Regulating Lobbying Activities in the European Union
A Voluntary Club Perspective
Why do interest groups sign up to the European Union (EU) Transparency Register, a non-binding lobby regulation system? In a contribution to a recent issue of Regulation & Governance, Claire Muurmans and myself argue that concern for one’s reputation represents the most important motivational driver. Based on this, we suggest that the Transparency Register (TR) can be understood as a ‘voluntary club’ sponsored by the EU institutions. This theoretical perspective captures the appeal of the instrument among lobbyists, but also a number of inconsistencies in its current design, which make it unviable on the long term. In this piece I expand on the implications for the ongoing reform of the Transparency Register, and more generally for the regulation of lobbying activities.
The TR was launched in 2011 through an inter-institutional agreement (IIA) between the European Commission (EC) and the European Parliament (EP), and is managed by a small team (equivalent of six full-time employees) comprising of staff seconded from both institutions. They make up the Joint Transparency Register Secretariat (JTRS). The TR is a voluntary lobby register that asks participants to declare their policy interests, lobbying expenses, membership in EU consultative structures, and staff members responsible for public affairs. This information becomes publicly available as part of a searchable online database, adjacent to which is a code of conduct outlining rules of engagement with EU officials. Registration numbers have grown constantly since the inception of the TR (amounting to a little over 11,700 individual entries at the time of writing). Already back in 2013, its coverage of the target population was assessed at approximately 75% for business organizations and 60% for NGOs (Greenwood & Dreger 2013). These are not bad numbers for a voluntary regime, which raises the question of why interest groups (broadly defined) choose to sign up to the TR.
To answer this question, we take a target compliance perspective and distinguish between three types of motivation. Firstly, lobby actors might join the TR because it resonates with their internalised values and/or sense of obligation as members of the same public affairs community (normative compliance). Secondly, registration can follow a cost-benefit analysis that shows that being on the TR is the more advantageous option (instrumental compliance). Following this logic, the EU institutions have introduced a comprehensive package of access opportunities to both information and decision-makers, which is exclusive to actors who join the system (e.g.: free access to EP premises, the possibility to meet with officials at the highest echelons of the EC, access to EC expert groups and EP committee hearings). Finally, registration can also be supported by reputational concerns – actors may join the TR because they care about the evaluative judgements made by others concerning their behaviour (reputation-based/ hybrid compliance).
The analysis draws on 19 in-depth interviews with public affairs managers recruited from various types of stakeholders (i.e., industry organizations, NGOs, trade associations and consultancies) active in climate policy and tobacco control, two of the most contentious (and hence intensely lobbied) fields of EU policy. The selection was based on maximum variation sampling, a technique whereby a relatively small number of participants are picked to represent all important dissimilar types present in the wider population (Weiss 1994, Patton 2002, Rubin & Babbie 2009) – in this case, all the different categories of registrant listed in the TR. A maximum variation sample permits generalisation (within limits) because any common patterns that emerge from a highly heterogeneous group may be assumed to hold for the wider population as well (Patton 2002, Weiss 1994).
Findings show that the decision to join the TR relies on a motivational mix. While the concrete access advantages associated with registration were deemed appealing, interviewees were more inclined to evoke normative language when describing their participation in the TR and placed a higher value on the symbolic significance of registration. Being signed up was considered as “a stamp of legitimacy” which denotes that one is “a legitimate stakeholder on a given subject”. Not being on the TR “doesn’t look good” and can lead to effective “blacklisting” because one cannot build relationships “if people don’t like or trust you”. Data from a public consultation on the TR conducted by the EC in 2012 confirms the reputational significance of being signed up – nearly 94% of TR-registered respondents (N=233) stated that they believed being on the TR reflected positively on their organisations.
The centrality of reputational concerns indicates that the Transparency Register can be viewed as a so-called ‘voluntary club’ (see e.g., Prakash & Potoski 2006 and 2007, Prakash & Gugerty 2010, Tremblay-Boire et al. 2016). Voluntary clubs are – usually – private regulatory schemes that target for-profit actors (firms) and have as an objective their engagement in socially responsible behaviour that goes beyond what is legally required. The principal gain they provide, which induces members to implement otherwise costly measures, is the good reputation of being associated to the program ‘brand’. Brand affiliation represents a club good (hence the label ‘voluntary club’) because it is non-rivalrous (i.e., it can be simultaneously enjoyed by club members without being diminished) and excludable (i.e., it cannot be appropriated by outsiders).
Seen from this analytical perspective, the TR is a voluntary club sponsored by the EU institutions. Alongside preferential access to information and to decision-makers, registrants receive (non-rivalrous and excludable) branding benefits in the form of a ‘seal of approval’ regarding their legitimacy as lobby actors. In exchange, they are asked to put their lobbying information in the public domain and agree to abide by the rules specified in the code of conduct. The TR is a voluntary club where transparency (and hence increased opportunities for accountability) represents the core output.
The perspective of the voluntary club has concrete implications for the ongoing reform of the TR, which was initiated in 2016 with a proposal for a new IIA from the EC, and which has in the meantime been assumed by the von der Leyen Commission. As explained above, the TR has been designed as an incentive-based system where, in exchange for disclosing their lobbying information, registrants are rewarded with competitive advantages in terms of preferential access to decision-makers and to policy-relevant information. The 2016 package proposed an extension of this access conditionality to the Council of the EU (the Presidency and the Secretariat) and within the EP (meetings with MEPs and the high-level officials in the EP administration), in an attempt to approximate a legally binding regime. But, the voluntary club perspective presented here suggests that such access incentives might be less effective compared to improving the TR ‘brand’, since the reputational gains associated to registration are what lobby actors primarily care about. In this connection, the specialised literature (Prakash & Potoski 2007, Prakash & Gugerty 2010) highlights two aspects which define the credibility of voluntary club brands: the club standards (which are indicative of the costs incurred by members to join the club) and the enforcement mechanisms (which show the extent to which shirking behaviour among members is curbed). The stricter these arrangements, the more credible the club.
Room exists to enhance the voluntary TR on both these dimensions. Higher standards most visibly translate into expanding disclosure requirements. Apart from lobbying expenditure (which is currently covered), specific information regarding lobbying targets and objectives could – in theory – significantly advance the public’s understanding of what interests are being pursued in Brussels, by whom, and through what means. US and Canada might serve as best practice models in this regard (see e.g. OECD 2014). On the other hand, the monitoring and enforcement arrangements are a more pressing matter, as the TR is notorious for containing unreliable information, a weakness acknowledged by the EU institutions themselves (see e.g. Commission 2015). The 2016 draft IIA does not modify disclosure requirements significantly, but does provide some solutions for the monitoring challenge, namely an a priori quality check mechanism whereby, instead of directly publishing registrant data, as it is the case today, new registrants would first be screened for ‘eligibility’ by the JTRS before being granted a public profile. Equally significant, a recourse body (i.e., the ‘Management Board’) is proposed to review sanctions imposed by the JTRS. Finally, a more solid management capacity is to be expected if the Council joins the TR and sends additional staff to the JTRS.
However, a more significant challenge to the credibility of the TR as a voluntary club is EU institutions’ inability to guarantee differential treatment for club members. The voluntary nature of the TR requires that the EC and the EP police themselves in what concerns lobbyist interactions. But how can one be assured that officials in these institutions will actually respect access conditionality (i.e., interact only with registered groups), and, more generally, accept registration as a reputation mark? So far, the EC remains alone in finding an answer to this dilemma, with two decisions issued in November 2014, whereby Commissioners, their cabinets, and Directors General were obliged to only meet with registered interest representatives and to publish such meetings. After long and tortuous negotiations, the EP followed suit in 2019, requiring rapporteurs, shadow rapporteurs and committee chairs to also publish lobby meetings – although, significantly, no actual ban exists on seeing unregistered actors. For its part, the Council firmly refused to introduce access conditionality to any of its political structures, on grounds that interaction between national officials and interest representatives was “the sole responsibility of the member state concerned, including when serving as Presidency of the Council” (Council 2017, p.1). The difficulty with which EU institutions seem willing to impose even minimal restrictions on their own interactions with interest representatives raises doubts about their commitment as club sponsors for the TR, and eventually jeopardizes its successful operation.
In conclusion, more stringent disclosure requirements, stronger enforcement mechanisms, and a credible commitment from the EU institutions to “bind their own hands” in interactions with lobbyists can strengthen the TR as a voluntary club. There remain, however, insurmountable drawbacks to this model of lobby regulation, which make it unviable in the long run.
Firstly, our research has found that while actors may sign up to the TR to demonstrate their good standing as lobbyists, the actual experience of being registered can prove discordant or even undermine this initial objective. With a very heterogeneous membership, the TR incorporates actors who regularly find themselves on opposing sides in EU lobby contests, and use the information disclosed through the TR in the context of these confrontations. This is most evidently illustrated by watchdog-type groups (see e.g. Corporate Europe Observatory 2014, 2015) and other NGOs who use declared lobby expenditure figures as evidence for the dominance of corporate interests in the EU policy-making processes. For their part, business interests and consultancies question (less vocally) the independence of civil society groups, pointing to the heavy funding they receive from the EU institutions, particularly the EC. Of course, the point of the TR is to enable precisely this type of scrutiny, but it does mean that being a compliant club member may not be enough to enjoy reputational perks. The TR thus exemplifies a paradoxical situation where an instrument meant to legitimize lobbying by demonstrating that there is ‘nothing to hide’ is just as likely to contribute to further problematization of this activity.
Secondly, it is also questionable whether the TR actually enhances the legitimacy of the EU institutions as regulators of lobbying activities. Lobby regulation – in the EU as elsewhere – rests on the premise that opening up the black box of decision-making to the public eye will boost citizens’ trust in the political system by proving that officials have “nothing to hide”. However, because the TR is non-binding, it does in fact allow for some things to stay hidden. For its critical observers, this has always seemed to be more important than the “full half of the glass”, as it were. The TR is essentially a symbolic policy – the kind that is adopted “because there is a need to be seen to be doing something” (Hill & Hupe 2002, p. 140), and where consequently perceptions are as (or maybe even more) important than actual effectiveness. Accordingly, a traditional command-and-control regulatory model is perceived as being the more serious (effective) option. The current one – simply by virtue of its voluntary character – denotes lack of willingness to truly engage with EU’s lobby problem.
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About the author
Andreea Năstase is Assistant Professor in European Public Policy at the Faculty of Arts and Social Sciences, Maastricht University. Andreea’s research focuses on issues of public ethics and integrity in the context of EU governance. Her broader interests are in the areas of EU public affairs, European public administration, and public policy analysis. She is the author of 'Public Ethics at the European Commission: Politics, reform and individual views' (Routledge, 2017).