LUXEMBOURG (Reuters) -- Germany has complied with a court ruling over a law that gives the state of Lower Saxony veto rights over Volkswagen, an adviser to Europe's highest court said today.
Advocate General Nils Wahl said in a written opinion on the case that the European Court of Justice (ECJ) should reject the European Commission's argument that Germany should be fined for infringing EU laws in the dispute.
Wahl agreed with Germany that it had complied with the terms of a 2007 ruling and had made the required legal changes.
ECJ judges are expected to rule on the case in the next few months. Wahl's opinion is not binding, though the judges follow such recommendations in a majority of cases.
The dispute centers on the "VW Law" that dates back to the company's privatization in 1960 and serves as a deterrent to hostile takeovers. The law protects Volkswagen by capping shareholder's voting rights at 20 percent, regardless of the size of their holdings. That matched the stake held during the previous four decades by Lower Saxony in northern Germany, where VW is located.
The European Commission, which is the executive body of the European Union, argues that Germany's overhaul of the VW law continues to violate the bloc's rules because it gives the government veto powers at the company. Instead of scrapping three provisions that were ruled unlawful by the ECJ in 2007, the country abolished two and kept the blocking minority, the commission has said.
The commission wants Germany to pay a penalty of 31,114 euros a day ($40,000) from the 2007 ruling until it complies or until the ruling in today's case, and a 282,725 euro daily fine from the ruling in today's case until the VW law is in line with EU rules.
Wahl said that if the judges did find that Germany had not complied with the 2007 court ruling, the fines should be substantially lower than those demanded by the commission.
Chantal Hughes, a spokeswoman for Michel Barnier, the EU's financial services commissioner, said the commission takes note of the opinion and awaits the judgment of the court.
The opinion "backs the federal government's view that it fully implemented the 2007 ruling by the European Court of Justice," Adrian Toschev, a spokesman for the German Economy Ministry, said.
The case is: C-95/12, European Commission v. Federal Republic of Germany.
Bloomberg contributed to this report