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Berlin Seeks Veto for EADS Decisions

Germany is seeking "golden shares" for Berlin and Paris in European aerospace giant EADS. The shares would essentially give the countries veto power on any major decisions facing EADS or its crucial Airbus subsidiary.

With an agreement in place between Berlin and France to streamline management at European aerospace giant EADS, the German government is now pursuing the creation of "golden shares" to ensure its strategic influence on the company. The shares would be tantamount to a veto power on major decisions, even though the French and German governments are minority shareholders in the company, which owns Airbus.

The German government said a working group at EADS would explore the possibility under European law of creating the "golden shares."

Industrial giants Lagardere and DaimlerChrysler are currently the company's largest French and German stockholders, but the French government is seeking to increase its own shares. For the German government, the golden-share option could protect it from French efforts to dominate the company.

But in Brussels, a spokesperson for the European Commission criticized the development, telling the Süddeutsche Zeitung newspaper: "In general, golden shares have no place in Europe." The European Court of Justice "only permits these special rights in unusual circumstances," the spokesman said.

Indeed, the commission is already challenging other companies that have created similar provisions, including Volkswagen. The German state of Lower Saxony owns a minority stake in the company, but through Germany's "VW Law," it enjoys the equivalent of veto or "poison pill" power in the event of a hostile takeover.

Under a deal struck Monday between German Chancellor Angela Merkel and French President Nicolas Sarkozy on Monday, EADS will streamline its cumbersome system of dual Franco-German CEOs . Now there will be one CEO for EADS and another for Airbus. After 2011, these roles will rotate between Germany and France, but until then Germany will hold both positions.

dsl/reuters