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BRUSSELS, Nov 27 (Reuters) - European Internal Markets Commissioner Frits Bolkestein said on Thursday he was unhappy with the German government's defence of a law that the EU executive says shields car maker Volkswagen AG from foreign bids.
"I can tell you that I am not satisfied with the reply the European Commission has received from Germany (on the VW law)," Bolkestein told a news conference in reply to a question.
Bolkestein added the Commission was considering taking fresh legal action against the German government, but gave no time frame.
Bolkestein's comments came after European Union governments defeated his proposal for cross-border takeovers, which would have banned many of Europe's common anti-merger defences.
The Commission wants Germany to scrap a law that not only caps voting rights in VW at 20 percent, but also allows a shareholder that controls 20 percent to block major changes at Europe's largest carmaker.
This effectively gives the regional government of Lower Saxony the power to veto hostile merger bids and to safeguard jobs as it owns just under 20 percent.
The Commission says the system deters foreign investors from bidding for the company and asked Berlin to modify it in March.
A second legal challenge by Bolkestein would be the last step before the issue is brought to the European Court of Justice by the EU executive.
The move against VW is part of the Commission's strategy to curb government control over privatised companies.
The Commission has taken a series of legal steps against countries such as France, Spain, Italy and others to force them to relinquish "golden shares" and other mechanisms that allow governments to meddle with formerly state-owned companies.