BRUSSELS, Nov. 27 (Xinhua) -- Germany must change its controversial Volkswagen law to comply with a court ruling within two months or face new suit, the European Commission said on Thursday.
"In the absence of a satisfactory reply from Germany within two months of receiving the reasoned opinion, the commission may decide to refer the matter to the European Court of Justice," the European Union (EU)'s executive arm said in a statement.
The 1960 German law privatizing Volkswagen attributes unjustified special rights to German public authorities, including the German state of Lower Saxony and potentially also the federal government, by giving automatic representation of public authorities on the company's board, a 20 percent voting cap and a 20 percent blocking minority.
The European Court of Justice, the EU's highest court, ruled in2007 that the German law violated EU rules on free movement of capital.
After the court ruling, a draft law amending the Volkswagen law, which is currently in the legislative approval process, abolishes the provisions providing for the representation of public authorities on the board and the 20 percent voting cap.
However, the draft law does not modify the provision establishing a 20 percent blocking minority, which allows the German State of Lower Saxony to veto any strategic decision in the country's largest car maker.
The Volkswagen law has been a subject of a long-time dispute between Berlin and Brussels. German Chancellor Angela Merkel had said she will fight pressure from the EU.
The law was bitterly opposed by Porsche, the sports car maker which controls 74 percent of Volkswagen.
Earlier on Thursday, Porsche suffered a setback in its bid to take over Volkswagen after a German court refused to strike down rules in Volkswagen's charter that protect the German state of Lower Saxony's voting rights.