Luxembourg/Frankfurt, Oct. 23 (Reuters): The European Union’s highest court on Tuesday struck down a German law that shielded Volkswagen from takeover, paving the way for Porsche to take majority control of Europe’s biggest car maker.

The ruling is a major boost for the European Commission in its crackdown on so-called golden shares, or strategic stakes held by governments in listed companies.

The law’s demise could also end decades of cosy ties between the management and labour at Volkswagen in a system called co-determination that gives workers a major say in how the company is run.

“By maintaining in force the provisions of the Volkswagen law ... the Federal Republic of Germany has failed to fulfil its obligations,” the court said in a statement.

Porsche welcomed the ruling that lets the maker of 911 sports cars exercise all of its Volkswagen voting rights via its nearly 31 per cent stake in Volkswagen ordinary shares.

Porsche has said it has secured enough options to let it “significantly” raise its holding in Volkswagen but has declined to say whether this meant it could already gain majority control.

“There is no decision on how we will proceed. We will take the decision to the supervisory board and this will be a decision for the supervisory board,” Porsche spokesman Frank Gaube said in Luxembourg.

The next meeting of the sports car maker’s supervisory board is set for November 12, he said, adding he could not say whether the Volkswagen issue would be on the agenda.

One source said it was unlikely Porsche would increase its stake before the end of this year.