Volkswagen Chairman Ferdinand Piech broke ranks with Porsche, his own clan's sports car maker, by tacitly backing VW staff in a boardroom showdown as thousands of workers protested outside.
A source briefed on Friday's events said Piech was not present during a VW supervisory board vote, allowing 10 members from the carmaker's labor unions to outvote the nine remaining shareholder representatives -- including three Porsche executives -- in a motion concerning VW's premium unit Audi.
The defeat for Porsche Automobil Holding means Volkswagen's largest shareholder will need approval from the VW supervisory board for any form of cooperation with Audi.
Volkswagen's luxury brand is a potential competitor to Porsche because Audi makes sporty cars such as the TT roadster and R8 high-performance coupe, which rival Porsche's Boxster and 911.
Porsche Chairman and VW board member Wolfgang Porsche attacked his cousin in a magazine interview, in a rare show of divisions between the Porsche and Piech clans.
"I am horrified by the behavior of the chairman," he was quoted as saying of Piech in Germany's Focus magazine. A preview of the article was released ahead of publication on Monday.
Extra power
The squabble took place as VW staff staged one of the biggest protests in the carmaker's history to support a German law giving labor and the state a big say at VW, which has passed Ford Motor Co to become the global number three automaker.
Both the European Commission and Porsche, poised to boost its VW stake to a majority, oppose the so-called VW law, which gives the state of Lower Saxony extra power to shape company strategy with its shareholding of just over 20 percent.
Union IG Metall said 40,000 Volkswagen workers from inside and outside Germany protested near its Wolfsburg headquarters. Staff from MAN, a truck maker in which VW holds a large stake, joined them.
"In times of shareholder value and finance market-driven capitalism we need more, not fewer, VW laws in our country," IG
Metall's leader Berthold Huber shouted in a passionate address to the noisy demonstration.
After the EU's highest court ruled last October that the 48-year-old law violated EU rules on the free flow of capital and needed changing, the German government made changes aimed at satisfying concerns in Brussels.
But EU Internal Market Commissioner Charlie McCreevy rejected those changes as insufficient.
Huber told the Westdeutsche Allgemeine Zeitung daily he would shift the protests to Brussels if the Commission lodged another complaint against the VW law, as McCreevy's office has threatened.
Earlier this week, Lower Saxony's premier said the state would raise its stake in Europe's biggest carmaker to 25 percent to retain its blocking minority if necessary.
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