The European Court of Justice on Tuesday sided with authorities in Lower Saxony in a protracted legal battle over shareholder rights at Volkswagen.

The EU's executive had brought Germany before the court because it believed the country had failed to comply with previous rulings.

A VW law had originally granted Lower Saxony mandatory representation on the automaker's board and effective veto powers. In 2007, the court in Luxembourg curtailed the German regional state's special rights, saying the law limited the activities of other existing or potential investors in the company and did not allow for the free movement of capital within the bloc.

Nothing wrong with the law?

That ruling led to a revised VW law which saw local authorities losing their automatic seat on the board but maintain their blocking minority rights.

The European Court of Justice said Tuesday the law in its current form did not violate any EU regulations. It concluded that a multi-million-euro fine as demanded by the European Commission was unjustified.

"By today's judgment, the court dismisses that action," it said in a statement. The Commission had requested a daily fine of over 30,000 euros ($42,000) to be slapped on the company for the time authorities had not backed down to the executive's demands.

hg/kms (dpa, AFP)