WOLFSBURG, September 12, 2008 (AFP) - Tens of thousands of workers demonstrated at Volkswagen headquarters on Friday to ward off what they see as threats to their jobs from both Porsche and the European Commission.

The official reason for the protest in Wolfsburg, which union IG Metall said was attended by some 40,000 VW employees from all over Germany and Europe, was to air grievances against the EU's wish to do away with the so-called VW Law.

'We don't need less VW law but more,' IG Metall head Berthold Huber told the massive crowd clad in the union's yellow and red colours.

The VW Law dates back to 1960 and effectively blocks another company making a hostile takeover bid for Europe's biggest carmaker as it gives the state of Lower Saxony a blocking minority over major company decisions.

The European Commission has taken a dim view of the law because Lower Saxony only holds a 20 percent stake in VW. Normally a blocking minority is only accorded to those owning more than 25 percent.

The law, which is also defended by Germany's federal government, was struck down in October by the European Court of Justice, which ruled that it violated competition laws.

Berlin redrafted the legislation to respond to EU objections but maintained the provision that gives Lower Saxony its effective veto, and EU Internal Market Commissioner Charlie McCreevy this week announced new court action.

'Blinkered neo-liberals like McCreevy are destroying Europe's future,' IG Metall's Huber told the crowd.

The union, which represents 90 percent of VW employees, fears that a takeover -- hostile or friendly -- would endanger jobs and encroach on workers' rights.

Friday's demonstration was scheduled to take place on the same day as a meeting of VW's supervisory board in Wolfsburg at which the law was due to be on the agenda.

But workers at the company, which last month said it had overtaken US giant Ford to become the world's biggest automaker behind General Motors and Toyota, also have another bogeyman in their sights: Porsche chief Wendelin Wiedeking.

Sportscar maker Porsche already owns more than 30 percent of VW's capital and is due to make an offer to buy the rest of the much larger firm later this year.

It is a deal that would see a family-controlled company that makes 100,000 expensive sportscars a year take over a national institution that churns out five million vehicles for the masses in the same period.

But relations between worker representatives and Wiedeking, who already holds a seat on VW's board, are far from warm, with the Porsche boss already warning there would be no 'sacred cows' once his firm is in control.

German media reports last week spoke of a possible departure of Wiedeking, one of Germany's best paid executives, who could be sacrificed by the head of VW's supervisory board Ferdinand Piech to appease unions.

Piech, who is also a co-owner of Porsche, was said to be highly irritated by tense relations between Wiedeking and unions, who for historical reasons wield significant influence over company decisions.

VW works committee boss Bernd Osterloh has slammed the 'arrogance of an absolute monarch,' and called Wiedeking a 'dilettante.'

But it is not just a matter of a face-off between Wiedeking and VW staff that would be arbitrated by Piech in his dual role of co-owner of one and supervisory board president of the other.

The IG Metall union chapter at Porsche, for example, is in favour of the VW takeover, with its head, a former boxer named Uwe Hueck, repeatedly voicing his support for the move and saying Osterloh is only trying to maintain his power.

In addition, a cousin of Piech, who represents the other branch of the Porsche family, Wolfgang Porsche, is reportedly a strong supporter of Wiedeking.

Nothing so far has indicated Wolfgang Porsche is ready to dump a boss who has turned the maker of the 911 sports car into the most profitable auto maker in the world.