The European Union's highest court has been advised to override German law and remove barriers protecting carmaker Volkswagen from takeovers.
Advocate general Damaso Ruiz-Jarabo has told the European court of justice that the so-called 'VW law', which restricts majority shareholders to 20 per cent voting rights, "restricts the free movement of capital".
In addition, the official writes that the legal stance is not based on "overriding reasons relating to the public interest".
When VW, Europe's largest car manufacturer, was privatised in 1960, Germany passed legislation enshrining the right of federal governing Lower Saxony to veto major decisions such as job losses and factory closures, as well as takeovers.
Lower Saxony owns a 20.8 per cent stake in the carmaker but currently has the same 20 per cent voting rights as 27.4 per cent stake owner Porsche.
Although the court is not obliged to follow Mr Ruiz-Jarabo's recommendations, it is widely expected to accept his counsel when making its final decision in four to six months time.
A statement issued to the European court of justice today said that the German government's approach to the restrictions on the free movement of capital was "too wide and too far removed from reality".
Digg 
Delicious 
Reddit 
StumbleUpon 
Google 
Technorati 
Netvouz