FRANKFURT - Sports car maker Porsche has an open road to make another bid for Volkswagen now that the European Union's highest court struck down the nearly 50-year-old "VW law" enacted to protect Europe's largest automaker from a hostile takeover.
Yesterday's ruling will reverberate across Europe, where many governments have attempted to protect companies they see as vital to their economies from being bought, particularly by foreign investors.
German politicians and labor unions had argued that the 47-year-old measure was needed to protect local jobs.
The EU Court of Justice, however, said the German law - which capped a shareholder's voting rights at 20 percent, whatever the size of its holding - limited "the free movement of capital" that is a tenet of the European Union.
It also said the measure discouraged foreign investors from taking a stake in Volkswagen, because the German government was able "to exercise considerable influence" over the company. The German state of Lower Saxony is VW's second-biggest shareholder.
As the EU basked in its triumph over the "VW law," Porsche got a green light to take a bigger stake in VW.
The Stuttgart-based maker of high-end sports cars has spent $7.13 billion buying 31 percent of Volkswagen AG since 2005, with what analysts say is a view toward eventually acquiring it outright.
Porsche was forced by German law to file a formal offer in April after its holding in Volkswagen surpassed 29.9 percent, but the bid price was intentionally low, and the offer failed.