FRANKFURT - Porsche's owner families have agreed with a key Volkswagen shareholder that controversial clauses of a law protecting Volkswagen from hostile takeovers would be absorbed into the by-laws of Europe's biggest carmaker itself, a German magazine said on Saturday.

The agreement was reached with the federal state of Lower Saxony, which currently owns a blocking minority stake of 20 percent in Volkswagen, Der Spiegel said.

A spokesman for Lower Saxony confirmed the report.

The pact with Lower Saxony would ensure the federal state, home to Volkswagen's headquarters and biggest plant, retains its blocking minority status regardless of the fate of the so-called Volkswagen Law, Der Spiegel said.

The Sueddeutsche Zeitung newspaper said on Saturday the EU Commission will discuss in the third quarter this year whether it would contest the German government's recent amendments to the Volkswagen Law.

The EU Commission won a court battle with Germany in 2007 over the Volkswagen Law after the European Court of Justice ruled that law hindered the free flow of capital.

The court had also told Germany to remove the offending clauses.

The Volkswagen Law allows Lower Saxony to hold a 20 percent blocking minority stake and to send two representatives to the carmaker's board.

Porsche had previously sided with the EU Commission's stance on the Volkswagen Law while building up a 75 percent stake in VW but the sports car maker in the meantime had agreed to merge with Volkswagen. [ID:nSP513587] (Reporting by Marilyn Gerlach; editing by James Jukwey)

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