German chancellor Angela Merkel and president of the state of Lower Saxony, Christian Wulff, have fought off surprise calls from the head of the Baden-Württemberg's government, Günter Oettinger, to repeal the VW Law.

A new VW Law is currently going through parliament. The new law includes amendments and replaces an existing law after the original law was ruled anti-competitive by the European Court of Justice.

Merkel is standing firm against demands from the European Commission to abandon the law. The European Commission is threatening further legal action against the special German law which means the state of Lower Saxony can effectively block a hostile takeover of Volkswagen through a 20% stake that it holds.

Earlier this month Volkswagen workers held a protest against efforts by the European Commission. The IG Metall labour union, which represents most VW employees, fears that a new owner could endanger jobs and rights for employees.

Oettinger has positioned himself in support of the Baden- Württemberg-based Porsche, which would like to see the raw repealed so that it can have full control over Volkswagen, in accordance with the number of voting rights it holds.

Germany's justice minister, Brigitte Zypries said, "There is no reason to completely abolish the VW Law. The EU Commission should accept that."

Wulff argued that Volkswagen has had political support in Germany for more than 50 years and that it is not up to Brussels to decide if this is right or not.

Oettinger said that normally a right of veto only applies to organizations with a 25% shareholding, and that the same should therefore also apply to Lower Saxony. Lower Saxony currently only has 20% althought Wulff has said in the past that he would support Lower Saxony increase its stake if necessary.