Policy impacts business' license to operate
The estimates vary, but the message is the same: Between 50% and 84% of the laws in Europe originate in the EU’s headquarters in Brussels. Whatever the precise share, no one denies that the power of the European Union has grown enormously in recent years. EU laws affects business first and foremost, as the central competence of the EU is the regulation of the biggest single market, comprising 27 countries and over 480m consumers.
Leading businesses recognize how involvement in the EU policy making process alongside other parts of civil society and other interests is crucial to shaping their operating environment, but it is still surprising how often businesses are unaware of legislation originating in Brussels and how it can affect them. By the time legislation at EU level is ready to be "transposed" or implemented at national level it may be already too late to change things. Early engagement is crucial to achieving a balanced and appropriate operating environment for any business in Europe, and there are a number of keys to remember for successful engagement.
Regulation and Standards
In addition to the impact on business of EU policy-making there are other areas where the EU wields considerable powers to influence and shape the business environment. These are also areas where effective engagement is essential for business at EU level.
Chemicals regulation or emissions trading are just two examples of areas where Brussels has become the global pacesetter for environmental standards. The high level of regulation and standard setting is not limited to the area of environment, but ranges across many business areas and sectors: Intellectual property, trade, telecoms markets, food and nutrition to name but a few. Corporations around the world need to accept EU norms in order to gain access to its affluent consumers. Better, influencing the shape of these norms and regulations can ensure competitive advantage in areas from pricing and tariffication to product penetration and public sector procurement.
Competition and mergers
Brussels also acts as the competition authority for the EU. Mergers and acquisitions concerning multiple European markets need approval from the European Commission. Remedies and disposals can be required for deals to progress and takeovers can ultimately be blocked. It is not just takeovers that need careful attention in the Brussels competition arena. The Commission’s work on cartels, abuse of dominant position and other competition enforcement is increasing and record levels of fines have recently been imposed. The competition arena is not just a technical process. Advocacy - ensuring bids or other relevant issues are understood and supported not just by markets but by politicians as well – can be crucial to the outcome of a deal. European governments are becoming increasingly nervous about the takeover of “strategic” industries by foreign interests, sovereign funds or even simply other private sector companies. The right political climate can make a real difference as was seen in deals such as the hostile Mittal bid for Arcelor where significant government shareholders were at play; or recent consolidation in the energy sector.
Lobbying in the EU
With an estimated 15,000 lobbyists (be they from NGOs, individual companies or trade associations), competing for attention in Brussels, how can business best navigate the complex Brussels environment effectively and with good results?
There are a number of guiding principles that will really help business engage effectively with the EU. Two fundamentals remain unchanged no matter what area -policy, regulation or competition- is at hand:
1. Engage early: Positions are always harder to change once they are written down or even partially formed. Ideally businesses should demonstrate presence and help set the context before the European Commission, charged with drafting legislative proposals, has come up with a proposition. This requires not the retrospective monitoring of information that is available to anyone online, but a more insightful and forward looking intelligence focused on emerging issues and areas likely to impact your business.
2. Make no assumptions: A formal legislative or technical process exists of course, but all things inevitably have a political angle and it is often the informal dynamic, the horse-trading in the Council or a totally unexpected alliance that can swing decisions. Even takeovers have a political context. It should also never be assumed that the EU is homogeneous. Perspectives are diverse, from different national pictures to differences within Commission Directorates. For successful advocacy, all aspects need to be considered.
Debunking lobbying mythology
Alongside the fundamentals a certain mythology grew up around lobbying in Brussels. These myths depict old style lobbying that is out of date and ineffective in the complex 27 member state entity that is the EU today. Let’s debunk some of the myths and learn the lessons for successful lobbying.
Myth 1: "Wine' em and dine' em"
Regular contact with policy makers is important to communicate your positions and gather intelligence, but socializing and entertainment cannot be the basis of a professional approach.
It is helpful to have a constant EU presence and to be part of the informal EU dynamic where some of the best ideas are often born, but the days of the criticism of the EU as “the gravy train” are long gone. The agenda tends to be so heavy that there is less and less time available to policy makers and unless “events” have a very clear rationale and are genuinely useful to policy making they are unlikely to be attended and may likely backfire.
Myth 2: "It's only who you know that counts"
Access to policy makers does not equal influence. Without a good case and solid arguments backed by facts and figures, no policy maker will embrace your positions. The EU has tended to be very open to input, but the key is to know who exactly is responsible for what and what exactly their positions are.
Myth 3: "Money equates to power"
It is often thought that the resources of business mean that they have a stronger voice than civil society. But studies show that EU policy makers perceive NGOs to be at least as effective in their lobbying as business in most sectors. So a carefully crafted strategy which demonstrates wider benefits is necessary.
Tips for effective EU lobbying
How then can business go about convincing EU policy makers?
Understand the political dynamic and arena
A myriad of stakeholders are present on the EU scene. A sound understanding of the underlying political dynamic is essential to crafting an effective lobbying effort. It is essential to recognize the full picture of interests, responsibilities and channels of influence and how these relate to each other. Understanding this web allows efforts to be focused and results to be maximized. Policy-making is no longer linear and to be truly effective business needs to relate to the interests of the full range of stakeholder interests and use multiple points of entry.
Decisions in Brussels are taken on a consensual basis. An alliance with others' be it other business sectors, your value chain from manufacture to retail, with civil society interests and NGOs - can be a constructive contribution to finding agreement and increasing your voice. Alliances can be conducted through trade associations (although this can reduce or slow effectiveness due to the need to iron out common positions) or by forming ad hoc alliances and single issue coalitions.
Give and take
Lobbyists must create win-win situations with the legislators. EU policy makers are generalists and need information from companies to understand the reality of their business. There may be specific issues in hand but companies need to make sure they are seen to be long-term contributors to Europe so it may be necessary to look at unrelated areas of interest to the institutions to ensure the contribution is valued.
The goal of public affairs activity is to build a relationship of mutual trust. Transparency, not secrecy, is the key to building trust. There are of course issues of commercial confidentiality but besides that it is best to be as open as possible. The Commission has recently launched the European Transparency Initiative (ETI) proposing voluntary registration, a code of conduct and declaration of financial and other interests. The goals are admirable and well respected but the way to attain them needs to be rethought to ensure commercial confidentiality and to avoid market distortion. EPACA (the consultancy trade association) would prefer to see a fully regulated lobbying profession which takes these concerns fully into account and is working hard to ensure a transparent and level playing field. More information is available on the www.EPACA.org website.
Think through the related media strategy
The Brussels press corps is now the largest in the world. It has a clear influence in EU issues and on EU politicians, is highly active, and needs to be fully considered as part of an advocacy strategy. This may mean thinking through how to keep things low key and out of the media or how to ensure a wider voice or third-party endorsement for your issues.
Brussels-based correspondents look at stories from a different perspective to their colleagues in national capitals. This EU factor needs to be fully understood to achieve coverage in a highly competitive environment. In the panoply of EU press events and media information it is difficult to attract attention and business-led press conferences in Brussels need to have real news interest to succeed.
To outsiders, the Brussels scene may appear confusing. But given what is at stake, companies cannot afford to be passive. Taking time to engage with Brussels can help business to both protect its ability to operate effectively and create competitive advantage. Lobbying Brussels has never been so important for business.
*Julia Harrison is Managing Partner of FD Blueprint, the leading independent public affairs and communications consultancy in Brussels: www.fdblueprint.eu