EU internal markets commissioner Charlie McCreevy has told Handelsblatt he expects to complete the second stage of legal proceedings against the German government and its new VW law before Christmas.

According to Reuters, Berlin will have two months to respond before the EU can formally take the issue back to the European court.

Germany rewrote the VW law when the European court of justice ruled that original law, dating back to the 1959, contravened European union rules on the free flow of capital. But Germany retained a clause that means the state of Lower Saxony can effectively block a hostile takeover of VW through a 20% stake that it holds and this is being contested. Normally, under German company law, such a right of veto only applies to organisations with a 25% shareholding.

Porsche is the largest shareholder in Volkswagen with the equivalent of a 74.1% stake. It has said it wants to raise this to over 75% and is keen to see the VW law abolished so that it can exert full control over the company.