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Journal of Comm on Market Studies Volume 3 1 , No. 2June 1993

Corporate Lobbying in theEuropean Community

ANDREWM. M C L A U G H L I N *The Robert Gordon University, Aberdeen

andGRA NT JORDAN

andWILLIAM A.MALONEYUniversity of Aberdeen

Drawing on evidence from the car industry and other industrial sectors, thisarticle examines the political activities of large com panies in the EC and theirimplications for supranational interest groups. We challenge the traditionalview that these 'Euro-groups' are weakened in the policy process becausenational groups provide inadequate resources to fund them. A n altemative viewis presented which suggests that Euro-groups are undermined by the willingnessof large company members to enter the political system on their own account.However, collective action is shown to be an indispensable option for largecompanies lobbying in Europe, and in this context we note the rise of Euro-groups dominated by large companies.

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1 9 2 A.McLAUGHLIN, G. JORDAN AND W.A. MALONEYThe Policy S tudies Approach and the

Traditional View of Euro-GroupsThere is an expectation in models of European integration that transnationalfederations will be the main actors in the policy proc ess. A s early as 1958, ErnstB . Hass argued that when nation-states joined supranational bodies the 'insti-tutional and political logic of supranationalism' would 'lead to the defensivegrouping of commercial interests (at a supranational level) fearful of no longerbeing able to lobby effectively at a national level' (H ass, 1958, pp. 318 and 323).Through the process of 'transnationalism' neofunctionalists expected nationalinterest groups to forge alliances with their sister groups in other EC states.European federations of national interest groups would be formed and becomekey agencies in the integration process along with the European Commission:'which was believed to be in a unique position to manipulate the facts ofdom estic pluralism and international interdependenc e so as to push forward theproc ess of E uropean integratioti eveti against the resistanc e of national goverti-ments' (George, 1991 , p. 21) .

In practic e. Eu ro-grou ps, far from being dynamic agents of integration, havetended to be rather ineffective bodies unable to engage in constructive policydialogue with the Commission. Their traditional structure, as a federation ofnational associations, has posed a number of problems. Firstly, national asso-ciations have been reluctant to provide adequate resources to fund EC-levelrepresentation. Secondly, the process of aggregating the interest of nationalgroups into meaningful policy positions has often proved intractable. Forexample, Sidjanski (1967, p. 414) noted how the Committee of ProfessionalAgricultural Organizations in the EC (COPA), failed to agree a policy onuniform prices amongst its membership in the 1960s. Thirdly, companies havefelt that the process of agreeing policy in national groups, which may then becompromised further in the Euro-group, has led to a serious dilution of theirviews . G rant encapsulates the position well when he notes that E uro-group s are:'inadequately resourced in relation to the range and complexity of tasks theyattempt to undertake ; they largely react to an agenda set by the Com mission; andthey often have great difficulty reconciling the divergent interests of nationalmember organisations. In short, they are often rather ineffective, and leadingmultinationalists have become increasingly exasperated with them' (Grant,1990, p. 6).It is therefore important from a policy studies standpoint to examine

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CORPORATE LOBBYING IN THE EC 193

was needed if the complex patterns of interest representation in Washingtonpolitics were to be explained (Salisbury, 1984, pp. 67-8). That is to say, theinterest group label can be seen as too restrictive. Salisbury was drawing ourattention to the fact that the pattem of divergent interest representation discov-ered in policy studies is often not adequately reflected by an interest group focus.Com panies have distinct corporate interests and are 'policy p articipa nts' in theirown right (Jordan et al., 1992). Here we are using the term policy participant todescribe organizations attempting to affect policy outcomes on their ownaccount.

These points are developed by examining European lobbying in the carindustry. This case study is important for two reasons. Firstly, in 1991, the carcom panies consciously altered the structure of their European representation soas to overcom e many of the problem s associated with the traditional Euro-groupstructure. Secondly, the companies have repeatedly relied on independentactivity when lobbying in Europe. The argument below is that the traditionalview of European lobbying overlooks two increasingly important features -Euro-groups which are dominated by companies, and direct lobbying by thecompanies themselves.

The Car-Makers in BrusselsUntil 1990 the industry was represented in Brussels via two o rganizations: theLiaison Co mmittee of the Autom obile Industry of the Countries of the EuropeanCommunities (CLCA) and the Committee of Common Market AutomobileConstructors (CCMC). CLCA was the peak association of the EC's sevennational trade groups and its creation in 1962 was an early recognition of theemerging policy-making function in the EC. CCMC was a 'club' of Europeanproducers established by a number of car-makers following their dissatisfactionwith the lack of direct company participation in CLCA. Membership wasrestricted to those firms whose corpo rate headqu arters were located within theEC, because the leading car-mak ers feared that the American com panies basedin Europe would lobby the Commission to adopt American technical andenvironm ental regulations. In the autumn of 1990, both groups were disbandedto mak e way for a new organ ization, the Association of European Au tomo bileConstructors (ACEA).

Individual car companies will also be members of other Euro-groups. Forexam ple there are separate Euro-grou ps for the mo tor compo nents and vehicle

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1 9 4 A.McLAUGHLIN, G. JORDAN AND W.A. MALONEYCom m erce based in Brussels and acts through this group on general issues suchas health and safety, and employee participation policies. Similarly, Daimler-Benz, Fiat and Volvo AB are members of the European Roundtable of Indus-trialists which lobbies for general policies such as improved intra-Comm unitytransport links and customs harmonization.

Perhaps the most significant development in EC interest representation hasbeen the opening of a Brussels office by most companies. Nine European car-m akers have opened offices there with the main intention of m onitoring the E Cpolicy agenda and developing personal links with Com mission officials. Theseoperations tend to be well resourc ed. For exam ple, D aim ler's Brussels office -one of five 'Corporate Embassies' worldwide - has more than double the staffof A C E A 's office. In its first public ation, the D aimler-Ben z office underlinedthe need to have resources 'on the grou nd ' in Bru ssels: 'O nly those who are wellinformed about the wide variety of initiatives and proposals and who have athorough understanding of the decision making mechanisms will be able todefend their legitimate interest effectively. It is for these reasons that Daimler-Benz has decided to "be present" in Brusse ls' (D aimler-Benz, 19 89, p. 33).

The need for these 'ow n-a c c ou nt' operations is underscored by the fact thaton som e issues, such as state aids, there will be no group discussion of individualcases - sensitive issues are simply kept off group ag enda s. R ecent exam ples ofdirect lobbying have included successful attempts by car-makers investing inEastern Europe to procure financial assistance from the Commission. In fact,one function of the com pany office is to monitor national and E C assistance tocompetitors and if necessary lodge objections with the Commission. Forexample, Renault protested to the Competition Directorate in 1992 aboutregional aid given by the Portuguese government to Volkswagen and Ford toestablish production in Portugal.

L arge co m panies also emp loy Brussels-based law yers and political c onsult-ants to represent the company. The last course of action is, however, viewedwith some scepticism by both companies, wary of delegating their interests toindepen dents, and Com m ission officials who prefer to avoid speaking to 'hiredha nd s'. O ne official notes that: 'Pu blic relations firms on the whole are not wellregarded. They tend to be perceived as glib purveyors of a tale which they haveprepared for a particular meeting and unable normally to get involved in anykind of detailed discussion of n issue because they don't understand it fullyonce discussion strays outside their br ief (H ull, 1991, p. 8). Similarly, G ardner( 1991 , p. 57) has argued that public relations firms 'are still struggling for

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CORPORATE LOBBYING IN THE EC 1 9 5facilities and hiring professional lobbyists when necessary. B elow w e discussthe role of these various lobbying options in the decision-making process.

Multiple StrategiesT here is now a sufficient volume of empirical studies on EC decision-makingto support the view that companies prefer to adopt multiple strategies whenlobbying in the EC (see M azey and Richardso n, 1993; Greenwood etal., 1992).Streeck and Schmitter (1991, p. 159) have highlighted the range and extent ofinterest clamou ring for attention in B russels. They note that: 'Interest associa-tions ... have to compete for attention with national states, subnational region s,large firms, and specialised lobbyists, leaving their constituents with a widerange of choices among different paths of access to the C om m unity 's politicalcentre and enabling them to use threats of exit to coerce their representative s intopluralist respo nsiv ene ss'. T hus there are likely to be several points of access forcompanies wishing to lobby in the E uropean policy process, and while Com m is-sion officials may w ish policy to be channelled through E uro-grou ps, com pa-nies rarely rely on the group alone. T his point was mad e by Daim ler-Be nz: 'T heBrussels corporate representation is a manifestation of the desire of Daimler-Benz advanced technology conglomerate to use all possible channels to fosterthe dialogue between the economy and politicians, against the background ofgrowing economic integration and the creation of a single market in Europe'(Daimler-Benz, 1989, p. 27).

But the use of 'all possible channels' can undermine the authority of grouppositions and m ay prevent an organization from entering into a higher level ofpolicy-making dialogue with the Commission. This view of the group as anoption for a member seeking to represent its corporate interests in the EC, issomewhat inconsistent with the view of groups in models of integration. Thetraditional view assumed that these organizations would become the mainconduit for national interests seeking to influence the legislative process at theEuropean level. Commission officials would exploit the plurality of nationalinterest by insisting on dialogue with European federations. Yet companieshave found it possible to participate in the policy process using other channe ls.The National Route to BrusselsPaterson has noted that the E uropean chem ical industry ' s technological achieve-

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1 9 6 A.McLAUGHLIN, G. JORDAN AND W.A. MALONEYspec tacular. T he car industry has, in the past, been plagued by crises and a poorindustrial relations record. M oreover, b ecau se of its pivotal role in the man ufac-turing sector, its underperformance has led to repeated govemment interven-tion. The European industry is therefore dominated by national championswhich have com e to rely heavily on domestic sales. For exam ple, in 1 9 89 ,6 2.4per cent of Fia t's total car sales were in the dom estic m arket, and the figures forR enault, Peugeot-Citron (PSA ) and R over were all over 50 per cent (D G III ,19 92). In the light of this industrial structure it is not surprising that issues suchas Japanese imports, technical harmonization and state aids have all becomematters of 'high politics' for the national govemments concemed. In suchcirc um stances the use of national strategies by com panies and groups has beencommonplace.The national route to Brussels is encouraged because of the enduringimportance of the Council of M inisters (CoM ) in the E C decision-makingprocess. Integrationists frown upon the nation-state bargaining character ofmuc h of E C policy-m aking. W hile the Single European A ct (SEA ) sought toredress this by limiting the powers of veto in the CoM , the majority thresholdneeded for a decision rem ains high and there is little doubt that national ch annelsfigure prominently in companies' corporate representation strategies. Forexample, the Commission recently proposed stringent standards to reducevehicle noise levels which would come into effect on all new models in 1994.In an intemal doc um ent. G eneral M oto rs' Brussels office noted of the proposals:'Sinc e it will be up to the Council of M inisters to take the final d ecision, goodopportun ities still exist for lobbying at national level to go no further than 75dBA [lesser noise level] bec ause of the considerable technical and financial effortsinvolved'. Similarly, attempts to harmonize vehicle technical regulations andcreate one E C-wide testing certificate - W hole Vehicle Type A pproval (W VTA )- have been obstructed by national resistance. The existence of national type-approvals m eans that any car imported into an EC country has to satisfy localtechnical standards and tests. Progress tow ards elim inating national testing hasbeen blocked by the French govemment, which views national testing as ameans of controlling non-EC imports into the French market - particularlyJap anese c ars. By specifying local con ditions, the French have in the past beenable to fm strate importing c om panies. Perhaps the most famous c ase of this isthe requirement that cars and commercial vehicles be fitted with yellowheadlamps in France. The Commission has been trying to gain agreementbetween M em ber States on the harm onization of three outstanding directives on

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CORPORATE LOBBYING IN THE EC 1 9 7similar directives on the Commission's agenda which can have major costimplications for the companies concerned.

A similar version of events occurred in the engine emissions debate in thelate 1980s. T he leading car compa nies took up different positions according totheir product developm ent and the imp ortance of environm ental issues dom es-tically. For example, BMW and Daimler-Benz responded to the salience ofgreen issues in Germany by investing in catalytic technology whilst others,notably Fiat, the PS A group and Ro ver invested in lean-bum engine technologyas a longer-term alternative. While the issue was high on the G erman politicalagenda following emission-related forest damage, it had little salience in Italy,France or the UK . T he Com mission proposed standards which could only be metby the fitting of catalytic converters since lean-bum technology was notsufficiently advanced. N ot only did this hand potential com petitive advantagesto those companies already advanced in catalytic technology, it created furtherproblem s for small car specialists such as Fiat and the PSA group w ho could noteasily disguise the cost of a catalytic converter in their price margin s. A s a resultof such factors, the CCMC and CLCA were paralysed by the issue. Theconclusion has been less severe standards, with the EC continually laggingbehind A m erican legislation, and longer lead-in tim es for producers (especiallyof small cars).Such instances of policy transfer from national to European agendas are notuncommon. For example, Paterson (1991) found that the response of theGerman chemical industry to a domestic increase in the political saliency ofenvironmental issues was to seek EC-wide regulatory responses, whilst theBritish industry continued to press for national regulation. Once again the issuewas the German industry's wish to avoid cost disadvantages in its domesticma rket and the E C was used as a safeguard against unilateral national actions.

It appears that a company's approach to corporate representation in Europemay be influenced by the configuration of the national political system, thedecision-making environment there and the company's relationship with na-tional officials. For exam ple. Fiat has a symbiotic relationship with the Italianstate, while R enault has in the past enjoyed rgie status in France w hich virtuallyguarantees the com pan y's solvency. T hese companies represent vital econom icinterests and will quite naturally seek to lobby via their established contacts ina bid to influence EC policy. Paradoxically, one of the consequences ofincreased EC activity has been to reinforce the tendencies towards symbioticrelations between national officials and groups.

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CORPORATE LOBBYING IN THE EC 199

Thus the phenomenon of proliferating Euro-groups appears to have beenparallelled by a trend of increasing company activity in recent years. M oreover,despite the neofunctionalist expectation that the Com mission will try to workvia Euro-groups, Commission officials appear to welcome company contacts.This was demonstrated in 1990 when negotiations between CCMC and theCom mission broke down over the issue of Japanese cars in Europe. Once againthe industry was split by the issue. Five EC states have limits on the level ofJapanese cars in their national m arkets, ranging from 3.0 per cent in France to11.4 per cent in the UK. Thus any attempt to find a common EC policy wasinevitably going to affect some com panies more than others (DG III, 1989). InJune 1990 the Com mission reached a preliminary agreement w ith the Japanesegovernm ent on this issue. It involved the Japanese agreeing to adhere to a self-regulatory EC export restraint. National governmen ts would monitor imports intheir own national markets over an agreed five-year transitional period afterwhich the EC restraint would be in place. These p roposals m et with oppositionfrom a number of leading manufacturers, the most outspoken critic being thePSA group. In a vitriolic speech to the 1990 Paris Motor Show, the PSApresident Jacques Calvet described Britain as, 'a Japanese aircraft carrier justoff the coast of Eu rope ', going on to highlight the pressures Japanese successesin the American market had placed on indigenous producers there. M. Calvet,presenting PSA's more protectionist policy document, demanded the suspen-sion of talks between Brussels and Tokyo until the Europeans had debated theissue more fully. The incident dem onstrated a willingness on the part of a largecompany to carry its position directly to the Com mission. But, although PS A 'sposition was the most extreme, general opposition from the other producers tothe June proposals brough t the negotiations to a standstill.

Faced w ith this problem , the Com mission then entered into formal bilateraldealings with selected com panies. The four largest European -owned manufac-tures - PSA , Renau lt, Fiat and Volksw agen-Seat - were invited to submit jointproposals on the issue. The group, known as the 'European Generalists',suggested similar measures (albeit diluted) to those of PSA. M ost notably, theydemanded reciprocal access to Japanese markets and the maintenance ofrestrictions for a ten-year period, and not five as the Commission had suggested.Fiat President Um berto Agnelli stressed: 'I t is impossible to think of less thanten years as the period w e need to acquire technological cred ibility'.

The intractability of this issue illustrates the problems that can emerge w henconsultation processes extend beyond Euro-groups to bilateral contacts. This

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2 0 0 A.McLAUGHLIN, G . JORDAN AND W.A. MALONEYand use of bilateral contacts have been resilient. Indeed, w here the Com m issionis sceptical of a grou p view , it will often test that position by seek ing the opinionsof individual companies. One official emphasized the value of contacts withDaimler-Benz during the engine emissions debate in the 1980s. The officialrecalled that: 'D aim ler were very useful allies .. . bec ause of their co nc em aboutthe issue domestically they were advanced with catalyst development.. . theyshared our view that CCM C w as being intransigent on the issue. In fact D aimlerwere already implementing some of the standards in other markets whichCC M C told us were not possible'.

It is therefore important for companies to try to cultivate a good reputationwith the Com mission as part of their corporate representation. A s one officialargues: 'The most successful [lobbyists] are those who have ... alreadyestablished a track record as a useful source of information' (H ull, 1991, p. 6).There may be advantages for large companies with pan-European operations.These c om panies w ill have experienc e of operating in a num ber of EC co untriesand may possess cross-national information which can be utilized by Com m is-sion officials (Greenwood and Ronit, 1992). In the case of the Japanesenegotiations, consultation noticeably favoured the larger car-makers.

E uro-groups have therefore tended to lack authority in negotiations w ith theCom mission. W here debate in the group has gone against large com panies, theyhave been willing to go directly to the Com mission. H owever, personal relationswith Commission officials can be damaged if the company misinforms thebureauc racy. Th e D irector of one Brussels office em phasized the imp ortance ofinterpersonal links: 'M aking individual com pany representations can be verydang erous if [they are] not done properly. If you give an official bad infon nationand he uses it, he could get into problems internally. If this happens yourreputation is gone and it is difflcult to re-establish ... they [EC officials]approach you as a com pany for co nstructive information. That is when you haveto be positive. But... there is a lot of personal and social contact and you canmake your views known in a personal capacity. '

Thus, establishing personal links with policy development provides usefuland important discretionary influence. A t a E uropean level no large com pany iswilling to discard such an option. This complex picture of corporate politicalbehaviour corresponds with W ilson's (1990) A merican research. C omm entingon his survey evidence on the political tactics of large firms, he argued: 'Themost striking feature of the answers ... is the importance for communicatingtheir views corporations attach to forms of political action used by individual

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CORPORATE LOBBYING IN THE EC 2 0 1Why Do Companies Need Euro-groups?

Although groups can be outflanked by their members in Brussels, they havenevertheless assumed an important role in the policy process at the Europeanlevel. An au thoritative and represen tative b usiness group can expect to have itsvoice heard in the C om mission. O f the 525 Euro-groups recently identified byMazey and Richardson ( 1993), almost 5 0 per cent were industrial and co mm er-cial emp loyer interests. A s the C om m ission 's political remit has gradually beenextended, the man agem ent of policy has become more complex and adm inistra-tively burdensome. Thus the Commission increasingly prefers to break largerissues down into technical m atters which can be hamm ered out in a myriad ofad hoc consultation groups. In the car sector, several such groups on fuelconsumption and CO2 emissions have been spawned by the Energy Charter.These committees are dominated by Euro-groups and have become a key wayof pulling national groups into the ambit of the Commission.

This development has tended to confirm the early suspicions of Euro-watchers that the C om mission w ould come to depend on well-organized groupsoperating in B russels. For exam ple. B utt P hilip remarked on the C om m ission'sgroup reliance: 'T he C omm ission, for its part both wants and needs contact w iththe many interested groups in E urope. It too needs information about the varietyof positions and aspirations of Euro-groups and national pressure groups, aswell as factual information which may be slow in arriving from nationalgovemments. Such information will often be essential material upon which toconstruct proposals and policies which will have community application'(Philip, 1985, p. 42). Thus there is a familiar information deficit which oftenexists between agencies and interests. H owever, becau se of its extensive policyagenda and limited policy resources, the European C omm ission seems to sufferparticularly from such a deficit.It seems that out of functional necessity more than anything e lse. C om mis-sion officials are prepared to offer g roups preferential access at the early stagesof policy developm ent in retum for detailed information they would o therwisestruggle to gather. In a characterization of the drafting process, one policy-maker has described the official as: 'a very lonely man with a blank piece ofpaper in front of him, wondering what to put on it. Lobbying at this very earlystage therefore offers the greatest opportunity to shape thinking. The drafter isusually in need of ideas and information, and a lobbyist who is recognised asbeing tmstworthy and a provider of good information can have an important

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2 0 2 A .Mc LA U G H LIN , G . JORDAN AND W.A. MALONEYco llective b odies via its network of ad hoc com mittees, then c ompanies w ill beanxious to make sure that the group's positions have been sensitized to theirparticulars. M ac M illan's study of over 20 major c ompanies showed that not allfelt they had good access to Commission officials, and many conceded that'getting tim e with key officials in Brussels is bec om ing m ore difficult as the cityattracts more lobbyists' (M acM illan, 1991, p. 11). Thu s, while some c om paniesgain good ac ce ss, it appears that E uro-groups are more likely to find them selvespushing at an open door in Brussels. Officials seem predisposed to groups,making them an attractive lobbying option for major companies. If largeco m panies can shape group positions to suite their particular needs this beco m esa crucial channel of influence.

There are also a number of cogent reasons for a company to use the Euro-group . W hile officials often c onsult individual com panies, they do appear tohave some resolve to speak only to groups where the issue may involvecompetitive advantages for individual manufacturers. The Commission goes toextraordinary lengths to be seen as 'even-handed'. On other issues, such as'side-impact' test procedures, one company told us 'the Commission insists ongoing via A CE A even though it has been approached by a m anu fac turer. . . theywo n't take up some issues unless A CE A runs with them too. ' O ur discussion ofACEA's structure and activity below illustrates that such issues have becomethe gro up's m ain con cem . A lthough participation in the group need not alwaysbe constructive, companies often seek to prevent the group reaching commonpositions. For example, it subsequently transpired that the PSA group hadfmstrated em issions talks within CCM C because it was well advanc ed w ithlean-bum engine development.

There are, however, plenty of issues upon which producers can agree aposition, and in these cases the collec tive approach is seen as a m ore effectiveoption. This is particularly so in areas where the Com m ission has signalled anintention to act in the future. The more each manufacturer falls into line withcu rrent regulations, the more c onsensu s there is about future ones. This occ urredin the case of car emissions which was previously the subject of muchcontroversy. The manufacturers are united in their opposition to Commissionproposals to set further limits on emissions after 19 96, based on U S legislation.Tw o A CE A working groups are currently preparing proposals in a bid to avoidlegislative standards. One of these proposals is that each ACEA memberguarantees to reduce the E C sales-weighted CO2 em issions of its new c ar fleetby 10 per cent on a voluntary basis within the period 1 9 9 3-2 0 0 5.

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CORPORATE LOBBYING IN THE EC 2 0 3implem entation, have increased the appeal of self-regulatory proposals to hard-pressed officials (as well as national governments!). While guarantees fromindividual com panies are likely to be treated with suspicion, group u ndertakingsto mon itor mem ber com pliance and provide regularly up-dated information arefar mo re plausib le. It is therefore essential to establish a group w hich is seen tohave the resources and expertise to monitor and regulate its members. Similarproposals have been put forward by ACEA on recycling and safety measures.O ne company official underlined the point: 'O ffering to police ourselves makestheir lives easier and our lives easier and is possib le if you have a credible centralorganization. It's then a matter of whether they [officials] can convince thepoliticians.' Even in those areas where the Commission is suspicious of the'closed shop' aspects of self-regulation, it has rarely been willing to assumemore responsib ility for imp lemen tation. A good examp le of this from 1992 wasthe concem that inflated British car prices were related to the industry'sselective distribution arrangements which the Commission exempted from ECcompetition rules in 1985. Despite a number of consumer group campaignshighlighting 'bad implem entation' by the car comp anies, the C omm ission hasbeen content to reiterate the guidelines which the manufacturers were originallyexpected to follow.

T he E uropean federation can also act as a front for large compan ies seekingto avoid regulation of their business environment. If preferential access is onoffer to groups, no company will wish to allow a group-Commission dialogueto develop without seeking to influence the relationship. This can be donethrough active participation in the group in order to shape the organizationalagenda, and by sensitizing collective positions to a company's specific needs.Moreover, a large company may wish to approach the Commission under theguise of a collective body whose demands approximate to the companyposition. T his may w ell be the case in heavily concentrated sectors where a fewfirms are dominant. For example, in the consumer electronics sector. Philipshave used 'letterhead' organizations to pursue their interests (Greenwood,1992). In this way individual comp any positions can b e advanced v ia collectivechannels to a receptive C omm ission.T hus, despite the prevalence of multilateral lob by ing. E uro-groups still playa potentially vital role in the policy process. If these organizations are ineffec-tive, this can create a num ber of problem s for comp anies in a particular sector(this occurred with the now defunct C C M C which was viewed with derision bymany C omm ission officials). T he key point is that, while com panies may prefer

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2 0 4 A.McLAUGHLIN, G. JORDAN AND W.A. MALONEYStructure of the E uropean federations which represent their interests in Brussels.The nature of these changes has been unmistakable, to create organizationswhich are more directly under the control of large companies.

The Formation and Role of A C E AO ur expec tation then is that Eu ro-group developm ents will be mem ber-led, w itha trend towards the formation of small (numerically) produc er-led E uro-groupsthrough which active companies can advance their interests. The group is suchan important channel of influence in the EC policy-making process thatco mp anies will want direct control over it. These smaller 'E uro-c lubs ' are likelyto form in oligopolistic sec tors and subsectors w here a specific set of com mod ityinterests is involved. The m ost spectac ular exam ple of this type of reorganiza-tion has been in the motor industry following the collapse of C M C and CL CA .The new organizational structure and policy-making functions are set outbelow.MembershipA key feature of the development of company Euro-groups has been theextension of membership to American multinational companies. Ford andG eneral M otors (GM ) were previously excluded from CCM C because theircorporate headquarters were in the USA. However, both companies are nowaccepted as 'adopted Europeans'. This move makes sense for a number ofreasons: firstly, the Commission always had to approach the American multi-nationals, given the size of their European operations; seco ndly, the in dus try'scollective positions were never wholly credible because they did not representthe views of the third and fourth largest producers in the European sector; andthirdly, the lobbying resourc es of Ford and G M made them attractive to the neworganization. The reforms have created a more prestigious group which repre-sents the most pivotal sector of European manufacturing. ACEA membersdirectly employed 6.8 per cent of total E C manufac turing emp loyme nt in 1990(35.6 per cent ind irectly), making a 1.6 per cent co ntribution to E C G D P in 1989.The Expansion of Group CommitteesA num ber of com panies felt that C C M C s secretariat was too 'rea c tive' andresponded to issues only after they had becom e a problem. In response to this,

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CORPORA TE LOBBYING IN THE EC

ACEA: Organization and Structure205

President

Secretariat18 full-t ime personnel

Board of DirectorsFormal decision-making area

Members:14 companiesOne member one vote

75% majority rule

AdministrativeCommittee

(general policymatters,

political aspectsof all issues)

LiaisonCommittee( issues w hich

relate tothe activities ofnational trade

groups)i

Strategy

Car TechnicalCommittee

(all technical andenvironmental

issues concerningcars)

i

CommercialVehicle

TeciinicalCommittee

(technical issuesconcerning

trucks and buses)

groupsWorking groups

Associated organ izations: national trade groups

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2 0 6 A.McLAUGHLIN, G. JORDAN AND W.A. MALONEYinstallation. A round 2 0 of these groups tend to be highly techn ical and staffedby experts from relevant comp any dep artme nts, with the rema inder dealing withmore political issues such as Japanese imports and taxation policies. However,it is often the case that even in the technical committees agreement cannot bereach ed, and it remains for the Board of D irectors to agree a com mon position.A CE A officials told us that agreement is m ore likely at this higher level becau sepresidents tend to be more flexible.The Introduction of Majority VotingIn the past, the requirement of unanimity amongst company members oftenprevented C CM C from adopting m eaningful positions. How ever, if a gr ou p-bureaucracy coalition is to become clientelistic, the group must be wellorganized and authoritative. The unanimity rule which was common in mostEuro-groups pushes group discussion inexorably towards lowest commondenominator positions which are of limited use to an official in the drafting ofpolicy. In such circum stances a Com mission official has noted that, 'it may beuseful to have an input from individual companies with specific interests andrepresenting op posite sides of the ca se ' (H ull, 19 91, p. 8).

In a bid to move towards more meaningful collective positions, ACEAintroduced a majority voting me cha nism. T his requires a 75 per cent thresholdwith decisions reached on a 'one mem ber one vote' ba sis, and is clearly intendedto improve the dec ision-making cap abilities of the organization. Though A CE Ais unlikely to have to resort to the majority rule, its existence prevents any onecompany from stifling group discussions.This was demonstrated almost immediately upon A CE A 's formation whenit reached an agreed position on the issue of Japanese imports which hadpreviously proved intractable within CCM C. Evidently A C E A 's success on theissue reflected a pre-existing consensus amongst those car-makers who dis-banded C CM C; howev er, the shift to majority voting was vital in pre-em ptingany further ob structionism on the issue. A s one interviewee put it: 'W esucceeded in moving away from the lowest common denominator towards apolicy package which accommodated the various industry positions'. Manycom panies had becom e increasingly co ncem ed with the industry's inability toparticipate in collective discussions on this vital question which had antago-nized the Com m ission. By early 1991, the Com mission insisted that the industryspeak with one voice on the issue before key negotiations started with the

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CORPORATE LOBBYING IN THE EC 207

are like to be more successful. All the com panies we spoke to acknowledged thaton some issues policy-makers will insist on going through the group. Thecompany strategy is then to shape group positions.The shift to majority voting and the formulation of a Japanese policy werenot without their costs. The PSA group , the second largest European car-maker,refused to participate in the new group and maintains that a tougher stanceshould be taken against the Japanese. H owever, even with the PSA group not amember, suspicion of the Japanese car-makers remains deep-seated withinAC EA . The Dutch car-maker V olvo BV w as asked to leave the group in 1992because M itsubishi acquired a controlling stake in the company. The issue alsohas serious implications for the European representation of the British car

industry. Other car-makers are wary of Ro ve r's position because of H on da 's 20per cent stake in the company. Moreover, Nissan has now qualified for fullmanufacturing membership status within the Society of Motor Manufacturersand Traders, suggesting the British trade group will be further marginalizedwithin ACEA. Such xenophobia is not restricted to the motor industry. Forexam ple, Cawson (1990) found that several clandestine groups had been set upby European electronics firms to establish a channel of interest representationwhich excluded trade associations which may have Japanese members.The Marginalization of National Trade AssociationsW ithin A CE A, voting power now resides with the 14 mem ber companies in theBoard of Directo rs, and there has been a marginalization of the role of nationaltrade associations. From having their own peak association in CLCA, thesegroups are now represented via one standing committee in the new group'sstructure. National trade associations have no voting pow er, no representationon the Board of Directors and can only participate in working and strategygroups where they are invited to do so by the secretariat. Under this new regim e,national groups are only associational members of the Euro-group whilecompanies are full members. The structure signals a shift towards the type ofEuro-club of com panies which are increasingly being utilized by large corpo-rations exasperated by national disputes in peak associations. As George (1991)has pointed out in his critique of neofunctionalism, it was precisely thispropensity for national interests to hinder suprana tional association which earlyintegration theorists failed to anticipate.

These changes clearly represent an attempt to move away from the tradition-al 'Euro-group' stmcture and its associated problems. The key manufacturing

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2 0 8 A.McLAUGHLIN, G. JORDAN AND W.A. MALONEYE uropean fed erations. G rant (1990) notes that one of the most effective bodies,CEFIC which represents the chemical industry, restructured its intemal deci-sion-making structures 'to give more weight to major multinationals, and lessto the directors of the national business associations who were seen as middleranking bureaucrats exercising a disproportionate influence' (Grant, 1991,p. 9).Yet the image of a Euro-consciousness developing via Euro-groups is stillfrustrated by the independ ent ac tivities of group m em bers. A rguably, w hat wasnot appreciated by early acc ounts was the discretion that large com panies hav ein seeking to represent their business interests directly in the European arena.Too m uch significance was attached to the need to approach the Com mission viaEuropean federations. Large companies are policy participants in their ownright, and have corporate interests which they seek to defend politically. Theissue may not so much be the transition of loyalties from national federations toEuro-federations, but the degree to which companies are prepared to use bothin their corporate representation.

H oweve r, the structure of the particular industry in question m ay be a factor.M any of the difficulties with collec tive action in the car industry have stemm edfrom difficulties in harmonizing national regulations which were designed toprotect national industries. Those industries which are dominated by multina-tional companies rather than 'national champions' may be able to work moreeffectively on a collective basis. This has been the case in the biotechnologysector. In a review of Euro-groups in this industry. Greenwood has noted that:'Only one of these Euro-groups, however, appears to have been particularlyeffective, a small outlet which began life with a rather exclusive, by invitationonly, direct firm mem bership struc ture' (G reenwood, 1992, p. 45). The SeniorAdvisory Group Biotechnology was organized by large companies from thechem icals sector who had specific com mo dity interests in biotech nology. T hesemultinational companies have more interest in uniform EC regulations thanthose companies whose production is concentrated in the domestic market.

Life Outside the GroupThe decision by the PSA group to remain outside AC E A may appear unwise inthe light of the above discussion, but it may also illustrate just how inessentialthe group option can be to the large company. The PSA group is a leadingmanufacturer in France and an important national economic interest. It is

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CORPORATE LOBBYING IN THE EC 2 0 9representation on Com mission w orking groups. Indeed, the French car-m aker'ssolo approach appears to have paid some dividend, w ith the French governm entsuccessfully negotiating agreements with Japanese car-makers independentlyof the EC-Japan discussions.N issan and To yota have reached a bilateral deal with the French governm entto limit the sales of their UK-produced cars in France in retum for clearance toestablish their own dealerships in the country. Thus the French industry isprotected by a voluntary export restraint on direct exports, and by this new'gentlemen's agreement' over transplant production. In addition, the Frenchgovernment has also gained undertakings that the Japanese will buy moreFrench components for their British plants as part of the arrangement (DailyTelegraph, 24 January 1992).However, there are grounds to be sceptical about the wisdom of the PSAgroup's isolation. It is reasonably well established in the literature that theC om m ission will usually insist on talking to E uro-grou ps, and any non -mem berwill have discarded the option of influencing that dialogue directly. Even if thegroup debate goes against the particular company, there is still the option thenof seeking to outflank the grou p via national and bilateral activity, not forgettingof course those instances w here the C om m ission is resolved to limiting consu l-tation to collective discussion.There is a more practical reason for a large company to be in membership.The diversity and volume of interfaces that are likely to develop between amulti-product company like the PSA group and the EC make group activity auseful way of man aging the com pan y's representation. T his point has also beenmade by Salisbury in his discussion of American companies. He suggests it isthe complexity of bureaucracy-business relations that leads companies torepresent their interests via groups. Salisbury argues:

the very size and complexity of an institution renders it vulnerable to a muchbroader array of specific policy impacts, positive and negative, present andprospective. . .. A given corporation is quite likely to find itself in severalencounters at once, on different policy issues, heing worked on in differentinstitutional settings, and requiring different modes of political action. (Salis-bury, 1984, p. 69)It is surely the fact that corporate rep resentation is a complex business whichexplains much about the diversity of interest representation strategies readilyobserved in EC policy studies. In our understanding of the nature of EC

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2 1 0 A.McLAUGHLIN, G . JORDAN AND W.A. MALONEYa continuing dispute between the PSA president and other car chiefs overC C M C 's collapse is the explanation for their isolation and that exec utivechanges in the French company will pave the way for membership.

Weak Groups or Strong Members?A recent spate of European policy studies has broadened our understanding ofthe E C decision-making p rocess, coming as a much needed descriptive com ple-m ent to earlier abstract integration theories. This study has shown a need for aconceptual framework which distinguishes collective policy participants (Euro-grou ps) from non-collective policy participants (c om panies). There is a dangerof a group focus in studies of European policy-making which ignores theprimacy of corporate interests. A major characteristic of European lobbying inthe car sector is the importance companies attach to independent activity. Thismay involve lobbying national officials or hiring assistance from the manypolitical and legal consultancies in Brussels. M ore typically, it involves thecompanies having their own 'in-house' operations in Brussels to co-ordinatelobbying ac tivities and monitor the E C policy agenda. Those who have followedpractice have consistently revealed that the decision-making process is morecomplex than the simple Commission-Euro-group symbiosis suggested byintegration m odels. These studies have shown that groups may be outflanked bythe activities of their members, are often letterhead fronts for large companies,and can become paralysed by mem ber obstructionism. A s M acM illan hasconcluded:

D iversified and decentralized companies may use multiple contact strategieswith B russels. Apart from the route via national govemments there may be atleast three others: personal contact by senior managers from a product areawhere, for example, a specific industry perspective is required; personalcontact by a top manager when a corporate viewpoint as a large intemationalcompany is called for, for example, in relation to trade, company law ortaxation matters; and contact via industry or employer associations, where thecompany needs to be seen to be acting in concert with others. (M acM illan,1991,p. 11)

The central point is that the range of influence-seeking organizations thatwo uld be of interest in a study of policy outc om es is different from the range ofbodies that are usually (but not always) considered as interest groups. In our

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CORPORATE LOBBYING IN THE EC 2 1 1Yet, paradoxica lly this study has also reported the efforts of the car compa-nies in Europe to reform fundamentally their collective representation. The neworganization is better equipped to cover a wider agenda of issues and has

improved policy-making stmctures. Indeed, in those sectors where the tradi-tional group structure of a loose federation of national associations provesunsatisfactory, AC EA m ay provide a model for more effective representation.How ever, there is no inconsistency between a com pan y's desire to improve therelevant collective body and its willingness to act independently of that body.The important point about these developm ents is that they have been led by largecom panies interested in establish ing effective channels of influence in all areasof their lobbying activity. Thus, while these new organizations represent asignificant developm ent, they are not evidence that early expectations about thesingular importance of Euro-groups in EC policy-making has finally material-ized. The existence of multilateral lobbying is ingrained in the European policyprocess.

European policy studies should therefore distinguish between the process ofrepresenting an institutional interest - in this case, of large corpo rate enterprises- which leads to a diversity of methods of representation, and interest groupactivity w hich is merely one aspect (albeit an important one) of this phenom e-non . To put it bluntly, if the goal is to understand the developm ent of EC policy,it is the influential policy participant rather than the narrow pressu re group thatshould be the major target for scm tiny . It is the diverse political tactics of largecom panies w hich undermine Euro-groups rather than the lack of organizationalresources w hich is emphasized in conventional explana tions of their weakn ess.

ReferencesButt Philip, A. (1985) 'Pressure Groups in the European Community'. UACES,Occasional Paper No. 2 (London: UACES).Cawson, A. (1990) 'Modes of Policy-Making and Patterns of State/Interest GroupRelationships: The EC, 1992 and the Consumer Electronics Industry'. Paperpresented to the ECPR, Rimini, 26-9 September.Com mission of the European C omm unities (1992) 'A Com parative Assessment of theEuropean Automotive Industry in View of 1992' (DG III/4237/88-EN 17/5/89)(Brussels: CEC).Daimler-Benz (1989) Towards a New Horizon (Brussels: Daimler-Benz).Gardner, J.N. (1991) Effective Lobbying in the European Community (Deventer:Kluwer Law and Taxation P ublishers).

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2 1 2 A.McLAUGHLIN,G. JORDAN AND W.A. MALONEYGranit, W . (1990)'Organised Interests and the European Com m unity '. Paper preparedfor the Vlth International Colloquim of the Feltdnelli Foundation, 'OrganisedInterests and Democracy - Perspectives on West and East', Cortina, Italy, 29-31

May.Grant, W., Martinelli, A. and Paterson, W. (1989) 'Large Firms as Political Actors: AComparative Analysis of the Chemical Industry in Britain, Italy and West Ger-many ' West Furopean Politics, Vol. 12, No. 2, pp. 72-9 0.Greenwood, J. with Ronit, K. (1992) 'Interest Groups and the Meso Dimension inBrussels: Newly Em erging D ynamics and Fo rm s'. Paper prepared for presentationto the Political Studies Association Annual Conference, Belfast, 7-9 April.Greenwood, J., Grote, J.R. and Ronit, K. (1992) Organized Interests and the Furope-an Community (London: Sage).Haas, E.B. (1958) The Uniting of Furope: Political, Social and Fconomic Forces1950-57 (Stanford: Stanford University Press).Hull, R. (1991) 'Th e Lobbying P roc ess '. Paper presented to the workshop on 'PressureGroups and Policy-making in the European Community', Nuffield College Ox-ford, 17-19 May.Jordan, A.G., Maloney, W.A. and McLaughlin, A.M. (1992) 'What Is Studied WhenPressure Groups A re Studied?: Policy Participants A nd Pressure G rou ps '. BritishInterest Group Project Working Paper No. 1, Department of Politics and Interna-tional Relations, University of Aberdeen.M acMillan, K. (1991) 'T he M anagement of European Public A ffairs'. Paper preparedfor presentation to an ECPA/Conference Board Meeting, Brussels, 30-1 M ay.M azey, S. and Richardson, J.J. (1993) Lobbying in the Furopean Com munity (Oxford:Oxford University Press).Paterson, W. (1991) 'Regulatory Change and Environmental Protection in the Britishand German Chemical Industries'. Furopean Journal of Political Research, Vol.19, Nos. 2 and 3, pp. 30 7-2 7.Salisbury, R.H. (1984) 'Interest Representation: The Dominance of Institutions'.

American Political Science Review, Vol. 78, pp. 66 -74.Sidjanski, D. (1967) 'Pressure Groups and the European Community'. Governmentand Opposition, No. 2 , pp . 39 7^ 16 .Streeck, W. and Schmitter, P.C. (1991) 'From National Corporatism to TransnationalPluralism: Organ ised Interest in the Single European M ark et'. Politics and Society,Vol. 19, No. 2, pp. 133 -64.Turner, I. (1988) Fnvironmental Policy in Furope: Uniformity or Diversity? A CaseStudy of the FFC Car Fmissions Decision, Centre for Environmental and Econo-mic Development Discussion Paper No. 7 (Cambridge: CEED).Wilson, G.K. (1990) 'Corporate Political Strategies'. British Journal of PoliticalScience, Vol. 20, pp. 281 -8.

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