(BRUSSELS) - Planned German changes to a law protecting automaker Volkswagen from takeover bids are insufficient, a spokeswoman for the European Commission said on Thursday.

"We have written to Germany about the 'Volkswagen law'," the spokeswoman to EU Internal Market Commissioner Charlie McCreevy said.

The VW law was introduced in 1960 as Volkswagen, founded by the Nazi regime before World War II, was being privatised, and was designed to shield the group from foreign takeover attempts.

The crux of the law is that regardless of the amount of capital it owns, a shareholder cannot hold more than 20 percent of the voting rights in a company.

Last year Europe's top court ruled against the VW law.

"They haven't fully complied with the court judgment, the commission spokeswoman Catherine Bunyan said.

"The draft amendment under consideration doesn't take into account the whole remarks of the court," in particular on the 20 percent voting threshold, she said.

German Justice Minister Brigitte Zypries aims to retain a clause in the Volkswagen law that requires 80 percent of shareholders to approve decisions, compared with the 75 percent most common among other companies.

That clause gives the German state of Lower Saxony, holding 20.3 percent of voting rights, a de-facto blocking minority.

The EU commission spokeswoman said that an "ordinary letter" had been sent to the German justice ministry and was not the start of a formal infringement procedure, adding that there was no fixed deadline for Germany to respond.

The European Court of Justice had ruled that certain clauses of the so-called Volkswagen Law violated EU laws on free movement of capital.

Zypries reacted promptly to the letter with one of her own to express Germany's point of view.

The text said Germany saw in the October court ruling "no sufficiently explicit declaration" that supported the EU's position.

Zypries argued that the minority blocking stake did "not limit the free movement of capital."

A ministry spokesman told AFP: "We are now awaiting the Commission's reaction. We hope we have convinced them."

Porsche, which currently owns 31 percent of VW shares and plans to raise its stake to more than 50 percent at an unspecified date, has urged the German government to scrap the VW law altogether, after officials said they were working on a new draft that would pass EU muster.

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