AICGSPOLICYREPORT · agenda as a consequence of growing interdependence. Both reports are part of a series of analyses, under- taken with the generous support of the DaimlerChrysler-Fonds

24AICGSPOLICYREPORT

INDUSTRIAL LOBBYINGWITHIN THE EUROPEAN UNION: ACTORS, STRATEGIES, AND TRENDS IN THE MULTI-LEVEL SYSTEM

Stefanie John Daniela Schwarzer

AMERICAN INSTITUTE FOR CONTEMPORARY GERMAN STUDIES THE JOHNS HOPKINS UNIVERSITY

27904 AICGS_CVR.qxp 5/8/06 11:25 AM Page 2

The American Institute for Contemporary GermanStudies strengthens the German-AmericanRelationship in an evolving Europe and changingworld. The Institute produces objective and originalanalyses of developments and trends in Germany,Europe, and the United States; creates new transat-lantic networks; and facilitates dialogue among thebusiness, political, and academic communities tomanage differences and define and promotecommon interests.

©2006 by the American Institute for Contemporary German Studies

ISBN 1-933942-00-2

ADDITIONAL COPIES: Additional Copies of this Policy Report are availablefor $5.00 to cover postage and handling from the American Institute for Contemporary GermanStudies, 1755 Massachusetts Avenue, NW, Suite700, Washington, D.C. 20036. Tel: 202/332-9312,Fax 202/265-9531, E-mail: [email protected] Pleaseconsult our website for a list of online publications:http://www.aicgs.org

The views expressed in this publication are those of the author(s) alone. They do not necessarily reflectthe views of the American Institute for ContemporaryGerman Studies.

TABLE OF CONTENTS

Foreword 03

About the Authors 05

Ch.1: Introduction 07

Ch.2: The European Automotive Industry 11

Ch.3: EU Multi-level Governance and Decision-making Processes 15

Ch.4: Promoting Interests Through Different Channels: Associations and Individual Companies 25

Ch.5: Case Study: Emissions Regulation 31

Ch. 6: Conclusion 37

References 41

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Deepening transatlantic economic integration has brought mutual benefit to the United States and Europe,but it has also created new potential for transatlantic conflict. In an increasingly integrated marketplace, legaland regulatory issues that were once considered purely domestic affairs can provide fodder for U.S.-Europeandisputes. When disparate approaches collide or new directives or regulations are issued, there can be far-reaching consequences for businesses that operate in multiple markets.

For businesses and interest groups, puzzling through the intra-EU dynamics that shape EU approaches andregulations is increasingly necessary but often difficult. For while much competence has migrated to theEuropean Union, the national capitals of the EU member states can still wield significant influence overoutcomes.

Understanding who and what drives debates on regulatory matters, both at the national and EU level, is noeasy task. Like their counterparts in the United States, European firms must contend with the multiple pres-sures of globalization. These pressures are also felt by the governments of the EU member states, who seeknot only to remain globally competitive, but must also respond to societal demands related to their welfaresystems and environmental and other concerns.

Input from businesses, associations, and interest groups that might be affected by EU directives and deci-sions can be useful in ensuring that the outcome represents a sustainable balance between these oftencompeting impulses. Lobbying is thus an important vehicle for firms to convey information and expertise,communicate interests, and shape the outcomes of regulatory and legislative activities.

In their report, Industrial Lobbying Within the European Union: Actors, Strategies, and Trends in the Multi-Level System, Stefanie John and Daniela Schwarzer explore the complexities of lobbying and decision-making in the European Union, using the example of the automotive industry. They examine key differencesbetween the lobbying processes of the EU and the United States, decipher the decision-making processesin the multi-level European system, and use a case study on emissions regulation to explore the structuresand patterns of lobbying activities, pointing out the strategies that have been successful in the complex EUsystem.

This report serves as a companion volume to the recently published Policy Report, The Stresses of DeepIntegration by Bruce Stokes, which provided an overview of the central issues topping the U.S.-Europeanagenda as a consequence of growing interdependence. Both reports are part of a series of analyses, under-taken with the generous support of the DaimlerChrysler-Fonds im Stifterverband für die Deutsche

FOREWORD

3

INDUSTRIAL LOBBYING WITHIN THE EUROPEAN UNION


4

Wissenschaft, examining the historical/cultural, institutional, political, and economic context of transat-lantic economic, regulatory, and policy approaches and the way that these factors shape our respec-tive responses to the challenges of remaining competitive in a global market.

We are grateful to Stefanie John and Daniela Schwarzer for their comprehensive overview of thelobbying process in the EU—a process that is little-understood by many in the United States. We areparticularly thankful for the sustained support of the DaimlerChrysler-Fonds im Stifterverband für dieDeutsche Wissenschaft for this project and the Institute’s work. I would also like to express my grati-tude to Dr. John Starrels, Senior Fellow-in-Residence, who has helped immeasurably to shape and guidethis series of reports, and to Ilonka Oszvald for her expert assistance in the editing and preparation ofthe manuscript.

CATHLEEN FISHER

Deputy Director



STEFANIE JOHN is a researcher at the Ruhr-Universität Bochum (Germany) working on global economicgovernance with a special interest in national preference formation. John experienced the lobbyingprocesses in Brussels in the field of European research policy first-hand through her work at theFraunhofer Gesellschaft, a German research institute that undertakes applied technical research ofdirect utility to private and public enterprise. Previously, she worked at the Jean-Monnet-Centre ofExcellence at the Freie Universität Berlin and in the department of European integration at the StiftungWissenschaft und Politik (SWP), the German Institute for International and Security Affairs, in Berlin.

DANIELA SCHWARZER is a senior researcher at the Stiftung Wissenschaft und Politik (SWP), theGerman Institute for International and Security Affairs, in Berlin. She specializes in EU integration witha special focus on economic governance, including private sector interest representation, and is alsoan expert on French politics and economics. She has authored numerous articles on questions ofeconomic integration and governance in the EU, and Franco-German relations, and co-authored a bookon private interest representation in the EU. Before joining the SWP in March 2005, Schwarzer servedas editorial writer and then as France correspondent for the Financial Times Deutschland. From 1995to 1999, she worked with a European business lobbying group, the Association for the Monetary Unionof Europe. Schwarzer holds a Ph.D. in Political Economy from the Freie Universität Berlin. She isfounding editor of the European Political Economy Review (www.eper.org).

ABOUT THE AUTHORS

5



01CHAPTER ONE


7


The automotive industry lends itself to a practical illus-tration of the above observations: It is one of the mostimportant industrial branches of the EU, comprising 7percent of total manufacturing output andcontributing 7 percent of total European manufac-turing employment.1 It furthermore provides for 20percent of total European manufacturing researchand development, and is a driving force behind theadvance of new technology and innovationsthroughout the economy. It is also an importantsource of fiscal revenue: In 2003, the combined totalincome from the road sector reached €346 billion or8 percent of total general government revenues.Traditionally, the European automotive sector wascomprised of nationally-rooted companies often witha semi-public ownership. This has changed in recentdecades: Transnational and transcontinental mergersand acquisitions, as well as the globalization of themarket in general, have turned the large automotivecompanies into global players. Within the EU, the

creation of the common market—which includes aEuropean competition policy exercising tough controlover state aid—reduced the scope for protectionistpolicies towards the automotive industry. Despitethese measures, lobbying, especially in the sense ofinfluencing legislation, remains an important corpo-rate activity. The automotive industry has to respondto a multitude of regulatory initiatives, many of whichdirectly affect their global competitiveness.

Lobbying here is understood as any attempt topromote corporate interests vis-à-vis the publicsphere. The most obvious forms are attempts to influ-ence the outcomes of regulatory and legislative activ-ities. Lobbying also includes the supplying ofinformation,2 since this can promote corporate inter-ests. Seen in this way, it is not only the corporateside that has an interest in lobbying. Political decision-makers need interest groups for the provision ofspecific information if they are to formulate adequate

One of the recurring issues in the contemporary debate on globalization relatesto the competitive pressures facing the industrial sector in the European Union(EU), in particular their effects on national economic and welfare systems.While global competitors and shareholders exert increasing pressure on indus-trial corporations, policymakers are increasingly concerned about producers(i.e. job-providers and taxpayers) outsourcing work abroad or closing domesticproduction sites altogether. As a result, companies and policymakers have astrong mutual interest: They each seek to ensure the competitiveness ofcompanies in the context of global competition. Meanwhile, policymakers mustalso respond to societal demands, for instance for environmental protection.Hence, there are also policy initiatives that industrial actors may see as detri-mental to their goal of increasing competitiveness.

INTRODUCTION


legislation. They also rely on interest groups for theimplementation of certain decisions. There is ampleevidence that interest groups play a crucial role inthe decision-making process by transmitting informa-tion to the relevant policymakers as they are betterinformed about the issues that affect them.3

This study concentrates on the lobbying of legislativeand regulatory processes. In the face of increasingregulatory activities on the part of EU institutions,which result from the continuous transfer of decision-making power from the national to the communitylevel, EU institutions are today a highly relevant policyarena for business interests. Furthermore, the imper-ative of the single market logically makes the EU therelevant level for many decisions concerning compe-tition, standardization, and competitiveness. Theeconomic and political importance of the automotiveindustry in the EU, and the fact that the interests ofthis industry lie at the cross-roads of several policyfields with partly competing aims (e.g. environmentallegislation vs. liberalization), make this a prime field forthe investigation of recent trends in EU lobbying.

This study explores the specificities of automotivelobbying in the European Union focusing on struc-tures, actors, and strategies in the unique multi-levelsystem of the EU. While it is not a comparativeanalysis of the EU and the United States, some impor-tant differences between both systems arediscussed. Chapter 2 provides a general overview ofthe importance and structure of automotive industryin the European economy. Chapter 3 turns to deci-sion-making processes in the multi-level system,paying special attention to the features of relevancefor regulatory activities. Against this background,Chapter 4 describes the channels and strategiesthrough which automotive companies promote theirinterests on the EU and national levels. Chapter 5provides empirical evidence for the structures andpatterns of lobbying activities identified in the previouschapters by presenting a case study on emissionsregulation. Chapter 6 concludes and brings togetherthe insights from all the chapters, focusing on thequestion of which strategies for industrial lobbyinghave proven successful under the complex conditionsof the EU system.

8



9


02CHAPTER TWO


11


The EU’s production of motor vehicles is highlyconcentrated, mainly in Germany, where close to halfof the EU total value added (45 percent) is generated.Further important countries are France (17 percent),the United Kingdom (11 percent), Italy (7 percent),Spain (7 percent), and Sweden (6 percent).4 Whilethe share of central and eastern European car manu-facturers is less important in terms of EU total valueadded, the automotive industry plays an importantrole in the national economies of both the old andnew member states, as Figure 1 illustrates.

In the last decade, the automotive industry has under-gone an important transformation. With the merger ofDaimlerChrysler and other transcontinental mergerssuch as Renault-Nissan, a consolidation trend, whichhad previously left its marks through national or intra-continental mergers and acquisitions, was reinforced.These developments were accelerated with theopening to international competition of new andincreasingly important markets such as easternEurope, China, and Russia. The search for scale andscope economies by large manufacturers and thedifficulty for smaller ones to sustain the investment

race have led to an ever decreasing number of inde-pendent manufacturers in the market. Figure 2 illus-trates this trend, which has resulted in the reductionof the number of independent manufacturers from 36in the 1970s to 14 in 2003.5

Despite the decline in the number of car manufac-turers, competition in the regional, local, and nichemarkets has increased as larger companies are nowpresent in all of them. Mergers and acquisitions haveplayed an important role in the process by givinginstant access to particular regions and nichemarkets and continue to do so. As a result, manufac-turers have transformed from automobile companiesinto global automobile groups. Nevertheless, regionalproducers still manage to hold dominant marketshares in their domestic markets.

The European car market is dominated by Germanand French brands, with American brands playing aminor role. The American market is heavily dominatedby American brands; German brands play a lessimportant role there than Asian brands do. The mostclosed market is the Japanese market, where

Global demand for automobiles rose in 2004. In contrast to the American andwestern European markets, where only slight gains were recorded, sales in theMercosur countries picked up strongly. In central and eastern Europe, automo-bile sales once again showed marked growth and the dynamic sales trend inmost Asian markets continued. Last year, a total of around 63 million motor vehi-cles were produced world-wide—5 percent more than in the previous year.Europe (including Turkey) leads with a share of 33 percent of world production.

THE EUROPEAN AUTOMOTIVE INDUSTRY


Japanese brands hold a market share of almost 95percent. There are two complementary explanationsfor this phenomenon: Firstly, customers are driven by national awareness regarding car buying. Secondly,market barriers like (non-) tariffs, technical standard-ization, and harmonization influence the possibility forforeign brands to conquer market shares on othercontinents. Meanwhile, entering foreign marketsremains a key challenge for the industry and is widelysupported by the public sector, given the economicimportance of the industry branch. In the EU, the mostfar reaching attempt is the CARS 21 initiativelaunched by the European Commission to develop a“Competitive Automotive Regulatory System for the21st Century”; it delivered its first report essentially onrecommendations for better regulation in 2005.6

This overview has revealed several important trendsin the European automotive industry: Firstly, while theautomotive industry is undergoing an importantconsolidation involving trans-continental mergers andacquisitions, markets remain dominated by regional ornational players. Secondly, while the global market

shares of producers from emerging markets(Mercosur, Asia) remain less important than the EUproducers’ share, the former have a robust growthperformance. Assuming a further (though slow) liber-alization of trade in the automotive sector, the EUautomotive industry will have to expect increasingcompetition from producers operating in a low-costenvironment. Policies ranging from blunt market-protectionism through to attempts to raise the auto-motive sector’s competitiveness by better regulationare likely to remain on the political agenda. Such poli-cies are a result of an (in part explicitly sought) inter-action between private interests and policymakersand hence have a major importance for our study ofautomotive lobbying in the EU. The nationally-orientedcustomer behavior observed above also has implica-tions for the trends in automotive lobbying. While thiscustomer behavior lies in sharp contrast to the glob-ally active companies, the trend to “buy domestic”offers corporations a special opportunity to promotetheir interests through national channels and to placethem on the EU’s decision-making agenda.

12


Figure 1: Share of Motor Vehicle Production in Total National Manufacturing in 2001/2002

Source: Own illustration based on European Commission (2004)


13


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03CHAPTER THREE


15


For business interests, the European Union, with itsregulatory authority on the basis of the “first” or“community pillar” of the Nice Treaty, is today themost important policy arena in several policy fields(especially those dealing with the single market) thatare relevant to their competitiveness. Studies suggestthat 80 percent of national legislation is of Europeaninspiration.7 Most legal scholars argue that the rela-tionship between the European and the national levelsis governed by one major rule: Community law hassupremacy over national law. This development hasan impact on the automotive industry, as issues likeenvironmental protection, consumer safety, transportnetworks, as well as technical harmonization and stan-dardization are decided on the European level andhave to be implemented on the national level. Thischapter discusses the EU institutions involved in thelegislative process, i.e. the European Commission,the European Council, and the European Parliament.Special attention is paid to the degree to which these

institutions are accessible to interest groups and atwhich stage of the legislative process they becomeimportant sources for lobbyists.

The European Commission

The European Commission has two major functions:it watches over the implementation of the CommonEuropean Law on the national level and it has theright of initiative to put proposals and drafts on thepolitical agenda within its competences defined bythe European Treaties. This agenda-setting powermakes the European Commission one of the majorpolitical actors within the decision-making processand an important addressee for legislative lobbying.Before presenting a proposal to the other politicalactors involved on the European and the nationallevel, the Commission usually calculates whichproposal will have a chance of being adopted, andwhere problems of implementation may lie. Through

The European Union is comprised of twenty-five member states forming aneconomic union. The EU’s political system is neither a federal state nor aninternational organization and has no historical counterpart, which is why thismulti-level system (including the supranational, the intergovernmental, national,and regional levels) has often been referred to as a construction sui generis.The EU system builds on the political-institutional system of the member states.But with the ongoing integration process, the nation states have transferred adegree of autonomy and certain competences to EU institutions and commondecision-making processes, building an “ever closer Union,” as stated in the EUTreaty.

EU MULTI-LEVEL GOVERNANCE AND DECISION-MAKING PROCESSES


its agenda-setting power and its strategy to pre-assess a feasible consensus among the actors, theCommission defines the field where the cows willgraze. In many cases, it is precisely in this early stageof the policy process that special interest groups wishto have their say.

The European Commission is structured as follows:on the highest (i.e. the political) level, there aretwenty-five Commissioners, each of whom has aCabinet. The Commissioners are nominated by thenational governments and need the approval of theEuropean Parliament and the President of theCommission. The cabinet staff of the Commissionersare usually from the same national background of theCommissioner and are in most cases drawn fromnational administrations. Below the level of theCommissioners with their Cabinets, there are thirty-sixDirectorate-Generals (DGs), which are comparable tonational ministries and basically structured alongpolicy areas. While lobbying efforts are primarilydirected towards the DG staff, cabinet staff and evenCommissioners can make contact with corporateinterests, for instance through participation in high-level conferences or the like.

The automotive industry can be viewed as a stake-holder in a wide range of policy fields e.g. industry,environment, consumer safety, research and devel-opment, and others. Automotive lobbyists henceaddress several different Directorate-Generals. In thepast, these have been:

■ DG Enterprise and Industry ensures that EU poli-cies contribute to the competitiveness of EU enter-prises and facilitate job creation and economicgrowth. It gives particular attention to the needs ofthe manufacturing industry and small and mediumsized enterprises. In particular, the DG’s activitiesare based on Articles 28, 29, and 30 (FreeMovement of Goods), 95 (Internal Market), 152(Public Health), 157 (Competitiveness) and TitleXVIII (Innovation and Research) of the Treaty. TheDG Enterprise and Industry employs over 930people and is responsible for a budget of some€250 million. Its directorate “Competitiveness,International Market for Goods and Sectoral Policies”deals with topics of the automotive industry.

■ DG Environment, with 550 staff, initiates anddefines new environmental legislation and moni-tors the implementation of agreed measures by themember states. Of the DG directorates, two havebeen relevant to the automotive industry: TheDirectorate for “Air and Chemicals,” especially thesubject “Clean Air & Transport” and the Directorate“Sustainable Development and Integration,” espe-cially “Environment & Industry” and “Research,Science & Innovation.”

■ DG International Market and Services has astaff of approximately 440 and coordinates theCommission’s policy on the European SingleMarket, aiming to ensure the free movement ofpeople, goods, services, and capital within theUnion. Relevant for the automotive industry isDirectorate B on general questions of “Horizontaldevelopment policy,” e.g. functioning of the inter-national market, better regulation, etc.

■ DG Energy and Transport is made up of some1000 officials and works in close cooperation withother Directorate-Generals, for example in thefields of enlargement, the environment, research,and international relations. In particular DirectorateD “Clean transport & sustainable development”and Directorate E “Inland Transport” are relevantfor the automotive industry.

■ The DG External Trade promotes the economicand political interests of the EU in all aspects oftrade in goods and services (tariff and non-tariffbarriers, trade defense, particularly in cases ofdumping and subsidies, and export loans) as wellas key aspects of intellectual property, investment,and competition. It defines trade interests in bothdefensive and offensive terms; it negotiates bilat-erally, regionally, or multilaterally on the basis ofnegotiating directives proposed by theCommission and adopted by the Council. It alsomonitors and ensures the implementation of inter-national agreements by using the World TradeOrganization (WTO) dispute settlement systems.Issues related to the automotive industry are dealtwith by different Directorates. Directorate C dealswith questions of development and the manage-ment of free trade-agreements with Latin America,

16



ACP countries, and Iran. Directorate D covers thesame issues but for the neighborhood countriesand Southeast Asia. Directorate E deals withindustrial related trade issue and bilateral traderelations with the United States, Canada, Australia,New Zealand, and EFTA. Furthermore, the ques-tions of standards and certification and of auto-motive industry are handled in detail. Directorate Fis responsible for the coordination of subjects ofthe WTO, the General Agreement on Tariffs andTrade (GATT), the Organization of EconomicCooperation and Development (OECD), and traderelated assistance.

Lobbying in the Commission

Given its agenda-setting and drafting responsibilitiesin the earliest phase of policy formulation, the EUCommission is one of the prime targets for lobbyistswishing to influence EU regulation. Furthermore, it isan interesting venue for obtaining reliable informa-tion, particularly on planned or impending legislativemeasures. The EU Commission is a complex actor forexternal stakeholders to address. Its structure withthirty-six Directorate-Generals and its staff consistingpredominately of twenty-five nationalities requirelobbyists to have experience and close contactsbased on mutual trust in order to obtain access (letalone influence). Each of the departments has its ownmethods for consulting its respective sectoral interestgroups. The Commission, like any public bureaucracy,seeks to construct stable relationships with stake-holders, in order, for instance, to gain access to expertknowledge and to be able to pre-assess the impactof planned legislative measures and the chances fora smooth implementation. Apart from informalcontacts with lobbyists, the Commission regularlyconducts publicly announced consultations orinvolves lobbyists in “comitology” working parties oradvisory committees.

In December 1992, the Commission started toformalize its dialogue with stakeholders through aCommunication on its relationship with SpecialInterest Groups (SEC(92) 2272 final andSEC(92)2274 final). The Communication laid downfive principles and a number of measures to increasetransparency and define certain rules of conduct for

lobbyists and Commission officials. A White Paperand a Communication of Consultation Standards8

further refined these measures to structure the rela-tionships and to increase transparency.

As a consequence of the rapidly increasing numberof lobbyists in Brussels, the Commission has morerecently sought to establish a kind of “inner core” ofinterest groups. This approach picks up on one objec-tive the Commission put into its Communication asearly as 1992: to give privileged access to(con)federations of representatives of individual ornational organizations. The most recent move favorsde facto a small number of well-established interestgroups at the expense of a larger number of “non-aligned” or smaller ones. The result is “secondarylobbying,” meaning that the less structured and lessinfluential groups of corporate actors lobby thoseassumed to have access to the Commission.9 Thistendency is probably less relevant for the automotivecompanies, from among which, after the recentconsolidation, only a relatively small group of largeplayers remain. However, it is likely that theCommission’s new procedure will encourage actionthrough business associations in the automotivesupplier sector, which are often medium-sized companies.

The Council of the European Union

The Council is the EU’s main decision-making body.It represents the member states, and its meetings areattended by one minister from each of the EU’snational governments. Hence, it is the most importantinstitution for formulating national interests on theEuropean level. Depending on the Council’s decision-making procedure (unanimity or qualified majorityvoting10) national governments are able to blockCommission drafts when these are against nationalinterests. Up to four times a year, the presidentsand/or prime ministers of the member states, togetherwith the president of the European Commission, meetas the “European Council.” These “summit” meetingsresolve issues that could not be settled at a lowerlevel and define overall EU policy directions, giving theCouncil a major influence on the direction of integra-tion and consequently on the EuropeanCommission’s activities.

17



The Council of the European Union has six keyresponsibilities:

1. To pass European laws—jointly with the EuropeanParliament in many policy areas;

2. To coordinate the broad economic policies of themember states;

3. To conclude international agreements between theEU and other countries or international organiza-tions;

4. To approve the EU’s budget, jointly with theEuropean Parliament;

5. To develop the EU’s Common Foreign and SecurityPolicy (CFSP) based on guidelines set by theEuropean Council; and

6. To coordinate cooperation between the nationalcourts and police forces in criminal matters (seethe freedom, security, and justice section).

There is formally one legal institution “Council” but itscomposition varies along the policy fields. Forexample, the ECOFIN (Economic and FinancialAffairs Council) is composed of the economics andfinance ministers of the member states, as well as thebudget ministers when budgetary issues arediscussed. Altogether there are nine different Councilconfigurations: (1) General Affairs and ExternalRelations, (2) Economic and Financial Affairs(ECOFIN), (3) Justice and Home Affairs (JHA), (4)Employment, Social Policy, Health, and ConsumerAffairs, (5) Competitiveness, (6) Transport,Telecommunications, and Energy, (7) Agriculture andFisheries, (8) Environment, and (9) Education, Youthand Culture. For automotive lobbyists, the Councilconfigurations Consumer Affairs, Transport, Energyand ECOFIN (for trade issues) are relevant.

With the growing complexity and the increasing quan-tity of tasks, the daily work of the Council is handledby the administration below the ministry level, whichtakes 80 percent of the decisions. The Committee ofthe Permanent Representatives of the Member States(COREPER), is the major institution for dealing withthe drafts by the Commission. The PermanentRepresentatives (national ambassadors) prepare theactivities of the Council and carry out the assignmentsgiven by the Council. COREPER’s decisions arebased on the findings of the functional working

groups. The Permanent Representatives have acertain margin of negotiation granted them by nationalcapitals, with which they also continually hold consul-tations in the course of the negotiations. Whenever anagreement is made on committee level, this is put onthe Council’s agenda as an A-point and will simply berubber-stamped by the Council. The Council onlydiscusses B-points. The ministers themselves seldomtake decisions on B-points. Usually, these subjectsare sent back to COREPER.

The Council as Lobbying Target

The Council is often called the least accessible insti-tution for lobbyists. Its secretariat keeps no listings oflobbyists and argues that “all contact with lobbyistsand NGOs is handled by the EuropeanCommission.”11 Nevertheless, lobbyists influenceCouncil decisions through contacts with nationalrepresentatives, especially the permanent represen-tatives. The parallels to the European Commissioncan be seen insofar as decisions are prepared at theworking level as well. Only non-agreed upon issuesare forwarded to a higher level within the administra-tion. Hence, the highest demand for information (andthus potential openness to lobbyist contacts) existson the working level. Additionally, the national admin-istrations based in the member states are involved inthe position finding process. Contacts with membersof Council working groups are especially valuable ifthey allow access to reliable information aboutchanges being made to draft legislation.

Successfully lobbying the Council requires a widenetwork of contacts to lobby representatives fromseveral member states (with a special priority on therotating presidency) and to monitor the closed workinggroup sessions. Though it is impossible to generalizefrom this single case, the following example ofVolkswagen (VW) shows in how far national businessleaders may be able to exert direct influence on thenational representative in the Council (Minister orHead of State or Government). In 1999, FerdinandPiëch, CEO of the German car manufacturer VW,addressed the then fifteen EU governments in an openletter in his role of ACEA President, asking them tostop the “End of Life Vehicle Directive,” which waspassed by Parliament and could have been adopted

18



by the Environment Council without further debate.Probably more important than this open letter to allmember countries was Piëch’s influence on GermanChancellor Gerhard Schröder, a former SupervisoryBoard member of VW during his term as MinisterPresident of Lower Saxony.12 Germany held the EUPresidency at the time, and after the public interven-tion of Ferdinand Piëch it rapidly took the Directive offthe Environment Council’s agenda, conceding to theindustry’s interests. Companies had warned that carprices would rise if they were obliged to take backend-of-life-vehicles for free, an obligation aimed atmaking vehicle dismantling and recycling more envi-ronmentally friendly.

The European Parliament’s Role within theDecision-making Process

Each revision of the EU Treaties has increased thepower of the European Parliament in relation to theother institutions. Today, the European Parliament isfirmly established as a co-legislator, has budgetarypowers, and exercises democratic control over all theEuropean institutions. As interest groups generallygo where the power is, the European Parliament hasbeen identified by interest groups as a new channelof influence. In most of the issues relevant for theautomotive industry, it acts as a co-legislator.

The members of the European Parliament (MEPs) areelected every five years by the European citizenswithin their national election arena (while EU citizensresident in another member state have the right tovote in European elections in their host state). Intheory, MEPs belonging to the same party family forma faction based on a common ideology in order to beable to better defend their interests. In reality, therecan be important differences even within groups—between, for instance, the programmatic positions ofa German Christian Democrat and a BritishConservative, or a French Socialist and a DutchSocial Democrat. The stability of the factions there-fore often depends on the willingness of the MEPs tocompromise for the sake of a better, common, interestrepresentation. MEPs formulate their interests notonly with regard to the party family to which theybelong, but also (and in some cases foremost) againsttheir national background. Nearly three quarters of

the members of the European Parliament are repre-sentatives of countries in which the automotiveindustry is an important factor in terms of GDP andemployment. Furthermore, Conservative and LiberalMEPs are more open to producer interests.13 On theother hand, social, environmental, and consumer inter-ests, which may conflict with the interests of the auto-motive industry, also are well represented in theEuropean Parliament. The left wing and the GreenParty together hold nearly 40 percent of the seats.They are traditionally assumed to be defenders of theinterests formulated by social, environmental, orconsumer movements. However, given the close linkof some socialist/social democratic MEPs with auto-motive companies through labor unions or direct pres-ence in the work councils, they are often open to theindustry’s point of view if jobs are at stake.

The European Parliament as a Target forLobbying

Relevant for lobbying contacts are the twenty differentcommittees in which MEPs draw up reports onlegislative proposals by the European Commission.Lobbyists usually become active when the rappor-teur of the relevant committee starts preparing thereport, while discussions commence within thecommittee and the parliamentary groups. The rappor-teur and the committee chair are often the keypersons in forming the opinion of the EP. When impor-tant matters are at stake, lobbyists usually addressthese two MEPs by letter, explaining their position,and subsequently seek a personal meeting with theMEP. The parliamentary committees meet once ortwice a month in Brussels and debate publicly. TheParliament can also set up sub-committees andtemporary committees to deal with specific issues,and committees of inquiry under its supervisory remit.The parliamentary committee votes on the report and,possibly, amends it. When the text has been revisedand adopted by the plenary, the Parliament adopts itsposition.

Given the importance of the committees in the deci-sion-making process and the key role assigned to thecommittee chair and the rapporteur, it may be usefulto give a detailed picture of those committees thatdeal with issues related to automotive industry:

19



The power of the Environment, Public Health, andFood Safety (ENVI) committee rose through theextended responsibilities in the Union on environ-mental matters and through greater sensitivity to elec-toral demands for environmental and consumerprotection, as well as food safety and public healthmatters. In general, environmental protection meas-ures are (e.g. air, soil and water pollution, recycling,noise levels, climate change) relevant for the auto-motive industry.

The Industry, Research and Energy (ITRE)committee deals with industrial policy and the appli-cation of new technology. Relevant for the automotivesector are the decisions about the funding and aimsof the European Research Area. The last debates, forexample, on the establishment of so-calledTechnology Platforms (TP) provided possibilities forsetting directions for research policy in ERTRAC(European Road Transport Research AdvisoryCouncil) and, in the second step, applying forresearch funding.

The Committee on the Internal Market andConsumer Protection (IMCO) coordinates legis-lation in the sphere of the internal market and customsunion at the community level, in which the free move-ment of goods, including the harmonization of tech-nical standards, is of specific importance to theautomotive sector. Additionally, the committee dealswith measures aimed at the identification and removalof potential obstacles to the functioning of the internalmarket and the promotion and protection of theeconomic interests of consumers, except for publichealth and food safety issues.

The Committee on Transport and Tourism(TRAN) is responsible for matters relating to thedevelopment of a common road policy, among otherthings. Particularly, it deals with common rules appli-cable to transport within the European Union and theestablishment and development of trans-Europeannetworks in the area of transport infrastructure andtransport safety.

The Committee on International Trade (INTA) isresponsible for matters relating to the establishment

and implementation of the EU's common commercialpolicy and its external economic relations, in particular(1) trade relations with third countries and regionalorganizations and (2) relations with the WTO,including its parliamentary dimension. The committeeliaises with the relevant interparliamentary and ad hocdelegations for the economic and trade aspects ofrelations with third countries.

Looking into the committee structure enables lobby-ists to focus their efforts on a certain group of MEPswithin the relevant committees before the legislativetext goes to the Plenary. A limited number of MEPscan then be addressed more efficiently by correspon-ding with them in their mother tongue, and by takinginto account their dominant interests. For example, arethey more open to the industry or the environmentside of the argument? Is one of the key players in theindustry from the same country or region and able togain privileged access to the influential MEPs? MEPsfrom member states or sub-national regions in whichthe relevance of the automotive industry for employ-ment and the Gross National Product (GNP) or GrossRegional Product is important are most likely to beinterested in an exchange with automotive lobbyistsand to take their interests into the debates in thecommittees and the plenary.

The European Union Decision-making Process

Two thirds of European laws are adopted jointly by theEuropean Parliament and the Council. This co-deci-sion procedure also applies to policy areas such astransport, environment, and consumer protection. TheCommission launches a proposal to the Council andthe European Parliament. The European Parliamentdiscusses the proposal in the specific expert commit-tees and votes in the Plenary about the proposal andits amendments. Specific Council working groups willdiscuss the Commission proposal and theParliament’s amendments. The Council from thatpoint has two options:

1. It adopts all amendments made by the EuropeanParliament by a qualified majority vote. The newproposal becomes European law; or

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2. It adopts the proposal, but returns a so-called“common position” to the Parliament by qualifiedmajority voting.

The Parliament has to react within three months andhas four options:

1. The Parliament has no opinion. The proposal withamendments by the Parliament and the commonposition by the Council will be adopted;

2. The Parliament adopts the common position. Theproposal will be adopted;

3. The Parliament rejects the common position. Theproposal will not be adopted; or

4. The Parliament amends the common position.

The fourth option can result in another reaction by theCouncil. It can either adopt all amendments formu-lated by the European Parliament within three months.Alternatively, the Council can choose not to adopt allamendments by the European Parliament. Thesecond case leads to a so-called ConciliationCommittee, made up of representatives from alltwenty-five member states and twenty-five membersof the Parliament. This committee must find a solutionfor a final text within six weeks. If the matter can besettled the directive will become European law.Should the Conciliation Committee fail to agree, themeasure fails.

The detailed description and analysis of the role of theEuropean institutions within the political decision-making process have shown two major facts regardingthe promotion of interests. Firstly, a successful lobbyistmust have detailed knowledge of the policymakingprocess. Lobbyists have to select their addressesaccording to the specific stages of the process. Closecontacts based on trust and a high quality of informa-tion exchange enable lobbyists to get easier access todecision-makers when the policy cycle makes themthe prime target of lobbying activities. Table 1 summa-rizes the different stages of the political decision-making process and names the most relevant actor(s)to these different stages.

While the influence of the European Commission andthe Parliament increased with every Treaty revision,

the Council still has a key role in the decision-makingprocess. Hence, interest groups still consider nationalgovernments important addressees when promotingtheir interests in the EU policymaking process. Cross-industrial associations recognize the growing rele-vance of European institutions, while seeing amoderate decrease in the importance of nationalgovernments, national parliaments, and the regionallevel.

The Europeanization of the Regulation ofSpecial Interest Activities

Two developments have increased the presence ofbusiness interests in Brussels in the last decade.Firstly, business has shifted much of its lobbying activ-ities to the EU level because of the increasing regu-latory powers of the EU system. Secondly, and in aparallel development, EU institutions actively solicitinput from interests groups, a phenomenon known inparticular for civic interest groups (such as environ-ment, consumer protection, etc.) fostered explicitlyby Commission money. However, the Commissionalso seeks input from the business sector, the mostfamous example being the European Round Table ofIndustrialists (ERT),14 which played an instrumentalpart in the preparation of the Single European Act of1986, the Single Market Programme of 1992, and theAssociation for the Monetary Union of Europe, whichcontributed decisively actively to the EU and memberstates’ capacities to conceive and manage the tran-sition to the single European currency.15

With the increase of lobbying activities on the EUlevel, the need to regulate special interest activitieshas grown. Lobbying can be open to abuse as in anymember state. One recurrent phenomenon is theabuse of privileged access to obtain informationdishonestly, another is bribing officials. For the timebeing, the U.S. political system is stricter than the EUin terms of prescribing transparency requirements toavoid undue influence on policymaking and policy-makers. For instance, the Lobbying Disclosure Act inthe United States obliges PR firms and lobby groupsto list their clients, the issues they deal with, and themoney the receive to perform these tasks. In the EU,the Commission sets the minimum standards for the

21



consultation of interested parties in December2002.16 In addition, the Commission recommendslobbying groups, consulting companies, and interestrepresentatives to sign a voluntary code of conductdeveloped by the Society of European AffairsProfessionals and Public Affairs Practitioners.

The overview of the EU institutions and decision-making mechanisms suggests that the EU is notcomparable to the political arena that organized inter-ests encounter in nation states, including the UnitedStates. The EU system, based on twenty-five nationstates that remain decisive in decision-makingthrough their representation in the Council, is far morecomplex than a single nation state system.Furthermore, while the institutional setting and systemof competence assignments is usually stable in amodern democratic nation state, the EU setting is inconstant flux, as decision-rules and mechanisms havebeen revised on various occasions as a result ofprocesses of deepening and widening the EU. Whilethe last major revision dates back to the Nice Treatyof 2001, further reforms of decision-making havebeen negotiated (though not ratified) in the EUConstitutional Treaty. Despite the discrepancybetween the EU and United States in terms of trans-parency, more regulatory efforts are likely to follow inthe EU, given the growing presence and activity ofinterest groups in Brussels and the fact that publicskepticism towards lobbying activities is more impor-tant in Europe, where it is not automatically seen asa legitimate part of the political process and culture.

22



23


Table 1: Potential for Lobbying Intervention

Stage Potential addresseesRelevance ofthe actor

Main activityNeeds on the

institutionalside

Relevance of

the stage

Commission +++

Evaluation ofthe politicalproblem

Description ofthe problemand argumen-tation for aregulatory solu-tion

+++Council ++

European Parliament (EP) +

Commission: Directorates +++

Collection ofinformation

Evaluation ofdifferentoptions

Basic anddetailed infor-mation aboutthe technical,economic, andpolitical impactof the potentialregulationimplementation

+++

Commission:Consulting Committees andExpert Committees

++

Commission:Cabinets

+

Commissioner +

EP: Rapporteur / SecretaryCommittees

+

EP: (Factions, Committees) +

Commission: Directorates ++

Council: Working groups +Technicalreview

Review of theproposal andpolitical findingof a consensus(incl. packagedeals); politicalaspectsoutweigh thetechnical ones

COREPER +++Finding a polit-ical consensus

Ministers +

EP: Rapporteur / SecretaryCommittees

++ Political review

EP: Plenum / Committees + Finding a polit-ical consensus

Commission ++Looking for acompromise

COREPER +++Finding a polit-ical consensus

Ministers +

Commission +Detailed elabo-ration

Detailed elabo-rationregardingnational legis-lation; need fortechnical andlocal expertise

+

Comitology ++

Implementation

Member States +++ ++

+++: strong; ++: medium; +: weak

Source: own illustration based on Buholzer (1998)

Pre

para

tion

Initi

ativ

eD

ecis

ion-

mak

ing

Impl

emen

tatio

n


04CHAPTER FOUR


25


In the EU, there are two types of associations. Somegather together national associations with no directmembership for companies at the EU level. In theseassociations, corporate interests are first aggregatedon a national level, and then are confronted at theEuropean level in negotiations within the association.Other European associations, like the ACEA(Association of European Car Manufacturers) haveindividual companies as members that define thecommon interest they wish to defend in direct inter-action, without a filtering by national associations. Ingeneral, while national associations voice opinionsabout European issues, European associations rarelyformulate positions on national legislation and onlyfocus on the EU decision-making process.

European Associations

Major European associations and their members arelisted in Table 2. Most important on the European

level is ACEA, which counts both American andEuropean car manufacturers as members. Here, the“Europeanness” of the Associations is defined bytarget (EU regulation) not by membership structure.The Alliance of Automobile Manufacturers (AAM),acting more globally than ACEA, is an associationcontaining the major world car manufacturers. Thefollowing overview shows that the same companiesteam up in different associations that serve differentstrategic goals.

Germany as an Example of National Associations

The associations acting on the EU-level are comple-mented by national organizations that have verydifferent structures, degrees of representation, andinfluence in individual EU countries. Germany is acountry with a particularly high degree of organiza-tional participation and representation. This can be

As in the United States, the private sector uses various channels to access EUpolicymakers and to influence policy decisions. Larger companies have in-house-lobbyists. Independent of their size, most companies are members ofassociations representing e.g. a certain sector’s interest. Some countries alsoemploy external professional lobbyists acting on their behalf. Nevertheless, anEU-U.S. comparison shows that differences in the structure of institutionalactors remain. The structure of the lobbying actors in the EU reflects to a largeextent the multi-level character of the EU decision-making system, especiallyinsofar as business associations are concerned. The fact that there is an“extra” level of interest aggregation adds complexity.

PROMOTING INTERESTS THROUGH DIFFERENT CHANNELS: ASSOCIATIONS AND INDIVIDUAL COMPANIES


26


Table 2: Major European Automotive Interest Groups

Members Remarks

Alliance of Automobile Manufactures(AAM)

BMW GroupDaimlerChrysler Ford Motor CompanyGeneral MotorsMazdaMitsubishi MotorsPorscheToyotaVolkswagen

Acting in the European, Asian, andU.S. political arenas. Common posi-tion papers or claims.

Association des ConstructeursEuropéens d’Automobiles (ACEA)

PSA Peugeot CitroênMAN GroupVolkswagen AGVolvoRenault / NissanFiatFordBMW AGScaniaDAFGeneral MotorsPorscheDaimlerChrysler

Acting mainly on the European level.

Association des ConstructeursEuropéens de Motocycles (ACEM)

Aprilia S.p.A.BMW AG - Motorcycle divisionDerbi Nacional Motor s.a.Ducati Motor Holding S.p.AHonda Europe Motorcycle s.r.l.KAWASAKI MOTORS EUROPE n.v.KTM - SportMotorcycle AGPeugeot MotocyclesPiaggio & C. S.p.A.Suzuki Motor CorporationTriumph Motorcycles Ltd.Yamaha Motor Europe n.v.

European Motorcycle Manufacturers,Acting mainly on the European level.

European Association of Automotive

Suppliers (CLEPA)

It represents 68 of the world’s mostprominent suppliers for car parts,systems and modules and 22National trade associations andEuropean sectoral associationsrepresenting more than 3,000companies, employing more thanthree million people, covering allproducts and services within theautomotive supply chain.


Association

explained by the high relevance of the German auto-motive industry in terms of market share and employ-ment not only in Germany, but also in Europe and therest of the world. Furthermore, it is often argued thatthe representation of German industrial intereststhrough the German government or the representa-tions of the regions (Landesvertretungen) is lessaggressive than is the case for other countries, forinstance France. The major German automotiveinterest association is the German Association of theAutomotive Industry (VDA). It consists partly of auto-mobile manufacturers and their development part-ners, the suppliers, and partly of the manufacturers oftrailers, body superstructures, and containers. The

fact that automobile manufacturers and suppliers aremembers of a joint association is uncommon at theinternational level: in many other countries, thedifferent companies belong to separate associations.As shown above, German companies are alsomembers of the different European associations.Additionally, German car producers have individualrepresentative offices on the national and Europeanlevels.

Promoting Individual Interests

While automotive companies use European andnational associations to promote common interests,

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Association for Emissions Control byCatalyst (AECC)

Argillon GmbH, GermanyCorning GmbH, GermanyDelphi Automotive Systems SA,LuxembourgEmitec Gesellschaft fürEmissionstechnologie mbH, GermanyEngelhard Technologies GmbH,GermanyIbiden Deutschland GmbH, GermanyJohnson Matthey PLC, UK NGK Europe GmbH, GermanyRhodia Electronics and CatalysisSAS, FranceUmicore AG&Co. KG, Germany

European Caravan Federation (ECF)

It consists of thirteen caravanningfederations and numerous nationalmembers of the caravanning industrywithin the EU member states. Thesemembers are involved in the produc-tion, the sales and the use of touringcaravans, motor caravans and mobilehomes (known as caravan holiday-homes in the UK) and the supply ofspecialist parts and services to theindustry.

European umbrella organizationrepresenting the national organiza-tions of the European CaravanningIndustry. Only active on the Europeanlevel.

European Council for AutomotiveR&D (EUCAR)

DaimlerChryslerFordPorscheRenaultVolvoPSA Peugeot CitroënBMW AGOpel AGFiatVolkswagen

Following on from the scientific coop-eration carried out by the (JRC),EUCAR fosters strategic cooperationin research & technological develop-ment (R&TD) activities. Only active on the European level.



they also promote individual interests through their in-house-lobbyists, mostly directly present in Brussels,or engage lobbying consultancies. Hull emphasizesthat public relations firms on the whole are not wellregarded because of their propensity toward sellingwell-prepared stories for a particular meeting.17

Professional lobbying firms can offer a compositelobbying service based on accurate, comprehensive,and up-to-date information about issues of concern toa client. Former diplomats tend to be unconvincingand recently departed former Community officials aretreated with some suspicion. In general, it can be saidthat lobbyists who are not part of a company or a busi-ness association are perceived as unable to offer thetechnical expert knowledge that Commission officialswould be interested in. Thus, industrial lobbying ismore likely to be successful if associations or indi-vidual companies directly engage and offer first-handinformation in exchange for influence.

Combining Different Channels of Interest Promotion

Associative lobbying and the activities of in-house-lobbyists complement each other well. By usingdifferent and parallel channels, companies paradoxi-cally seem to increase the efficiency of their lobbyingactivities. National associations not only provide moreconcrete information on national legislation, e.g. thetransposition of EU legislation, but also provide rele-vant contact points to influence national positionstaken in the COREPER and the Council. Membershipin European associations, on the contrary, increasesthe chances to be informed early about EU develop-ments, such as e.g. legislative initiatives, and to influ-ence the content of EU regulation. The Commissionis more likely to pay attention to input from Europeanassociations as it assumes that a corporateconsensus presented by a European association is ofhigher relevance than the input of individual compa-nies or national associations. Associations with globalmembership offer EU-based companies the chanceto gain insider knowledge about regulation in otherrelevant markets. Today, the structure of the associa-tive membership shows that major car manufacturersact transnationally, not only in production and sales,but also in the promotion of their interests. The promo-tion of interests through different channels and on

several levels mirrors the complex decision-makingprocesses in the EU. Empirical research on the forma-tion of interest groups demonstrates a correlationbetween the deepening of the integration processand the growing number of interest groups on theEuropean level and the foundation of European asso-ciations, respectively.18

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29


05CHAPTER FIVE


31


Two Modes of Regulation and their Impact on Lobbying Strategies

A distinction between supply-side and demand-sidemeasures and procedures can be made. Regulationsaffecting the supply-side have an impact on thevarious parts of the value chain such as procurement,construction, production, distribution, or services andare likely to influence the cost structure of the auto-motive industry. The early anticipation of regulationsthat affect the supply-side are likely to influence theindividual company’s competitive position in themarket. Whether supply- or demand-side orientedregulation is at stake, companies are likely to actcollectively through sectoral associations. However, inthe case of supply-side regulation, companies aremore likely to seek their competitive edge throughearly anticipation of the measures and similar moves.The following list comprises recent initiatives taken bythe European Commission:

■ Block exemption: regulating the distribution of carsand vehicles;

■ Industrial design protection and design patents;■ Registration, evaluation, authorization, and restric-

tion of chemicals (REACH);■ End-of-Life vehicle directive;■ CO2 voluntary commitment;■ Mobile air conditioning (MAC): work on possible

options to reduce emissions of fluorinated green-house gases from air conditioning systems fitted toor designed for vehicles;

■ EURO 5: setting new limits for particle emissionsand other gaseous pollutants for light duty vehiclesfor the medium terms;

■ Pedestrian protection directive: a measure toreduce injuries to pedestrians and other vulnerableroad users who are hit by frontal surface of vehi-cles.19

Demand-side oriented regulation affects consumerbehavior and the use of motor vehicles. These inter-ventions usually impact business-to-business as wellas business-to-consumer relations. Recent policymeasures the EU Commission has envisaged are:

■ Taxation: harmonization of fuel taxes and restric-tions which currently differ widely across the EU byfuel category (petrol versus diesel), customersegment (industrial versus private use) andpurpose (heating etc.);

■ Fostering bio-fuels: a new directive will allow taxbreaks for hydrogen and bio fuels;

■ Harmonization of rules and penalties, i.e. disre-garding road signs, laws on drunk-driving or speedlimits;

■ Setting common limits on the working hours oftruck drivers;

■ Harmonization of weekend bans for trucks.20

While both supply- and demand-side oriented regu-lation affect the business perspectives of the auto-mobile industry, the effect of supply-side orientedmeasures is likely to be more direct and more easily

As Chapter 3 has shown, the automotive industry is affected by regulatoryactivities in various policy fields. This chapter first classifies the wide variety ofpossible cases by grouping them into supply- and demand-side measures. Thesubsequent case study on emissions regulation then illustrates the specificitiesof EU regulative lobbying.

CASE STUDY: EMISSIONS REGULATION


discernable. Intensive lobbying activities are to beexpected. With regard to emission regulations, oneconcrete example is discussed in detail here. RobinPedler was the first to investigate the case of emissionregulations in detail. He found a limited scope forinterest group influence in the regulatory process.Our analysis of the literature and empirical investiga-tion however, hints at the fact that, although Pedlersees a limited scope for interest group influence in theregulatory process, our analysis of the literature andthe empirical material hints at the fact that intensiveindustrial lobbying was going on from the start andprobably counter-balanced the influence of environ-mental interest groups. The following takes intoaccount Pedler’s analysis but completes it by furtherour own interviews and research.21 The case studyillustrates the complete process starting with formu-lation of a Commission draft based on its compe-tences given by the European Treaties and thepolitical guidelines formulated by the Europeangovernments. Furthermore, given the fact that it fallsunder the co-decision procedure, this case involvesall major EU institutions, the Commission, the Council,and the European Parliament. Commission officialsand representatives of interest groups have confirmedthat this case illustrates the work and time process oflobbying work on the European level very well.

Emissions Regulation: How Lobbying Worked

The European Union began trying to limit exhaustemissions in 1970. Controls became progressivelytighter and were extended to all kinds of vehicles. Thelatest Exhaust Emissions Directive was launched in1996. It was adopted under the “First Pillar” of theEuropean Union Treaty.22 The Commission had theright to initiate and draft a formal proposal to theEuropean Parliament and the Council. Environmentalpolicy is subject to co-decision and thus allows theEuropean Parliament to exercise its power. BothDirectives were decided by conciliation in 1998.

The process towards the new directives started in1994, as soon as the previous Exhaust EmissionsDirective had been adopted. This may be viewed asa limited success for a powerful lobby, as the institu-tions faced criticism from the automotive motorindustry. The main issue of the automotive industry

was that the previous legislation had adopted manyof the details of the U.S. legislation, which had beendeveloped on different car and road conditions andwas therefore not adequate for the European Union.A second issue was that future legislation shouldfocus not only on output (exhaust emissions), but alsoon input (fuels), and that there would be much poten-tial environmental improvement from cleaning uppetrol and diesel inputs. The latter brought the oilrefining industry directly into play.

From the European Commission’s side, threeDirectorate-Generals were involved: “Industry,”“International Markets (Section Transport),” and“Environment.” Parallel to the technical research,chaired by DG Environment, there was a cost-effec-tiveness study commissioned by DG Industry.Meanwhile, the DG Environment launched its ownparallel studies on ambient air quality. The technicalresearch program (The European Programme onEmissions, Fuels and Engine Technology (EPEFE))was a tripartite operation, co-funded by the EU andbringing together the Commission and the two majorindustry concerns. Both powerful industries, carmanufacturers represented by the European VehicleManufacturers’ Federation (ACEA) and the oilindustry, were involved. They assisted actively withthe research, applying their own resources and tech-nical back-up. While European and American carcompanies are involved in ACEA, the Japanese AutoManufacturers Association (JAMA) and Toyota itselfhad to press hard with the Commission to be includedin the consultation process, and were forced tocontinue separate lobbying.23

Although these were particularly controversial direc-tives, the schedule from drafting to adoption wastypical: two years of hard work and research to draftthe Commission proposals (1994-96) and thenanother two years of strong argument and amend-ments for it to go through the full adoption process(1996-98). The outcome of the technical researchprogram EPEFE fed into the Commission’s proposalwhich suggested a reduction of up to 40 percent inthe level of emissions. This level was clearly below thereduction demanded by the European Parliament inthe debate on the 1994 Directive. Nevertheless, theautomotive industry claimed that an “unfair burden”was created by this directive. So despite being

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consulted intensively in the drafting process, theindustry still chose a confrontational take on the draft.It was not able to shift the burden through subse-quent lobbying—but likewise, the burden did notincrease despite the implication of the EuropeanParliament in the co-decision procedure.

However, the Parliament was indeed able to use theco-decision procedure to reintroduce some of itsdemands. After the release of the Commission’sformal proposals in July 1996, they went through tothe European Parliament and the Council of Ministersfor consideration, amendment, and agreement. Thelead committee in the European Parliament was“Environment,” then chaired by Ken Collins (ScottishSocialist). Another important role was played by therapporteur on the Exhaust Emissions Directive, whosejob was to coordinate his colleagues’ views and drafttheir joint opinion (Bernd Lange, Socialist; NoëlMamére, Radicals; Heidi Hautala, Greens).Parliamentary committees were subject to vigorousand sustained lobbying, both through person-to-person contact and written submissions.

On the Fuels Directive, the Committee was moreaggressive, substantially reducing the Commission’sproposed limits on all the chemicals concerned andinserting lower but mandatory levels for 2005. Onexhaust emissions, the Environment Committee of theEuropean Parliament decided to go for “fewer butstronger” amendments.

As a result, however, the Parliament merelydemanded a minor change with respect to diesel vehi-cles and their maximum emission levels. In the end, allother permitted emissions were identical to the valuesof the Commission’s proposal. The Parliament,however, reached some important additional conclu-sions:

■ The car industry has to take into account toproduce “more environmentally friendly vehicles”;

■ The car industry agrees to use advanced computertechnology to improve emission eliminationperformance in every car;

■ Member states may encourage “cleaner” vehicleswith tax incentives;

■ The Commission gets the mandate to continue thenegotiations and research to set further standardsbeyond the standards is set for the year 2005.

“Diffuse interest” non-governmental organizationsformed a campaign alliance “working for environ-mental sustainability.” These consisted of: Bird LifeInternational, Climate Network Europe, EuropeanEnvironment Bureau (EEB), Friends of the Earth,Greenpeace, Transport and Environment (T&E), andWorld Wide Fund (WWF). These NGOs were organ-ized into seven large working groups to look atdifferent aspects of the policy.

The European Commission tried to re-establish itsrole as the proponent of “Clean Air for Europe.” Partof this strategy is the goal “Auto Oil II,” for which theEuropean Commission worked together with theabove-mentioned alliance. Meanwhile it kept and isstill keeping large industries close to the process andprofiting from their technical expertise. Anotherchannel of influence, apart from the Commission inthe drafting phase, open to automotive lobbyists wasthe Council via national representatives. The industryassociations and their large (company) memberscould play the “national” card to individual member-state governments. This was particularly the case inGermany, France, Italy, Spain, and Belgium for the carindustry and in the UK, the Netherlands, and Francefor the oil industry.24

Assessment

Even though the representatives of the automotiveindustry complained about the Commission’s draft,the industry was able to influence it considerably.Their early participation in comparison to environ-mental protection associations enabled a betterstrategic position for promoting technical expertiseand interests that ACEA in particular fed into theprocess. Also, the simple fact that the Commissionput the issue of emissions regulation on the agendaas quickly as it did, seems to be a reaction to corpo-rate pressure. The European Parliament was able tobring in additional points. With regard to the hardfacts like the prescribed emission values, however, itonly demanded a change of one minor value.Nevertheless, it did satisfy environmental interests by

33



introducing setting new milestones for future regula-tion–the Directive calls on the industry “to produce‘more environmentally friendly vehicles.’”

There are two conclusions from the case study, whichcould be tested on other cases: Firstly, major changesto the Commission’s draft are unlikely once it hasbeen handed over to the Council and the EuropeanParliament. In the case study, the main impact on theregulation was achieved by working together with theCommission, which, in turn, was already in closecontact with national administrations seeking topresent a legislative proposal which could becomeconsensual. Secondly, the Parliament has a growinginfluence and addresses environmental issues.Historically, the environmental protection associationshave a better relationship and access to theParliament than to the Commission. In the past,industry associations almost neglected theParliament. Given the fact that MEPs do not haveback-office staff like members of Congress in theUnited States, technical expertise is needed.

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35


06CHAPTER SIX


While consumers still tend to buy “national” brands,the industry, through recent consolidations involvingcross-border mergers and acquisitions, can be seenas a globalized one, featuring some corporations thatare firmly rooted in more than one continent (e.g.DaimlerChrysler or Renault-Nissan). If not throughmergers or acquisitions, most automotive companiesare internationalized by running production sites incountries with a low cost structure. These increasinglyinternationalized companies are facing national orregional political entities whose regulatory activities inpolicy fields as diverse as environmental policy, taxpolicy, consumer protection, or taxation directly affectthe companies’ competitiveness and the behavior ofconsumers. In order to influence any relevant regula-tion, automotive companies invest considerable effortin lobbying activities. Through these activities, theyhave adapted to the continuously changing environ-ment of the EU multi-level system. With the growingregulatory power of the EU and the increasing involve-ment of the EU institutions such as the EuropeanParliament in the legislative process, corporate lobby-ists have had to become increasingly active inBrussels and the capitals of the EU member states.

To succeed in their mission in the complex world ofEU policymaking, lobbyists need an in-depth knowl-edge of the processes and people involved. Closepersonal contacts and a good personal reputationare essential. A large part of lobbying works throughan exchange of expert knowledge between corporate

representatives with detailed insider knowledge, onthe one hand, and civil servants or MEPs, whodepend on external input to deliver a high-qualityoutput, on the other. The chance of expert informationbeing fed into the policy formulation process isgreater if the corporate lobbyist is personally knownas a trustworthy person and information provided inthe past has been reliable. The timing of lobbyingefforts is also crucial. Lobbyists must approach therelevant people at the precise moment, e.g. when theCommission is in the key phase of refining itsproposal, or an EP committee rapporteur is draftingthe report. The EP, which has been underestimated bybusiness interests for some time, now enjoys strongattention among lobbyists, especially given itsperceived bias in favor of environmental issues overindustrial competitiveness.

Lobbyists will be most successful if they adapt theirstrategies as much as possible to their institutionaltargets. The EU Commission, because of its interestin strengthening its own position in policymaking, hasa major interest in bringing proposals to the politicaldecision-making process that contain the “best”compromise that could be accepted by all politicalplayers. Thus, the Commission is not only heavilydependent on the expertise brought in from outsidethe institutions, it also very carefully selects trust-worthy sources of information. In the first policyphase, the Commission is the primary target of anylobbyist or interest group. Early thinking on any

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CONCLUSION

This study has shown the ways in which corporate lobbying, and more specifi-cally, automotive interest representation, has adapted to the new decision-making system created by the deepening integration of the European Union.The automotive sector is a particularly interesting example. It is not only thesingle most important industry in terms of output and employment in the EU,but it is also a sector that is subject to increasing competitive pressure, notonly among the industrialized countries, but also from emerging markets.


proposal usually takes place in the office of theCommission official who will have the responsibilityfor drafting legislation. Constant contact withCommission officials is crucial for lobbyists in orderto learn as early as possible about new proposals. Asthe example of emissions regulation has shown, thegreatest impact can be made during the period ofdrafting the proposal. In general, the final proposaladopted by the Council contains at least 80 percentof the original Commission draft. The official who isdrafting the legislation is usually in need of ideas andinformation. A lobbyist who is recognized as beingtrustworthy and a provider of reliable information canhave an important impact at this stage, especiallywhen the know-how is presented as objectively aspossible and underlined with (research) data basedon sound and accurate information. Handing over awell-grounded position paper to the civil servant isadvisable.

Commission officials tend to appreciate representa-tive lobbyist or interest groups that can speak onbehalf of a cross-section of interests throughout theindustrial sector rather than in the interest of an indi-vidual company. However, if the interest group has awide presentation role and can only represent thelowest common denominator, input from individualcompanies with specific interests can be more useful.While working-level officials should probably be thepriority targets because of their willingness to talk, thehigher the officials’ position in the Commission hier-archy, the more open to discussion the individual islikely to be. Middle-ranking officials are more likely toview talking to lobbyists as a greater risk.25

Successful lobbying results in a strategy consistentwith the strategy of the DG while emphasizing theEuropean value added. Furthermore, rivalry betweenDGs, stemming from different approaches and polit-ical agendas (strengthening the EU’s economicpower vs. environmental protection), on the one handand, from individual power seeking strategies ofCommissioners or Directors-General on the otherhand, can provide openings to influence the decision-making processes while issues that overlap compe-tences are on the political agenda.

There are also possibilities for influencing the deci-sion-making process at the cabinet level within the

Commission. This, however, is not a straightforwardtask. The Commissioners and their staff mayremember that an interest group has already had itssay via the usual consultation process at the servicelevel. This could result in a loss of reliability and couldbe an obstacle for a group’s influence over the nextrelevant issue. The national card could be played onthe cabinet level by persuading other cabinets toblock proposals or introduce last-minute changes.This strategy, however, could reduce the confidencelobbyists may enjoy among officials on the workinglevel.

Once the Commission itself has agreed upon aproposal and sent it to the Parliament and Council,the scope for changing the proposal switches to theEuropean Parliament through individual members oreven whole political groups. However, the extent ofpossible influence exists only at the margin, involvingabout 20 percent of the total proposal. This minorinfluence can be explained by the strategic agendasetting behavior of the Commission. The Commissiontries to formulate the best compromise in the firstdraft by submitting proposals that experts helped todraft. During this process, it considers the differentpositions of national governments to ensure that theproposal will be adopted.

Generally speaking, there are two ways to go aboutlobbying in the European Parliament. The first involveswritten submissions. These should be very conciseand written in the mother tongue of the correspondingMEP. The members of the European Parliament havefewer back-office staff than e.g. representatives in theU.S. Congress and have very busy schedules, sowritten submissions play a more important role thanthey do with Commission officials. Ideally, writtensubmissions should be addressed to the members ofthe parliamentary committees and the secretariats ofpolitical groups that advise the MEPs. For person-to-person contacts, the relationships will be lessenduring than with Commission officials, as rappor-teurs change.

For the Council, there are opportunities to talk tonational officials in the Council working groups(COREPER) involved in the discussion of proposals.The scope for influencing them, however, is limited

38



and following the recent enlargement, their voice isoften just one in twenty-five, although the asymmet-rical power of the member states through their voting(and economic) power should also be borne in mind.A likely trend is that more and more issues will behandled by majority vote. Thus, the pressure for acompromise (minimal output) is immanent. Despitethese developments and the growing influence of theCommission and Parliament, the Council is still animportant player within the EU decision-makingprocess. Targeting COREPER as well as nationaladministrations is strategically useful for promotinginterests. The success of companies depends on howwell they can play the “national card” vis-à-vis nationaladministrations. Automobiles and the automotiveindustry are still a national issue for consumers (i.e.voters) and, hence, for politicians. Firstly, automobilesstill reflect a national symbol despite of more transna-tional company organization and car production and,secondly, the automotive industry is of great impor-tance to economic development and national employ-ment structures. European car producers are thusable to play the national card and are in a better posi-tion to influence the Council than American or Asianproducers.

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41


Austin-Smith, David (1993), “Information and Influence: Lobbying for Agendas and Votes,” in American Political ScienceReview, Vol. 37, 799-833.

Bouwen, Pieter (2003), “Theoretical and Empirical Study of Corporate Lobbying in the European Parliament,” in EuropeanIntegration Online Papers (EIoP), Vol. 7, No. 11.

Buholzer, René (1998), Legislatives Lobbying in der Europäischen Union: Ein Konzept für Interessengruppen, Paul Haupt

Berne Verlag, Bern, Stuttgart, Vienna.

Collignon, Stefan/Schwarzer, Daniela (2003), The Power of Ideas. Private Sector Involvement in the Euro, Routledge, London.

Eising, Rainer, Kohler-Koch, Beate (eds.) (1999), The Transformation of Governance in the European Union. London/New York.

Eising, Rainer, Kohler-Koch, Beate (1995), Inflation und Zerfaserung: Trends der Interessenvermittlung in der EuropäischenGemeinschaft, Mannheim.

European Commission: COM (2001) 428 final: European Governance. White paper, Brussels, 25 July 2001.

European Commission: COM (2002) 704 final: Towards a Reinforced Culture of Consultation and Dialogue - GeneralPrinciples and Minimum Standards for Consultation of Interested Parties by the Commission. Communication from the

Commission, Brussels, 11 December 2002.

European Commission (2004): European Competitiveness Report 2004, Brussels.

European Commission (2005a): CARS21 - A Competitive Automotive Regulatory System for the 21st century. Final Report,Brussels.

European Commission (2005b): Key Indicators on the competitiveness of the EU’s automotive Industry, Memo 05/7, Brussels.

European Parliament (2003): “Lobbying in the European Union: Current Rules and Practices.” Constitutional Affairs Series, 04-

2003.

European Parliament (2005a): Committees – Environment, Public Health and Food Safety, Download:

http://www.europarl.eu.int/activities/expert/committees/presentation.do?committee=1239&language=EN

European Parliament (2005b): Committees – Industry, Research and Energy, Download:


European Parliament (2005c): Committees – Internal Market and Consumer Protection, Download:


European Parliament (2005d): Committees – Transport and Tourism, Download:


European Parliament (2005e): Committees – International Trade, Download:


European Parliament (2005f): MEPs by member state and political group – sixth parliamentary term, Download:

http://www.europarl.eu.int/members/expert.do?language=EN

REFERENCES


Fischer, Klemens (1997), Lobbying und Kommunikation in der Europäischen Union, Verlag A. Spitz, Berlin.

Hull, Robert (1993), “Lobbying Brussels: A View from Within,” in Hesse, Joachim Jens / Wright Vincent eds., Lobbying in theEuropean Community, Oxford University Press.

Kohler-Koch, Beate (1996), “Gestaltungsmacht organisierter Interessen,” in Jachtenfuchs, Markus / Kohler-Koch, Beate eds.,

Europäische Integration, Opladen, 193-222.

Lohmann, Susanne (1995), “Information, Access, and Contributions: A Signaling Model of Lobbying,” in Public Choice, Vo. 85,

267-284.

MZES – Mannheimer Zentrum für Europäische Sozialforschung (2000), “Die Europäisierung der Interessenvermittlung,

Forschungsprojekt,” Research Report, Universität Mannheim.

Pedler, Robin (2002): “Clean Air and Car Emissions: What Industries and Issue Groups Can and Can’t Achieve,” in Pedler,

Robin (ed.): European Union Lobbying – Changes in the Arena, Palgrave, New York.

Der Tagesspiegel, “Bonner Vollbremsung nach Piëchs Brandbrief,” 29 May 1999.

VDA – Verband der Automobilindustrie (2005): Auto Annual Report 2005, Frankfurt.

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1 European Commission (2005b): Key Indicators on the competitiveness of the EU’s automotive Industry, Memo 05/7, Brussels.

2 See Klemens Fischer, Lobbying und Kommunikation in der Europäischen Union, (Berlin Verlag A. Spitz, 1997), and Pieter Bouwen, “Theoretical andEmpirical Study of Corporate Lobbying in the European Parliament,” in European Integration online Papers (EIoP), Vol. 7, No. 11, 2003.

3 See Susanne Lohmann, “Information, Access, and Contributions: A Signaling Model of Lobbying,” in Public Choice, Vol. 85, 267-284; David Austin-Smith,“Information and Influence: Lobbying for Agendas and Votes,” in American Political Science Review, Vol. 37, 799-833; and Stefan Collignon and DanielaSchwarzer, The Power of Ideas. Private Sector Involvement in the Euro (London: Routledge, 2003).

4 European Commission, European Competitiveness Report 2004, 155.

5 ibid.

6 European Commission, http://europa.eu.int/comm/enterprise/automotive/index_en.htm

7 European Parliament 2003: 2.

8 COM(2001)428 fin, 12 October 2001 and COM(2002)704 fin, 11 December 2002.

9 European Parliament 2003: 38f.

10 Decisions in the Council are taken by vote. The larger a country’s population, the more votes it has, but the numbers are weighted in favor of the lesspopulous countries: Germany, France, Italy, the United Kingdom: each 29; Spain, Poland: each 27; The Netherlands: 13; Belgium, Czech Republic, Greece,Hungary, Portugal: each 12; Austria, Sweden: each 10; Denmark, Ireland, Lithuania, Slovakia, Finland: each 7; Cyprus, Estonia, Latvia, Luxembourg, Slovenia:4; Malta: 3 ( total: 321). On most issues, however, the Council takes decisions by “qualified majority voting” (QMV). A qualified majority is reached, when amajority of member states (in some cases a two-thirds majority) approve and when a minimum of 232 votes is cast in favor–which is 72.3 percent of thetotal. In addition, a member state may ask for confirmation that the votes in favor represent at least 62 percent of the total population of the Union. If this isfound not to be the case, the decision will not be adopted.

11 Quoted in European Parliament 2003: 42.

12 Der Tagesspiegel, “Bonner Vollbremsung nach Piëchs Brandbrief,” 29 May 1999.

13 European Parliament 2003: 36.

14 European Parliament 2003.

15 Collignon and Schwarzer, compare, in particular, Chapters 3 and 4.

16 COM(2001)428 fin, 12 October 2001 and COM (2002)704 fin à COM (2002)704 final, 11 December 2002.

17 Robert Hull, “Lobbying Brussels: A View from Within,” in Joachim Jens Hesse and Vincent Wright eds., Lobbying in the European Community, (Oxford:Oxford University Press, 1993).

18 Rainer Eising and Beate Kohler-Koch, Inflation und Zerfaserung: Trends der Interessenvermittlung in der Europäischen Gemeinschaft, (Mannheim:Publisher, 1995); Rainer Eising and Beate Kohler-Koch, (eds.), The Transformation of Governance in the European Union (London/New York: Routledge,1999); Beate Kohler-Koch, “Gestaltungsmacht organisierter Interessen,” in Markus Jachtenfuchs, Beate Kohler-Koch, eds., Europäische Integration,(Opladen: Leske und Budrich, 1996) 193-222.

19 European Commission, European Competitiveness Report 2004, (Brussels) 209.

20 European Commission, European Competitiveness Report 2004, (Brussels) 210.

21 Robin Pedler, “Clean Air and Car Emissions: What Industries and Issue Groups Can and Can’t Achieve,” in Robin Pedler, (ed.), European Union Lobbying– Changes in the Arena, (New York: Palgrave, 2002).

22 The Commission launched the Proposal COM/1994/559/Final in 1994. Parliament and Council Directive 96/1/EC amending Directive 88/77/EEC onthe approximation of the laws of the member states relating to the measures to be taken against the emission of gaseous and particulate pollutants fromdiesel engines for use in vehicles.

23 Pedler, 111.

24 Pedler, 114.

25 Hull, 87.

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NOTES



Located in Washington, D.C., the American Institute for Contemporary German Studies is an independent, non-profit public policy organization that works inGermany and the United States to address current and emerging policy challenges. Founded in 1983, the Institute is affiliated with The Johns HopkinsUniversity. The Institute is governed by its own Board of Trustees, which includes prominent German and American leaders from the business, policy, andacademic communities.

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