EU clears Porsche's Volkswagen takeover[fr][de] 

The approval paves the way for Porsche to raise its stake in Volkswagen from 30.6% to 35.5%, granting it "de facto" control of Europe's largest car company, the Commission stated. 

According to the EU antitrust authorities, "the transaction would not significantly impede effective competition" in Europe as "horizontal overlaps between Volkswagen and Porsche are limited". 

Indeed, the Commission argues, "while Volkswagen is active within a wide range of different types of passenger cars and commercial vehicles, Porsche is focusing on sports cars and SUVs". 

This difference is meaningful not only in terms of competition law, but also in light of environmental legislation proposed by the Commission late last year, which would oblige all car manufacturers to slash their overall emissions to 120 grams of CO2 per kilometre by 2012 (see our LinksDossier on Cars & CO2). 

Porsche, with its specialised range of powerful sports models, currently averages 282g/km and the EU's Industry Commissioner Günter Verheugen already pointed out last year that the company would be "in the clear" if a holding company with Volkswagen emerged. Indeed, this would allow Porsche to balance out its highly polluting models – which are also sold in much smaller volumes – with less polluting ones like the Polo. 

The takeover would however come as a blow to trade unions, which staged mass protests earlier this year out of a fear that Porsche could decide to move more of the group's production outside Europe due to the strong euro and high German labour costs. 

The German Land of Lower Saxony, which is home to Volkswagen and also holds a 20% share in the company, has also been strongly resisting the takeover. Under the so-called 'Volkswagen law' formerly in application in Germany, the state had the power to block any resolutions and transactions relating to the company, even though it only owns slightly more than a fifth of the company's shares. 

While the European Court of Justice struck down the law last October, arguing that it went against EU's basic principle of free movement of capital, the German government has thus far refused to do away with the 20% blocking minority provision. 

The Commission has already threatened that it could take legal action against Germany if it fails to make further changes and yesterday's decision could add to the pressure (EurActiv 11/04/08).