The European Court of Justice is expected to rule on Tuesday against the so-called ‘Volkswagen Law’. That could pave the way for Porsche to finally take full control of the continent’s biggest carmaker.


Removing the four decades old law which prevents Volkswagen from being taken over would allow Porsche to raise its 31% stake to a majority, though in practice it may not be able to do that quickly.


Porsche has made no secret of its desire to expand beyond its traditional luxury sports car market to create a truly global group.


The VW law was introduced in 1960 as Volkswagen was being privatised and was designed to shield the company from foreign attempts to control it. Regardless of the amount of capital it owns, a shareholder cannot hold more than 20% of the voting rights in a company.


The law also stipulates that the authorities in Lower Saxony, the German state where Volkswagen is based, have the right to appoint two members to VW’s supervisory board, allowing them to block the majority needed to adopt resolutions.


Lower Saxony is the second-biggest investor in VW with 20.3% of the capital.


Porsche has long opposed the restriction on its voting rights.


“To have 31% of the capital but only 20% of the voting rights is clearly discrimination,” said its chief executive Wendelin Wiedeking.


The European Court of Justice is widely expected to rule in favour of the European Commission’s opinion that the Volkswagen Law is restrictive, obliging Germany to revise it.


If the law is changed, Porsche will enter a ‘decisive’ phase in its attempt to take control of VW, Wiedeking has said. Many investors are banking on Wiedeking to take on the unions and Lower Saxony to reform Volkswagen’s operations. But Ferdinand Piech’s position will be key. The VW Supervisory Board chairman may opt to dampen any move for significant reforms.


In the past, he sided with the unions against the reformers in VW’s management team, including ex-CEO Bernd Pischetsrieder.


However, it will probably only be a matter of time before Porsche takes a majority share.