cap and the mandatory representation of public authorities on the board nevertheless create an indirect restriction to the free movement of capital because they deter foreign investors. The next point, which also played a substantial role in the golden shares-decisions, is Art. 295 EC. According to the jurisdiction of the ECJ, only the original property order can be excluded from the scope of the Treaty, but not special rules of the Member States in order to protect certain parts of the economy. The implementation of the internal market has a higher priority in that regard. There is no justification for the restrictions of the free movement of capital. The character of the VW-share as a people's share, the danger of a job loss and the promotion of science through the Volkswagenstiftung are not sufficient to be regarded as mandatory requirements in the sense of the ''Cassis de Dijon''-formula. Therefore, I come to the conclusion that the VW-Gesetz stands in contradiction to the free movement of capital. (Less)
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http://lup.lub.lu.se/student-papers/record/1554953
- author
- Grünwald, Clemens A.
- supervisor
- organization
- year
- 2005
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- European Affairs
- language
- English
- id
- 1554953
- date added to LUP
- 2010-03-08 15:22:46
- date last changed
- 2010-03-08 15:22:46
@misc{1554953,
abstract = {{My thesis deals with the VW-Gesetz and its compatibility with the free movement of capital (Art. 56 EC). The whole topic is highly political because Volkswagen is the biggest car-producer in Niedersachsen (Lower Saxony) and provides many jobs in that area. There have been attempts to takeover the company, which have not been successful because the VW-Gesetz includes several provisions, which make the takeover more difficult. Especially two of those have been criticised by the European Commission: That is the 20%-voting cap (§ 2 para. 1 VW-Gesetz) and the mandatory representation of public authorities on the board (§ 4 para. 1 VW-Gesetz). Both provisions detain foreign investors from taking over the company and can therefore be deemed to be an indirect restriction of the free movement of capital. The factual scope of the free movement of capital includes direct and indirect restrictions. There is a guideline in those matters from the recent judgements of the ECJ in the ''golden shares''-cases. There were proceedings the ECJ had to judge on in 2002 against France, Belgium and Portugal where the Commission had started an infringement procedure. In all three cases, the Member states reserved themselves priority rights during the process of legal estate privatisation, the so-called ''golden shares''. The formerly state-owned companies were part of the telecommunications, armament, aviation, and energy supply sector. The states wanted to justify those priority rights with the interest of the general public. They primarily wanted to prevent hostile take-overs of those companies by foreign competitors. The Court rules that all national rules are contrary to the free movement of capital besides those of Belgium. However the VW-Gesetz is of a slightly different character. It only stipulates obstacles for a foreign takeover which are not directly comparable with the ''golden shares''-cases. The 20%-voting cap and the mandatory representation of public authorities on the board nevertheless create an indirect restriction to the free movement of capital because they deter foreign investors. The next point, which also played a substantial role in the golden shares-decisions, is Art. 295 EC. According to the jurisdiction of the ECJ, only the original property order can be excluded from the scope of the Treaty, but not special rules of the Member States in order to protect certain parts of the economy. The implementation of the internal market has a higher priority in that regard. There is no justification for the restrictions of the free movement of capital. The character of the VW-share as a people's share, the danger of a job loss and the promotion of science through the Volkswagenstiftung are not sufficient to be regarded as mandatory requirements in the sense of the ''Cassis de Dijon''-formula. Therefore, I come to the conclusion that the VW-Gesetz stands in contradiction to the free movement of capital.}},
author = {{Grünwald, Clemens A.}},
language = {{eng}},
note = {{Student Paper}},
title = {{The German Volkswagengesetz and the free movement of capital}},
year = {{2005}},
}