The German state of Lower Saxony would raise its stake in Volkswagen to 25% if that was necessary to retain the state's blocking minority, according to remarks made by state premier Christian Wulff.

The reported comments follow indications that the EU is preparing a new legal action against the German government over the 'VW law' which protects the firm from takeover and is viewed by the European Commission as anti-competitive.

The so-called 'VW law' allows Lower Saxony to block decisions with its current shareholding of just over 20%.

If the law was scrapped, Lower Saxony would have to raise its holding to keep its blocking minority in Volkswagen.

"The question is whether the blocking minority is 20% or 25%, in which case we would have to buy an additional five percent," Wulff reportedly said.

He added: "We would rather use the money for other things but we would do it if necessary."

See also: BELGIUM: EU planning new action over VW law