W--- B-- B------- --------- P-L-CY------- --- --------- --- ------ ALTEREU C--P----- C-P---- -- ----P- ALTER-EU, Alliance for Lobbying Transparency and Ethics Regulation, Rue d’Edimbourg 26, 1050 Bruxelles [email protected] IN EUROPE CAPTURE CORPORATE Corporate capture 1 2 Published in September 2018 by the Alliance for Lobbying Transparency and Ethics Regulation in the EU (ALTER-EU) Editor: Rachel Tansey Editorial team: Claudio Cesarano, Paul de Clerck, William Dinan, Myriam Douo, Olivier Hoedeman, Nina Katzemich, Margarida Silva, Rachel Tansey Thanks to: the ALTER-EU steering committee members for their valuable feedback Cover and design: Capucine Simon ALTER-EU is a coalition of over 200 civil society groups and trade unions concerned with the increasing influence exerted by corporate lobbyists on the political agenda in Europe. ALTER-EU ran the Politics for People campaign at the 2014 EU elections which gained the support of 180 MEPs, all of whom have pledged to “stand-up against the excessive lobbying influence of banks and big business”. ALTER-EU, Alliance for Lobbying Transparency and Ethics Regulation, Rue d’Edimbourg 26, 1050 Bruxelles [email protected] EUTR registration: 2694372574-63 This book is freely available online in a pdf version for printing: https://www.alter-eu.org/corporate-capture-in-europe Individual chapters © their authors 2018; book as a whole © ALTER-EU 2018 Creative Commons Attribution-ShareAlike http://creativecommons.org/licenses/by-sa/3.0/ Corporate capture 3 summary 4 4 — Introduction How ALTER-EU identifies corporate capture 14 — Case study 1 The Banking Sector Kenneth Haar, Corporate Europe Observatory 26 — Case study 2 Trade Policy and the Case of TTIP Paul de Clerck, Friends of the Earth Europe 36 — Case study 3 The Gas Industry Myriam Douo, Friends of the Earth Europe 46 — Case study 4 Tax Policy in the Netherlands Jasper van Teeffelen, Lobbywatch 54 — Case study 5 The Pharmaceutical Industry Rachel Tansey, Writer and researcher 64 — Case study 6 Data Protection and Privacy Policies Léa Caillère Falgueyrac, Researcher 76 — Case study 7 The Arms Industry Bram Vranken, Vredesactie 88 — Case study 8 Dieselgate and the German Car Industry Nina Katzemich, Lobbycontrol 104 — Conclusion 108 — Recommendations Corporate capture 5 introduction 6 This report examines the extreme and undue influence of big bu- siness on European Union (EU) and member state decision-making pro- cesses. It has been produced by the Alliance for Lobbying Transparency and Ethics Regulation (ALTER-EU) as a response to the distortions we witness in policy and law making at EU-level and across a wide number of member states. Citizens expect decision-makers to regulate in their interests, to be ambitious and to achieve the best possible outcomes, but the reality often fails to live up to expectations, with weak or disap- pointing laws benefiting mainly big business interests. ALTER-EU’s experience, and that of our members across Europe, points to excessive corporate influence over policy-making as being a key reason for this. At times, this influence is of such an extreme de- gree that we talk about corporate capture. Corporate capture 7 In this report, for example, we industries in Brussels, taking argue that corporate capture shelter under Council secrecy has been behind the lack of and avoiding public accounta- action in the aftermath of the bility. financial crisis, with banking regulation that continues to The evidence and analysis we allow mega-mergers of banks, have pieced together in this and fails to tackle the “too big report is a critical but sober to fail” problem (see case study assessment of how an extraor- one). Similarly, we present the dinary set of practices and role of the arms industry in set- assumptions have become ting the agenda and objectives normalised, even legitimised, of the EU’s defence programs particularly by those inside (see case study seven). The the Brussels’ bubble, the main phenomenon of corporate cap- focus of this report. The term ture is not, however, limited to ‘corporate capture’ is used the EU level. Even the Organi- deliberately to illustrate how sation for Economic Co-opera- deeply entrenched and em- tion and Development (OECD) bedded the relations between has recognised that “while EU policy-makers and business capture has been commonly interests are. There appears to perceived as characterising be very little debate or reflec- countries with endemic cor- tion about what this closeness ruption, it is increasingly pre- between big business and EU valent in developing, emerging political elites means for Eu- and developed countries”.1 AL- ropean citizens, workers, or TER-EU’s broad membership consumers. In fact, within po- has witnessed and challenged licy circles it seems to be ac- corporate capture of various cepted as common sense that national governments. Diesel- whatever is good for industry gate, for instance, exposed the is, self-evidently, good for Eu- intimate connections between rope. This kind of complacen- the German government and cy is particularly worrying at its national car industry, and a time of growing inequality how the German government and associated social tensions acted as vehicle for the indus- across EU member states. try’s influence at EU level (see case study eight). Too often we The European institutions are find member states acting on failing in reforming themsel- behalf of their biggest national ves in any substantial way, and 8 Introduction their remoteness from those lated issues that go to the heart they notionally serve has ar- of how democratic institutions guably fuelled populist criti- respond to external pressure, cism of the wider European including: project. To be clear, ALTER-EU is committed to the ideals of — lobbying transparency: wit- European cooperation, based hout transparency around who on the principles of solidarity is lobbying who, it is difficult and sustainability. However, to know what is happening ALTER-EU is also convinced between governments and in- that democratic reforms are dustry, let alone hold public long overdue in Brussels. Wit- institutions and office-holders hout reform, it is very unlikely to account; that the EU will deliver tan- gible benefits for the wider — conflicts of interest and EU citizenry, address the huge ethics rules: these are a vital challenges of sustainability and means of trying to ensure that environmental justice, or tackle public officials and elected re- inequality and growing racism. presentatives are not unduly in- Reform is needed because a fluenced by private interests in sustainable social and econo- the performance of their public mic model, capable of meeting duties; and, the challenges facing Europe in the 21st century, cannot — balancing the inputs into EU simply be predicated on the decision-making processes: an preferences of big business. It essential step towards addres- is this assumption – that what sing the privileged access en- is best for big business is for joyed by industry, ensuring that the good of all – that has pro- business interests do not domi- duced record levels of social nate policy expertise, and that and economic inequality, led us civil society input and public in- towards climate catastrophe, terest arguments are integrated and created the conditions that into policy development. have bred growing nationalist and populist sentiments across In the last decade, there have the EU. been some notable improve- ments around disclosure of ALTER-EU has been campai- lobbying activity, regulating gning for over a decade on a conflicts of interest and ope- number of key and inter-re- ning-up expert groups to more Corporate capture 9 diverse interests, but these Taking a step back and consi- measures have still fallen short dering longer time-scales, it is of what is needed. hard to avoid the conclusion that the core of EU policy-ma- What’s more, beyond these king has been, or is vulnerable particular campaigns, there re- to being, captured by big bu- mains a wider structural issue siness. There are too many of the closeness of industry policy decisions and political to EU policy-making. Some of priorities where the prefe- the reforms that ALTER-EU has rences of industry have been campaigned for since its incep- accommodated at the expense tion have served to highlight of the quality and efficiency how little has changed regar- of policy-making. For corpo- ding the systemic close ties rate wish-lists to be rejected, between Europe’s corporate it seems to require extraordi- boardrooms and the European nary levels of public mobilisa- Commission, and other EU tion across Europe, as with the institutions. To be clear, this case of TTIP a few years ago.2 embedded corporate capture However, even this victory may does not affect all the insti- be temporary, as core elements tutions, or all policy areas, of TTIP are being revived in equally. Policy areas marked by ongoing EU-US trade nego- powerful, rent-seeking indus- tiations, including the recent tries that stand to be heavily ‘deal’ between Commission regulated seem to be the most President Juncker and US Pre- vulnerable. Issues that avoid sident Trump, which re-opens full scrutiny of the European negotiations on so-called ‘regu- Parliament or the press also latory cooperation’, a core big face a higher risk. But while the business demand that poses a risk of corporate capture is not threat to democratic processes equal among all areas, it is far (see case study two). from an exceptional case. 10 Introduction GROWING RECOGNITION OF CORPORATE CAPTURE: — Box 1 DEFINING THE PROBLEM The concept of corporate capture has been used by academics for a long time, and civil society groups are showing renewed interest in the idea. Definitions and ways of iden- tifying the problem vary, but share many common traits. Some of the broader definitions used by civil society groups emphasise its consequences rather than its causes.