The EU proved its might a few years ago by vetoing a megamerger. Now, public affairs pros are adapting to a new world.
More than four years ago, many in American business awoke to the power of the European Union, when the proposed acquisition of Honeywell by General Electric was derailed by European regulators.
Last December came a reminder of this event, when the European Court of First Instance, based in Luxembourg, upheld the regulators' decision, but also found that the European Commission "made a manifest error of assessment in holding that the financial strength and vertical integration of the merged entity would bring the creation or strengthening of dominant positions on the markets."
"Fundamentally, this is legal speak for saying that the analysis carried out by the commission ...was flawed," explains Brad Staples, CEO of EMEA at APCO.
He adds that this ruling must be studied alongside a series of other cases that went before it, which came to the same conclusion.
Though it's too late for the merger now, and even as other companies like Microsoft have since faced EU problems, much has changed since 2001. The competition directorate, responsible for nixing the acquisition, has hired a chief economist and made other changes to reassess the way in which it looks at deals.
Companies have evolved their own communications strategies since then, too. "GE-Honeywell was a watershed moment," says Caroline Wunnerlich, MD of Fleishman-Hillard in Brussels. Not least because, she says, major companies realized they had to establish a beachhead in Brussels and become a participant, rather than a bystander, in the process. "The understanding is that you have to be a player, a permanent presence to contribute to the debate."
RULES OF ENGAGEMENT
Brussels is not DC, as companies will discover. "Brussels is not a transactional place, not a place where money will sway things," Wunnerlich says. "It's a consensus-building city. It's about contributing to discussions constructively, not just wanting something."
Engagement in Brussels has its own protocol and standards. "The rules of the game [here] are non-confrontational," says Josep Catlla, CEO of Weber Shandwick in Brussels.
"The power struggle between the business community, the Commission, and NGOs is probably more balanced than in the US. There has to be consensus between these worlds. [We] make sure clients are perceived as part of the solution, not the problem."
Companies that may be commercial rivals may unite over certain cross-industry issues, either independently, or through their trade group. The American Chamber of Commerce in Belgium is considered a sensible starting place for US companies exploring Europe.
Francine Lamoriello, who recently joined the Cosmetic, Toiletry, and Fragrance Association as EVP for global strategy, says that companies will gain by connecting with both US and European trade associations. "The positions aren't always the same," she adds. "But a number of our members are actively participating in both."
US companies can stumble when they try to blandly apply tactics and strategies that might be effective in the US to European communications. "Certain things might work in the US, but play against you here," says Jere Sullivan, EVP Europe/vice chairman for Edelman in Brussels. "For example, issue ads can be a big plus in the US. But the opinion here seems to be if you have to take out an ad, you are trying to buy the message."
Perhaps above all else, US companies must not assume that there is one single European sensibility. With 25 member states, this diverse group of countries contains regional perspectives that will be considered alongside their European-wide points of view. EU officials will be influenced by news coverage locally, as well as from their own countries (see sidebar). To reflect this diversity, PR firms with Brussels operations, and those locally headquartered, may be the most international in the world. At WS' office, for example, its 50-strong staff represents 21 different nationalities.
CHANGE IN EUROPE
Even as US corporations have been changing their approach to Europe during the past four years, the EU has also been changing. Last year, the group launched a massive reorganization of its communications structure, decentralizing its structure to serve individual member states better.
"It's the job of each member state to communicate...but very often, they don't," Beate Gminder, an EU member of cabinet who advised on the plan, told PRWeek in the August 25 issue. "That's a totally new paradigm, that we're saying we can't do communication [only]... from Brussels. We have to do it in our member states."
At the same time, while big legislative proposals are coming out of the Commission (including REACH, a community policy on chemicals, with wide-ranging implications for many industries), the volume of EU legislation is "much lower than it once was," says Robert Mack, MD of BKSH/Burson-Marsteller in Brussels.
Now that legislation has been adopted, the real work for companies is in influencing the regulatory procedures for these specific decisions. Having an inside track at the committee level is vital. Says Mack, via e-mail, "Many key decisions taken by the EU today that impact business are taken through these regulatory committees.