I see that the corporate status of Volkswagen is in the spotlight again. Last year the European Court ruled that limitations on voting rights in VW’s statutes infringed EU rules on freedom of capital movement, so the German government has now notified Brussels of proposed legislative changes to satisfy the Court judgment.
For Commissioner Charlie McCreevy these changes are not enough and letters have been exchanged.
It’s another of those battles where a member country wants to protect a national champion, except that in this case the predator is also German: family-owned Porsche AG, which already holds 30.9 per cent of VW’s shares and is determined to push its holding above 50 per cent, which in most companies would mean a takeover. However, the VW law requires an 80 per cent vote in favour to adopt major decisions. That, I suppose, is the sticking point for the Commission.
The German government relinquished its own shareholding some years ago, but the Land of Lower Saxony still holds 20.3 per cent, and is thus able to block any takeover – and resist any moves to transfer the business away from Wolfsburg.
So what is Porsche’s interest? To bring all VW and Porsche models as it were into the same corporate garage, ensuring that VW remains German and, by the way, using the fuel-efficient Golfs to balance out the turbo-charged 911s when EU vehicle emission rules are tightened up under climate change legislation.
VW has survived attempts in the past to break up its voting structure, as when former Commissioner Frits Bolkenstein tried to push through a radical takeover directive and had to abandon his objectives in the face of widespread opposition. His successor McCreevy decided last year not to press ahead with one-share-one-vote legislation, but the VW case raises different issues of government control and the Commission is bound to pursue this one.
The Commission has another challenge on its plate, which is the bid by Austria’s OMV (30 per cent government owned) for Hungary’s MOL (independent quoted company). The Hungarian parliament last year adopted the so-called Lex MOL, a measure which would allow directors to block a bid for any utility company of national strategic importance.
This might seem a simple case of blocking capital movement within the EU, just like the VW case. Mr McCreevy is currently examining the legislation under this heading. But the closer you look, the more complex the issues become, enmeshed in the manoeuvring for control of energy markets across central and south-eastern Europe and the Balkans.
Heaven knows who is on whose side! Russia’s Gazprom was said to support OMV’s bid, and a Russian businessman bought a substantial slice of MOL stock on the Budapest stock exchange last summer which he then obligingly passed to OMV, yet OMV portrays itself as Gazprom’s competitor in the region and supporter of the Nabucco pipeline project, a gas transit route from central Asia through Turkey to Europe which would bypass Russia and offer an alternative to Gazprom’s South Stream pipeline.
Nabucco is a favourite project of the EU, as Commissioner Piebalgs has confirmed and is enthusiastically supported by the US, although ironically it would seem to depend on tapping Iranian gas supplies to become viable, which of course does not go down well with the Americans.
Needless to say, Russia is no enthusiast for Nabucco, but no doubt delighted that Hungarian prime minister Gyurcsany recently signed an agreement in Moscow supporting the South Stream pipeline – a move which cynics said was designed to boost his pension following defeat in the recent referendum in Hungary, rather in the style of a former German Chancellor who became a Gazprom executive.
OMV’s bid was notified to the European Commission under the Merger Regulation in January 2008. An in-depth investigation was announced in March, with a decision currently foreseen for July 22. Separating the economic from the geopolitical aspects of this case will be no easy task for the Commission’s competition team and you can be sure that colleagues from DGs for energy and external relations will have plenty to say.
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November 4, 2022