EUROPEAN UNION

BUSINESS & GOVERNMENT

SECTION A
GROUP 9

PGP/18/314 PRANJAL NIGAM

PGP/18/114 UTSAV BANERJEE
PGP/18/240 D CHETHAN
PGP/18/287 APURV YADAV
PGP/18/033 NAVAM GUPTA
INTRODUCTION TO THE EUROPEAN UNION
Its predecessor is the European Coal and Steel Community which was established just after World War 2 to promote
trade and political cooperation
It comprises of 27 member nations and its purpose is to provide for free movement of people, goods, services and
capital across its members
Although 17 member states have adopted a common currency, the degree of political integration however still is a
matter of debate and discussion
There have been three major steps to attain high levels of economic and political integration:
1. The Single European Act: It established the assent procedure which is used for decisions like admission of new
members, international agreements and the structure of the European Central Bank
2. The Maastricht treaty on European Union: More power to the European Parliament over the Commission and the
council
3. Treaty of Lisbon: Played a crucial role in making the institution more transparent and democratic although the
parliament is the only popularly elected institution.
INSTITUTIONS OF THE EUROPEAN UNION
The European Commission:
It is the executive and administrative institution that implements EU legislation and ensures compliance by member
nations
It is the only body with the power to initiate legislation
Each state has one commissioner and it manages the EU budget along with trade negotiations

The Council of Ministers and the European Council:

In contrast to the commission, the members of the council members primarily take care of the interests of their nation
rather than the union
The nations have different vote weights based on the population. For example Germany has 16.5% BUT Luxembourg
has 0.1%
Associated with the council is the Committee of Permanent Representatives (COREPER) which acts as the secretariat
of the council of ministers. Coreper resolves 90% of the issues before they come to the council
INSTITUTIONS OF THE EUROPEAN UNION
The European Parliament:
It has 750 members elected for 5 year terms under propositional representation by voters from member states
The role of EP is described as democratic supervision as it approves of and can dismiss the commission. It
asks questions to commissioners during the question hour
It has no legislative authority. It elects a president for a 2.5 year term and vice-presidents

The court of justice:

It is the supreme judicial body of the union and has the authority to overturn decisions that conflict with the EU
treaties
The court has one judge from each member state and the term is 6 years
The court also hears appeals of commission decisions like cases involving competitive practices of firms.
NON MARKET ISSUES
At EU LEVEL, some important issues are Euro Crisis, deeper political integration, persistent high unemployment,
harmonization of fiscal policies, takeover policy etc.
Takeover policy example: Govt. in several member states held golden shares in companies which gave them a veto over
any takeover attempt, impeding free flow of capital with the EU
At NATIONAL LEVEL, overall tax burden remains an issue.
Denmark, France, Sweden have taxes-to-GDP ratio of 50%, US 31%, Japan 33%
Firms worried it hampers their global competitiveness
Tax rates of member states differ considerably, making some relatively attractive as locations for new plants
EU more readily uses precautionary regulation than United States
For e.g. EU restricts Genetically Modified Foods on the grounds that it might pose health risks, US doesnt
EU embarked on a campaign to force test 30,000 industrial chemicals either manufactured in or imported into EU
Testing would be required even if there was no indication that there was any risk associated
Companies accused EU of using regulation as a trade barrier
After intense lobbying, EU scaled back this regulation
 NON MARKET ISSUES
US more frequently relies on voluntary approaches to regulation than EU
For e.g. When a woman in US complained that google street view showed her cat, google voluntarily agreed to
blur the faces of people visible in street view
In EU, data protection officer warned street view to comply with data protection directives
Kyoto protocol
EU implemented a cap-and-trade system for controlling emission from factories
Expanded the scope of its emissions permits trading system to cover emissions of airlines that use EU airports
US airlines backed by US govt. objected strongly
US govt. lobbied arguing that control of airline emissions required global accord, being done by UN
EU rejected saying that UN was too ambitious and moving too slowly
COMPANY LEVEL non market issues : Responsibility for advertisements of fake goods on online market
places (for e.g. eBay)
In US, the online marketplaces are not responsible, provided they remove the ads when asked to do so
In EU, the Court of Justice held eBay responsible for removing advertisements for fake goods
 INTEREST & THEIR ORGANIZATION
Different organization of interest as compared to US, other countries but nature is pluralistic
Majority of the firms involved in issues at the member states level, few directly involved at EU level
For e.g. Philips Electronics worked to develop research centre at EU level
Much of the nonmarket activity at EU level is conducted by peak associations representing business within
states
Interests are represented by national associations in strong corporatist countries like Germany, Sweden
Each of unions and businesses have peak organizations to advise govt. and negotiate on policy
For e.g. manufacturing enterprises, agriculture interests, service companies are organized into chambers
They are responsible to control members and represent member interest before government
For e.g. The Federation of German Industry (BDI) represent 39 national federations that include 40,000
businesses and 85% of German industry
For e.g. The Federation of German Employers Association (BDA) represent 56 employer association on social
and labour issues
Both are involved in lobbying, consultation on issues pertaining to nonmarket areas
 INTEREST & THEIR ORGANIZATION
Many national associations join to form EU-wide associations to implement non market strategies
For e.g. Union of Industrial and Employers Confederations of Europe (UNICE), European Confederation of Retail
Trade, and European Chemical Industry Council (CEFIC)
Interest represented are ranging from retail, chemical, beverage, and fast moving consumable goods
Foreign firms association like American Chamber of Commerce (Amcham) follow same structure
Nonmarket action at industry level by EU-wide associations
For e.g. decontrol of drug prices which have been kept low to relieve the govt. healthcare budget in countries like
France
Sometimes, ad hoc groups of firms from various member states join together to seek support
For e.g. Philips, Siemens, Thomson, and GE sought support for computer and semiconductor industries
Unions representing employees are organized in national federations and in EU-wide umbrella associations
For e.g. German unions are organized by industry and bargain with associations of employers
Activists and NGOs are also active in the EU
Interest groups like Greens have been successful in slowing the growth of biotechnology industry
 NONMARKET STRATEGIES IN THE EUROPEAN UNION
Multiple level nonmarket strategies Implemented at the levels of Member States and EU
e.g. cap-and-trade system among the signatories to achieve Kyoto Protocol goals on Climate Change

Representation and Informational Strategies are important in a Multi Level body like the EU

EU Institutions, Constituencies and Access

Institution
European Commission
Council of Ministers
European Parliament
Economic and Social Committee
Constituency Access
EU wide Constituency Member DGs, Commissioners, Staff
States, Citizens, Interests
Member States Member States, Political Parties,
COREPER, Working Groups
Voters Committees, Political Parties,
Members of Parliament
Interests Representatives, Associations
 NONMARKET STRATEGIES IN THE EUROPEAN UNION
Representation Strategies Based on the Constituency for each of the principal EU Institutions
e.g. Constituency of the Council of Ministers is the Member States - Representation Strategies targeting the Council
are implemented primarily through the member state governments.
e.g. European Union Data Protection Directive (B) - Working party composed of data protection regulators in each of
the member states met with industry groups and companies about the revision of the directive.

Lobbying principal political activity for implementing both Representation and Informational Strategies in the EU

Informational Strategies Center on the strategic provision of information to EU officeholders

e.g. The European Commission - is the agenda setter for legislation and administers policies. Relatively small staff,
it needs information and expertise for its legislative and regulatory actions. Advisory Committees, Policy Forums and
NGOs play an important role
Working Groups and Committees used for formulating and implementing legislation, e.g., Advisory, Management,
Regulation and Oversight Committees

e.g. Influencing the Council of Ministers - COREPER is required by law to consult directly with interests, industry and
labor organizations as it is expected to resolve political issues on behalf of the Council

Peak Organizations like UNICE, Ad Hoc Coalitions or Independent Political Action are used to advance agenda
through political and other nonmarket actions.
 PRONUPTIA CASE AND FRANCHISING
Pronuptia de Paris known for its wedding dresses entered in a franchising agreement with a
German retailer to sell its wedding dresses only and in some specific territories
German court invalidated the franchise agreement which led to the French franchiser to appeal in
Court of Justice
U.S. franchisers saw the decision crucial to their use of U.S. style franchising agreements in EU
They lobbied with the commission which was preparing to file an opinion in the court
The commission argued that franchise restrictions were necessary to maintain product quality
In 1986 the court overruled the German court and upheld the right of franchisers to restrict the
action of their franchisees on several dimensions
 U.S. Franchisers were still concerned that the franchising arrangements allowed by Court of Justice
might be challenged under the antitrust provisions in Article 101
Some franchisers including Pronuptia sought and received exemptions from the commission
The Franchisers wanted the commission to grant a broader exemption from antitrust rules for
franchising agreements
Some of the companies in contention were Mc Donalds, Pizza Hut, KFC, Coca-Cola etc.
U.S. franchisers were granted almost all of their demands except that they were prohibited from
requiring franchisees to purchase one brand exclusively
THANK YOU