As the EU sets more rules, corporations are building their presence and paying for clout
Few would turn their noses up at the food served by Brussels eatery Barbanera. The pasta is handmade, the fresh sole grilled to perfection, and the tiramisu rich and creamy. But the crowds that gather there every day for lunch seem to pay scant attention to what's on the menu. That's because Barbanera, the Brussels equivalent of Washington's Capital Grille, is where the city's lobbyists wine, dine, and schmooze officials from the European Commission's glass-clad headquarters just down the street. Documents are spread out on tables, briefcases sit open on stools thoughtfully provided by the management, and the talk is peppered with the acronyms and jargon of the EC bureaucracy.
If you thought Washington was lobbying central, think again. Some 15,000 lobbyists ply their trade in Brussels, the EC estimates, vs.the 11,660 who have reported lobbying in the U.S. capital this year. Commissioner Charlie McCreevy, who oversees financial-market integration across the 27-country European Union, says he often feels like a bystander caught in crossfire between rival interest groups. "It's frustrating," he says, "but it's a system we have to live with."
What's drawing this crowd is Brussels' growing regulatory clout. From food safety to Internet privacy to auto emissions, the EU is setting ever more rules for companies that want to play in its $13 trillion economy. This year the EC's antitrust watchdog has hit corporations with $3.6 billion in cartel-busting fines, nearly eight times the total levied by the U.S. Justice Dept.'s Antitrust Div. during 2006. In recent months, EC regulators have won a $613 million antitrust judgment against Microsoft (MSFT), launched an investigation of pricing by U.S. chipmaker Qualcomm (QCOM), and announced plans for sweeping new regulations on cell-phone operators and utility companies. "I haven't been to Washington once this year, but I've already been to Brussels three times" to lobby EC transportation and anti-trust regulators, says David Schwarte, a Texas-based executive vice-president of Sabre Holdings, an operator of travel reservation systems.
JUNKETS ON THE RISEWith so much at stake, corporate giants are rushing to build up their presence in Brussels. Google (GOOG), for instance, faces EC scrutiny of its privacy policies and its planned acquisition of online-advertising group DoubleClick. So it's hardly surprising that Google is now recruiting a senior Brussels-based lobbyist to "manage public policy advocacy, issue analysis, and government affairs," according to a job description recently posted on the company's Web site.
In some respects, Brussels is a lobbyist's dream. While their Washington counterparts fan out across Capitol Hill and dozens of agencies, the hired guns in Brussels aim mainly at a single target: the EC and its 23,000-member staff, which drafts all legislation and regulations and enforces competition rules. By comparison, the federal bureaucracy in Washington totals more than 270,000. "Because they have such a shortage of staff, the commissioners are relatively easy to see," says Karen Corbett Sanders, a Washington-based lobbyist for Verizon Communications (VZ) who represented the company in Brussels until 2004. "I have even sat at a keyboard in the Commission and the [European] Parliament and typed in language."
The scenario looks ripe for influence-peddling, yet many global giants have stumbled in Brussels. Despite opposition by the likes of Intel (INTC) and Dell (DELL), the EC in 2005 enacted rules requiring electronics makers to pay for recycling old equipment. More recently, regulators have forced big cell-phone operators such as Vodafone (VOD) and T-Mobile to slash the rates subscribers pay for calling while outside their home countries. "A lot of the lobbying that goes on here is frankly worthless," says Thomas Vinje, a U.S.-born attorney and lobbyist with the law firm Clifford Chance who represented Microsoft's adversaries, including Oracle (ORCL) and Sun Microsystems, (JAVA) in the antitrust case.
Brussels can be perplexing for those accustomed to the ways of Washington. Because EC jobs are prestigious and highly paid, few officials are tempted to move from government to lobbying. Campaign contributions are another Washington tradition that's absent. EU leaders are either appointed or elected in taxpayer-financed campaigns. And Brussels lobbyists don't have to register. Although the EC next spring plans to launch a voluntary registration system with minimal disclosure of activities, even that proposal has drawn opposition from business groups.
Some aspects of American-style lobbying are starting to catch on. Junkets are on the rise. Norwegian oil company Statoil (STO), for example, invited a group of lawmakers to northern Norway last year to visit production sites—and sail the fjords on a cruise ship. And the revolving door is starting to turn: On Oct.1, Michiel van Hulten, a former Dutch politician, joined the Brussels office of public-affairs giant Burson-Marsteller. Says Erik Wesselius of the Corporate Europe Observatory, an Amsterdam group that monitors EU lobbying: "It's disturbing to see how the roles are starting to blur."