The Tiguan compact sport utility vehicle made by Volkswagen. - Contributed

FRANKFURT, Germany (AP):

Chancellor Angela Merkel vowed on Tuesday that the German government would strive to keep in place the so-called 'Volkswagen Law', allowing the state of Lower Saxony a blocking minority of Europe's largest carmaker Volkswagen AG.

Speaking to Volkswagen workers at the company's Wolfsburg headquarters, Merkel said the German government was "deeply convinced" the 50-year-old law does not affect the company's competitiveness and said Berlin would fight for it despite European Union attempts to overturn it.

Brussels is not alone in its opposition to the law. Stuttgart-based Porsche SE has been voicing its opposition while buying up stakes of Volkswagen for several years. Porsche has said it intends to buy more than 50 per cent of the company and, last week, said it held more than 35 per cent of Volkswagen voting rights - giving the luxury carmaker effective control of VW.

The German state of Lower Saxony, where Volkswagen is based, holds just over 20 per cent of Volkswagen and a blocking minority right while Porsche argues that the blocking minority at Volkswagen should be 25 per cent, in keeping with standard German securities laws.

Blocking minority

A European court recently struck down a long-standing law protecting VW from a hostile takeover but the German government drew up legislation that would still allow a shareholder with 20 per cent of the stock a blocking minority.

The European Commission objects to that plan.

Merkel said Tuesday that the German government finds that the blocking minority should remain at 20 per cent despite the EU court's decision.

"That's the position of the German government after thorough review and we'll maintain that position before the European Commission with all our power and clarity," Merkel said.

Merkel said Volkswagen was an example of will in post-World War II reconstruction - something that was possible because of the VW law. "There will be a Volkswagen law in the future, too," she added.

Ferdinand Dudenhoeffer, director of the Center of Automotive Research at the University of Gelsenkirchen said he saw Merkel's comments as largely political ahead of next year's elections and the prospect of a slowing economy.

"She can't offend trade unions or Volkswagen. If we had a better economic situation and no elections next year, I think things would be somewhat different," he said.

He noted that the German government's efforts would probably be unsuccessful.

Merkel's comments follow a German Securities Trading Act statement earlier Tuesday, which said members of the Piech family had amassed 29.9 of the voting rights of German truck maker MAN AG on September 16.

Volkswagen owns about 30 per cent of the 250-year-old MAN, based in Munich.

According to the statement, Hans Michel Piech and Ferdinand Piech controlled more than 42 million voting rights of MAN at the middle of the month.

The news is significant because the Piechs are direct descendants of the founder of Porsche and own large stakes in that company. Ferdinand Piech is also the supervisory board chairman of both MAN and Volkswagen.

Define strategy

Dudenhoeffer said he thought the Piechs could be buying up stakes in MAN in an effort to "personally shape and define" the strategy at Volkswagen and MAN, and gain more influence at those companies, as well as Porsche.

He estimated the Piechs' stake at about 47 per cent of Porsche Automobile Holding, while the Porsche family owns about 53 per cent. The holding company owns 100 per cent of Porsche, and the current stake in VW, he said.

Other Porsche representatives on Volkswagen's board include Porsche CEO Wendelin Wiedeking, Porsche director of finance Holger Haerter, and Porsche supervisory board chairman, Wolfgang Porsche.