## Facts

- The federal government held major ownership interests in Volkswagenwerk GmbH and decided to transfer substantial federal share rights into private hands through a 1960 privatization statute.
- The statute converted Volkswagen from a GmbH into a stock corporation (Volkswagenwerk AG) and structured a public offering of shares, including reserved tranches for employees and certain residents, with allocation and pricing rules intended to broaden share ownership.
- Individual employees and employee representatives filed constitutional complaints directly against the statute, alleging violations of the socialization clause (Art. 15 of the Basic Law), equality (Art. 3(1)), and rule-of-law/social-state constraints on disposing of public assets.
- The complainants argued that Art. 15 either required continued public ownership (or at least barred privatization that could impede future socialization) and that the pricing and preferential allocations unlawfully advantaged select groups and risked selling below proper value.
- The court accepted the complaints as admissible but rejected them on the merits.

## Issues

1. Whether enactment of a statute constitutes “public authority” permitting a constitutional complaint directly against legislation.
2. Whether Art. 15 of the Basic Law imposes a constitutional mandate to socialize, or a constitutional bar on privatizing profit-oriented federal enterprises.
3. What constitutional constraints apply when the state sells public assets, including whether it must maximize revenue or merely seek an appropriate price.
4. Whether preferential share allocation to employees and certain residents violates Art. 3(1) equality and limits derived from the social-state and rule-of-law principles.

## Decision

- The court held that enactment of a statute is always an exercise of public authority for purposes of the constitutional-complaint procedure.
- The court held the 1960 Volkswagen privatization statute compatible with the Basic Law and dismissed the constitutional complaints.
- The court found no constitutional provision generally prohibiting the sale of purely profit-oriented federal enterprises.
- The court construed Art. 15 as an authorization to legislate socialization, not as a mandate to socialize and not as a prohibition on measures that could make future socialization more difficult.
- The court held federal organs must seek an appropriate price when disposing of public assets, but may consider economic and social-policy objectives within limits consistent with rule-of-law requirements.
- The court upheld the preferential allocation rules because the selected beneficiary groups were defined on objectively justified grounds and the differentiation was not arbitrary.

## Legal Principles

- Enacting legislation constitutes “public authority” and may be challenged by constitutional complaint when the complainant shows personal, direct, and present impact.
- Art. 15 of the Basic Law is enabling: it permits socialization by statute but does not require socialization and does not impose a duty to preserve public ownership to keep future socialization easier.
- The Basic Law contains no general constitutional ban on privatizing profit-oriented enterprises owned by the federation.
- When selling public property, the state must seek an appropriate price and may not dispose of assets arbitrarily; revenue maximization is not constitutionally required in every case.
- In benefit- or promotion-oriented state action, unequal treatment favoring defined groups is permissible if supported by reasonable, objective grounds; the social-state principle does not justify arbitrary distribution that negates equality.

## Conclusion

The court upheld the Volkswagen privatization framework, holding that the constitution permits privatization of commercial state enterprises, treats socialization as a legislative option rather than a constitutional command, requires an appropriate (not necessarily maximal) sale price, and allows group-based allocation preferences when objectively justified and nonarbitrary under equality and rule-of-law constraints.


Volkswagen Denationalization Case (Ger.), 12 BVerfGE 354 (1961)