The European Union is contesting amendments to the Volkswagen Law proposed by the German government in response to a European Court of Justice ruling last year.

According to Thomson Financial, the European Commission has confirmed that internal markets commissioner, Charlie McCreevy, has sent a letter to the German government outlining concerns.

The commissioner is reportedly concerned that the government want to retain a clause that requires 80% of shareholders to approve decisions, whilst most companies only need 75% approval.

The government's move is designed to allow the state of Lower Saxony, which owns a 20.3% stake in Volkswagen, to retain a power of veto over major decisions. This is considered particularly important at a time when Porsche is acquiring a majority shareholding in the company, and employees are concerned that all decision making will be transferred to Stuttgart.

A McGreevy spokesman told Reuters that: "The Commissioner reserves the right to open proceedings against Germany but is relying on the German authorities to do the right thing."