Nota Bene Podcast Ep. 146
Distinctly Europe: German Elections, UK Supply Chain Chaos, ESG Guidance and a New EU Whistleblower Regime with Oliver Heinisch
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Listen to the original podcast released October 6, 2021 here: https://www.sheppardmullin.com/notabene-342
We catch up with our Europe-based expert, Oliver Heinisch, on upcoming changes for the fourth quarter of 2021 including updates on the German elections, Brexit and supply chain issues, and a new EU whistleblower directive.
Guest:
Oliver is a partner in the Antitrust and Competition Practice Group in Sheppard Mullin’s London and Brussels offices. Oliver advises on all areas of EU, UK and German competition law with a focus on international cartel and abuse of dominance procedures including related antitrust litigation matters as well as merger control law. He also regularly advises clients on questions relating to the UK’s decision to leave the European Union.
Transcript:
Michael P.A. Cohen:
Welcome to Episode 146, of the Nota Bene podcast. Thank you so much, to all of our listeners in more than 100 nations around the planet. We so appreciate your continued participation in our ongoing conversations and your feedback. Please keep it coming. It continues to help influence our program, including today, where we turn to our first, of our four regular quarterly check-ins on the world's large geopolitical regions and markets, both of those kinds of perspectives. Joining me for our first of our four Q4 geopolitical market check-ins, is regular guest Oliver Heinisch, from Europe.
Michael P.A. Cohen:
For those of you who may be joining the show for the first time, or need a refresher, Oliver received his undergraduate and legal degrees in Germany, at Humboldt University in Berlin. He received his Masters of Law at University College in London, in the United Kingdom. He is admitted to practice in England, Wales, Germany, and Belgium. He speaks fluent German, English, French, and Italian. We'll try to limit him to English today for our wider audience, and perhaps the lowest common denominator of the languages.
Michael P.A. Cohen:
Oliver specializes in European and multinational competition law. His bio will be linked to our show notes, for any of you who would like to reach Oliver or click through to see more about him. Oliver Heinisch, welcome back to the Nota Bene podcast.
Oliver Heinisch:
Thanks, Michael. Great to be back. Good to hear from you.
Michael P.A. Cohen:
So great to have you back on the show. It's really been a wonderful journey with you over the past three quarters, so thank you for your regular reappearances on the show, each quarter. As the earth tilts, so to speak, head into our last quarter where the days are shorter, and the air is a little bit cooler in the Northern Hemisphere. In the Southern Hemisphere, the days get a little bit longer, and the air gets a little bit warmer.
Michael P.A. Cohen:
There's a lot going on. Let's jump in. We're recording this show about a week out from release. I think there's some German elections that may have some results, so maybe we can start there. That seems like a pretty important place to start when you're talking about Europe, and everything Germany has meant to the European Union, over the past history, and certainly recent decades.
Oliver Heinisch:
Yeah, let's do that. Look, yesterday night, the elections took place in Germany, votes by mail, as you won't be surprised. The counts came in around 6:00 in the evening, with different predictions. Basically, the way it turned out was that the big parties, the big two parties, so the SPD, which is the Social Democratic Party, and then the CDU, the Christian Democratic Party, the conservative head to head in the results with the SPD being at 1% up.
Oliver Heinisch:
The city is the party of the incumbent Chancellor Merkel, significantly to the SPD, but then also The Greens as the sort of third strongest party, the environmental party and the liberal Democrats as the fourth strongest party. The good news is that despite COVID and recent challenges, none of the extreme parties have sort of gained ground to the country, they've lost ground.
Oliver Heinisch:
This board was certainly about voting for the center if you want, but the whole system in Germany is changing. Whereas, we always had the two big parties, maybe in coalition with the liberal Democrats, that is now a thing of the past. Now you have the two bigger parties basically being around 25%, and needing a coalition with at least two other parties, unless, as we currently have it, we have a grand coalition between the two big parties, and both parties have expressed the wish to no longer continue that.
Oliver Heinisch:
That's sort of the outcome. Of course, I think from a sort of international perspective, the key is that Angela Merkel, who's been in power for so long, for 16 years, will step down and we'll have a new chancellor. That's certainly, I guess, for the international audience, probably the biggest impact. In terms of what we expect the outcome of what the government will actually be looking like, that's difficult to say. Four years ago, we had months and months of negotiations between the smaller parties and the bigger parties and the city all at the time, which then failed and then ended up in a great coalition between the two big parties.
Oliver Heinisch:
This time around, I think the smaller parties, so the Green party and the liberals are probably more prepared, and they've already been set to have met today to basically discuss what they want on the bigger third party with which they want to govern. Of course, that's a different approach, and with Merkel being out of the picture, the smaller parties are probably not so worried to be sort of sidelined by a very dominant politician.
Oliver Heinisch:
Merkel has been dominating German politics for so long, and now we have had two candidates in the bigger parties, have a lot of experience, but do not have the standing that Angela Merkel has internationally and also within Germany.
Michael P.A. Cohen:
Who are those candidates, Oliver? I take it they're the sort of candidates that the two large parties threw up. So who are those candidates for?
Oliver Heinisch:
On the CDU side, you have Armin Laschet, and he's currently Minister President of North Rhine-Westphalia, and then you have Olaf Scholz, the current finance minister of the SPD. These are the two candidates, Scholz, he's 1% ahead with his party. He obviously claims to become the Chancellor, but he has to build that coalition.
Oliver Heinisch:
The liberal Democrats are traditionally closer to the CDU, the conservatives, and they can make or break Mr. Scholz, and the same is true for Mr. Laschet. For the city who needs the Green to come on board, so nobody has won. It's difficult to say, and everything really depends on these negotiations, complex negotiations between the four parties involved really.
Michael P.A. Cohen:
Yeah. Is there some notion that maybe Mr. Scholz might be a preferred candidate here, in the sense that he at least represents some change in the party for the Chancellor, right, because I think the other candidate is from Ms. Merkel's party? Is that correct?
Oliver Heinisch:
Yes. In a way, yes. On the other hand, the big challenge the SPD has is you have Scholz being the candidate for the chancellery, but he's not head of the party. The two co-heads of the SPD, and they are much more from the lesser side of the political spectrum than Mr. Scholz is. The campaign of the SPD was very much focused on just the candidate choice, and the other sort of heads of the party were really stepping back and were in the background.
Oliver Heinisch:
The big question is, what do you actually get when you vote Scholz? You don't just get the person. You also get a program and different personnel in the background, which is a bit more unpredictable. That was obviously the campaign the CDU was making against the SPD.
Michael P.A. Cohen:
Yeah. Just from an outsider's perspective, an outsider American's perspective, I have a great deal of respect for Ms. Merkel. I think she's had to deal with one crisis after another, if you look at it over her 16 years tenure, and she's done an extraordinary job.
Michael P.A. Cohen:
She was a marvelous consensus builder, and I think will certainly go down as one of the great leaders in European history, but there is some fair criticism that she was too consensus oriented, that she should have pushed through the ability for the European Union to issue debt instruments, for example, and that she was far too conciliatory in the Southern European debt crisis. Now that's really a time bomb waiting to explode on whoever is the new chancellor and European Union, generally, meaning that austerity measures are going to kick in soon, because these countries are not going to meet their obligations on the timelines set forth.
Michael P.A. Cohen:
I have heard rumor that Mr. Scholz may be a little bit more prepared to use the force of Germany, which is by far and away the strongest force in the European Union and in Europe, to perhaps take a more aggressive role in some of these areas that Europe seems to stand to benefit from, by way of financial policy, that it is currently not benefiting from, from confederacy. What are your thoughts on any of that?
Oliver Heinisch:
I agree there are different views of the two parties on that. The question will be, of course, will Scholz be able to convince the other EU member states to effectuate substantial changes. Merkel did have, with her personality, quite a strong link into all the governments across Europe. The question will be whether Scholz, with his technical ability and obviously his financial background, having been a finance minister in Germany, whether he would be able to convince other governments.
Oliver Heinisch:
Of course, we'll have Mr. Macron, and they have elections soon as well, which might again, tilt the dynamics a little bit. Certainly, Merkel has the reputation of dealing well with crises, but keeping the ship steady without changing dramatically, policies and direction. The result of the election certainly shows that people are not happy with that. The Green Party didn't really make the headways they wanted, but they obviously are standing for substantial change. I think the city was slowly waking up to that, but yeah, we shall see.
Michael P.A. Cohen:
I'm actually fascinated by the German election, because I feel it may be an early but reliable marker for the turbulence that we see in a changing world, of trade and commerce and regulation, and so many other things. I'm kind of stricken, Oliver, by your point that, hey, this German election doesn't reflect in any way, radicalism. This is a centered election and we see two different parts of that center as you should, but we're between the 40 yard lines, to use the American National Football League analogy.
Michael P.A. Cohen:
I never know what to call American football on an international podcast, because no matter what you say, it's going to be confusing, but the middle of the field is what I'm talking about, folks. Take any sports field of your choice. The Germans are in the middle of the field, and that's great, but there's really no way to kind of have a steady ship. I mean, as Europe looks across to America, I would imagine it sees an uncertain and distracted ally.
Michael P.A. Cohen:
I think the events of the past week and France, America's oldest ally, and perhaps the only single nation responsible for America's independence, at least in substantial part, had to pull its entire embassorial staff out of the United States. I mean, just that fact alone is extraordinary to me, because the United States felt compelled to not inform France, over a nuclear submarine deal that displaced France's diesel powered submarines in the Australian part of the Pacific.
Michael P.A. Cohen:
America has not enjoyed the best reputation for reliability amongst the European experience over the past five years across two administrations now, not exactly. Perhaps that's an informed departure in some ways. I wonder if Europe doesn't need a little bit of change rather than steadying of the ship, so-
Oliver Heinisch:
Agreed.
Michael P.A. Cohen:
I just think that this fascinating election of reasonable people all in the middle reflects a lot of that thinking, a lot of that.
Oliver Heinisch:
Yeah. I agree with that, and I think Mr. Macron, certainly his role and his vision on a sort of stronger Europe, his position will have strengthened with Merkel being the sort of moderate and sort of consensus building person. With her gone, I think, and the two other candidates not having the clout, probably, Macron or Merkel have internationally, on the international stage, is agenda forward, which is probably a bit more also informed by the recent story you just mentioned, where obviously the UK played also an important role, but again, and we'll have these French elections, and we'll see how he will come out of that one. Uncertain times ahead.
Michael P.A. Cohen:
Yeah, certainly, some interesting times. Not really sure how the American moves in the Pacific, to perhaps counterbalance what has been a show of military power by China, actually are going to go anywhere. I mean, frankly, the Australians are never going to blow up a Chinese ship. Just the notion of this great deterrent, and this spread is so symbolic. I mean, it's just not going to happen, and where does that leave the economies of Japan and South Korea.
Michael P.A. Cohen:
They're not going to get nuclear sub technology, and they're not getting economic support from America. We can talk to Paul Kim about that, but the turbulence of the world impacts the American experience and the European experience, simply because of their roles, never being content in the modern world to focus more solely on their own affairs, and they are constantly focused on affairs around the world.
Michael P.A. Cohen:
These things do matter. The departure between European global policy and areas of trade and regulation from American policy and areas of trade and regulation can matter greatly, particularly when China has a very singular policy. However you feel about it, that is becoming more predictable and long term, at least something that is not subject to as many ruffles in its direction, so we'll see. We'll see. What else should we know? What else should we know about in Europe, Oliver? Pulling us back to your continent.
Oliver Heinisch:
Yeah, look, and probably a couple of words on Brexit. I think as people will have read, we have shortage of lorry driver crisis, and which ends up in, it feels like it's interesting to see all these queues of cars in front of fuel stations, hogging fuel, because we don't have enough drivers bringing the fuel that's actually in the country to the fuel stations, but that's just sort of a general sign of labor shortage.
Oliver Heinisch:
The labor market is very active, and more than a million sort of vacancies out there, which can't be filled. Now, post Brexit of the idea of switching on immigration, reducing the sort of the terms for people coming in that was just met with laughter in Europe, and a Polish driver sort of saying, "You can't just switch on and off immigration. That's not how it works." It's just a sign that on the one hand, the lorry drivers' market is, well, not working very well, and on the other hand, just a general lack of labor in the UK.
Oliver Heinisch:
That's the same for, we talked about all these people, fruit pickers, et cetera, but more importantly, I think what came out of recently, is that you remember with the Brexit being implemented here and the time pressure the government was under, there was a wholesale sort of implementation of European rules, international rules. Now the government is thinking of getting rid of a number of these rules, and that law is probably nine months old.
Oliver Heinisch:
They want to have sort of a short and swift procedure, not involving parliament, potentially, to get rid of these laws in a very under democratic way, so that's being criticized. Of course, with all these laws and changing the diversification from Europe, away from Europe, will increase, and that'll make it more difficult, of course, for companies doing business in the UK and the EU at the same time.
Oliver Heinisch:
More concretely in areas such as, we talked about data protection where we just got adequate status last couple of months or four months ago, that will of course impact on businesses here in Europe, and the uncertainty will increase. It'll also make the trade just more difficult and probably the overall negotiation's more complex. That's just a little bit of an update on Brexit. The usual construction sites continue, and the uncertainty increases.
Michael P.A. Cohen:
I'm so glad you put all of those things out there, and the way you phrased the significance of each of those developments matches my own kind of view of the world, the lorry drivers in particular being an early marker for what you and I have discussed. Brexit was really all about immigration policy, and now the United Kingdom doesn't have anybody to drive their trucks. I mean, just to put it bluntly.
Michael P.A. Cohen:
Like, forty percent of the lorry drivers left the United Kingdom and went back to Europe, and now there's nobody there to drive their trucks. If you've ordered something from, I don't know, X, you're waiting for, I don't know, I don't see a bunch of British people flocking to those jobs. Likewise, you see a lot of suffrage in America that I believe are also attributable to its own immigration policies over the past four years and presently under the Biden administration.
Michael P.A. Cohen:
Now, I think the images of folks riding the Texas border on horseback, trying to herd Haitians, who are literally fleeing the most horrid of circumstances back to Haiti, really no different than immigration that we've seen in America for some time, which has not been anything close to the words etched on the Statue of Liberty in the New York Harbor or the Statue of Freedom that sits a top of the United States Capitol Building in Washington, DC.
Michael P.A. Cohen:
America has become a different country than the one that accepted almost everybody who is in it. The result is, there are like a hundred ships outside of Long Beach. You can't get goods unloaded. The average days that ships are waiting in a harbor for stevedorage to unload containers is like six days, man, which is a whole lot of time and money in shipping, and sometimes, up to a lot longer than that.
Michael P.A. Cohen:
Same thing. You know? We're not seeing a lot of people filling a whole lot of jobs. America's economy looks healthy in a whole lot of ways, but I've been waiting for three months for a new Trane air conditioner unit that I used to wait three days for, so something's wrong. Something's not behind those numbers. Something's freaking off, and everybody's, "Oh, it'll all balance out, right? When water stops shaking." How is that going to balance out? When is the water going to stop shaking, when you're shaking the glass?
Michael P.A. Cohen:
We used to be in this world where we're really heading towards business without borders. Now I think the big picture ticket for our audience to take away, from what you've just described in Europe and what's happening in America, and what's happening in Asia, as we'll go through this Q4 analysis, we'll keep an eye on it, is we're in a world now of business with borders.
Michael P.A. Cohen:
Actually, it's just the opposite. It's been compounded. It's aggravated. I mean, you now need to navigate your business through borders entirely differently than you did just five years ago, when we were seeing a world of trade flow and the wealth of nations, by the way, rise, and we're not seeing that right now. What else do we need to know about the European continent?
Oliver Heinisch:
Right. The other area probably which is attracting a lot of attention and discussion more closer to our area of practice [competitional], is sort of the interplay of competition policies and sustainability policies. I think in 2019, the European Commission will have issued a Green Deal set of rules and roadmaps to make the US economy more sustainable and carbon neutral by 2050.
Oliver Heinisch:
It has since opened the, in particular, the competition directed opened a consultation on whether, and if so, how rules or competition all need to change to encourage innovation into sustainable technology, and also potentially collaboration between companies. The consultation is ongoing, and if listeners have views they want to express to the Commission or in this process, we're happy to help with that.
Oliver Heinisch:
Of course, the issues are, of course, the industry should be encouraged to innovate and into sustainable technology and also compete to become more sustainable, but of course, there are areas where investing into green technology, you might not be able to recoup these costs and then are the incentives right? The general message is that competition shouldn't be holding back companies from becoming greener, and the Commission has an incentive to ensure that the competition policy is not in the way of a more sustainable Europe.
Oliver Heinisch:
The commissioners identified in the consultation process, several areas, of course. One, with state aid, which is the concept we have in Europe, where the way governments support businesses with financial support is controlled by the European Commission. Of course, fossil fuels, for instance, shouldn't be supported anymore. The state aid regime should look very closely at the aims of the aid given, and of course, support transition into a more greener environment. That's one area.
Oliver Heinisch:
The other area is the classic sort of corporation between competitors in the area of antitrust, that certain collaborations should be made possible on the basis that they benefit the enhancement of sustainability, the joint R & D industry wide as the standard setting processes or agreements to bring more sustainable products onto the market and phase out unsustainable products. Then of course, merger control as well, another area where these policies should be taken into account during the assessment.
Oliver Heinisch:
Now, these are sort of the broad areas in which all of this is discussed, and the debate is ongoing, but the question really is, how can the Commission provide clear rules that give legal certainty to companies dealing with these industries and these problems. I think what we hear from the debate is that it's too early to say, but the Commission is currently reviewing its horizontal guidelines on cooperation between competitors.
Oliver Heinisch:
They might work some of these views on how competition will be looking at these efficiencies, potential efficiencies in there, and then also other guidelines they are currently looking at, so the vertical guidelines. Certainly more guidance will be expected. I don't think that the Commission is currently minded to drastically change the law or add to the law, but they have the tools available.
Oliver Heinisch:
Then the details will have to be assessed, and companies will be encouraged to approach the Commission or national regulators for guidance on particular questions of whether their sustainable goals are sort of in line with the policies, whether anti-competitive effects coming from the collaboration are outweighed by the benefits in terms of increased sustainability.
Oliver Heinisch:
Other areas are that the effects felt by collaborations, the restrictive effects are felt by certain customers in the market. Whereas, the benefits of that collaboration in terms of sustainability are felt either within the entire market, so the whole population or in a different market. The question is whether these out of market efficiencies can sort of outweigh the inefficiencies within the market.
Oliver Heinisch:
There's a lot to talk about. Of course, how do you quantify the sort of consumer benefit in the wider sense? It's not something you can economically easily show, and so that tests have to change, do we move away from a consumer welfare test, et cetera. I think this is a very interesting discussion in which we're involved in here in the early days, but I think it's a good discussion that's going on. It's certainly a very hot topic.
Michael P.A. Cohen:
I think it's super fascinating. We're entering this era of private equity investment, social responsibility goals, and governance goals, sustainability goals, working their way into the domestic and multinational business world in rapid fire ways, I think largely because of the adopted goals of owners, the investors themselves, as well as consumers for those companies that face a public market of buyers.
Michael P.A. Cohen:
Also, I think the efficiency of the greener world, it's actually less expensive and more productive than the fossil world, for example. A lot is being driven there too, but at the same time, I think, I've heard, and I'd love to get your reaction to this, but I hear this notion all the time from people like, "Well, it's an environmental goal, so we can get together and do whatever we want."
Michael P.A. Cohen:
I mean, that just ain't the rule, man. I've never seen that anywhere. I think it's great that Europe is trying to give guidance to that notion, but I think there's a real risk to companies that believe that just because their goal may be environmental, or governance, or social, our sustainability, that they can essentially reach agreements with others in the marketplace on whatever gets them there. That ain't the rule as I know it. What is your reaction to any of that, Oliver?
Oliver Heinisch:
Absolutely. That's sort of one of the criticisms of breaking up or opening up the existing exemptions, rules on exemptions. The Commission in Europe, we refer to that as sort of greenwashing anticompetitive agreements by just putting a sort of sustainability goal on top of it. Can you just implement anticompetitive practices?
Oliver Heinisch:
Of course, the Commission is very alert to that. Hence, I think the Commission is very much minded to keeping the rules as strict as possible, but of course, taking sustainability goals and efficiencies in that sense into account. The question is how, to what extent, and I think that's where we're going to be headed in terms of obtaining guidance or more case law in that area.
Michael P.A. Cohen:
Yeah. I think it's super, I think a lot of folks will be looking to Europe to see what it does in this important area, global competition and ESG, as we'll call it. Again, it's kind of fun to observe the different approaches, the globe's two large Western geopolitical markets, the European Union, and the American experience. Europe deals with these kinds of things more historically and presently through a regulatory process that is relatively transparent, invites a lot of stakeholder opinions and turns into rules.
Michael P.A. Cohen:
If you go to an American college, you kind of pull all that back to the Napoleonic influence of the Napoleonic code, and that may or may not be accurate. That's just what we learn here, but there are far more sort of code or legislation, regulation-based initiatives in Europe. It functions on a higher plane there. Very little legislation is passed in the American Congress, but the American states do pass a lot of legislation that is experimental and picks up various places where you see that kind of activity in Europe.
Michael P.A. Cohen:
But when it comes to competition law, the American experience is unique to its market. Number one, it's not something that can be extrapolated to, this should be the rule in the rest of the world. As the Supreme Court in America says about its competition laws all the time, we rarely see anti-competitive conduct in certain areas that's sustainable, that the market usually corrects it.
Michael P.A. Cohen:
Therefore, the violations of the competition statutes are really quite narrow. There's a preference in America for the actual market to correct the behavior rather than otherwise. That develops through the experience, the controversies and the common law. In America, there's a cloak over this area right now, as to what people can do or not do. There's nobody addressing kind of stakeholder input and what we might come up with to enable these things. It's going to be like trial and error and people getting slapped and all that kind of stuff.
Michael P.A. Cohen:
In Europe, we'll have some guidance emerge. I don't mean to characterize any one of those as better or worse than the other, quite the opposite. They're both adapted and meaningful to the experiences of those two marketplaces and suit their needs in ways that work for each of them respectively, but we will see a different emergence probably on a different timeline.
Michael P.A. Cohen:
Like, something will happen in Europe through this process, something will happen in America, like a firecracker case. It's like, all of a sudden there'll be a bunch of talk about it, and then it'll work its way through the common law of these two very simple statutes that have been around for 120 some odd years. I think that's kind of, I don't know, I'm perhaps being too nerdy, but I find that fascinating in many, many ways.
Oliver Heinisch:
No, absolutely very fascinating. I think the reason why it's still here on the agenda is just the urgency of the Green Deal and the environment. I think politicians here need to seem to be doing something and rightly so, of course. This is the process that's going to happen here.
Oliver Heinisch:
I don't know whether one is faster than the other. As you say, anything can happen in America, anytime. Cases can come up and create a common law in that space, so I guess we'll have to see, but I think here, things are on the way, and the process is moving ahead.
Michael P.A. Cohen:
Right. For our audience, that's what they need to know is that, look, Europe is going to give guidance here, so participate in it. If past is prologue in the modern history of competition law, following the European rule will probably be what gets you around the safety zones around the world, because other jurisdictions around the world in all of the major geopolitical markets have tended to follow the European guidance rather than the American guidance, because it's transparent and more predictable, and not subject to change through the American experience, so to speak.
Michael P.A. Cohen:
For our multinational businesses, this is an important area to watch in Europe, because you're likely to get guidance that is going to be adopted more uniformly across the globe, and also guidance that will help aid you and your business decisions in this important arena. What else do we need to know, Oliver, in our quarterly European check in?
Oliver Heinisch:
Well, look, the last topic I chose, and that's probably a little bit of a dry-eye topic, is just to mention the whistle-blowing directive, which has been adopted at the end of 2019, and now has to be implemented internationally by the end of this year. That will certainly bring about changes to the requirements and obligations for multinationals doing business in Europe.
Oliver Heinisch:
Around 40% of European companies have what we call a whistle blowing procedure. It's very, very little compared to probably in the US, where many more companies have a whistle-blowing procedure in place. Now, this is formalized, there's been a sort of a wide mix of different national laws so far. Now the European Commission has harmonized that area of law, and basically just to encourage reporting of illegal activity and then protecting the whistleblower from retaliation by the employer.
Oliver Heinisch:
These rules are being implemented in international laws, and companies need to know that there will be obligations to put in place, certain reporting procedures, internal reporting procedures, and then of course, policies have to be in place to protect what investigates wrongdoing. That has to be neutral, and then the individuals have to be protected.
Oliver Heinisch:
Of course, you have employment laws, data protection laws that also will play into that. We've set up several systems for clients of whistle-blowing systems across the EU. It's a rather complex exercise, but we have the overview of that. You have to deal with a number of different aspects in the organization. You have to make organizational changes, but the last thing hasn't been said yet on this topic, because of course it needs the national government to implement national laws.
Oliver Heinisch:
They will diverge, because of course the areas of laws that can be reported under the whistle-blowing directive, it's not a set list of areas. I mean, anti-money laundering, consumer protection, environmental protection, competition law, as well as public health, financial interests, et cetera, all of these things should be reported, but member states can add to these topics.
Oliver Heinisch:
Ultimately, once all 27 have implemented this directive, do we know what the rules really are, but I think companies are well advised to start preparing for that, because the overall structure is clear. The procedures that have to be put in place are clear, and then you will also be subject to fines if you get it wrong. How much there will be, that's a question for the national regulator, again, national legislator to put in place.
Oliver Heinisch:
I think it's good to just do some form of mapping exercise in terms of where you fall within that directive, and then implementing these channels, I think it's not so early to start with that and getting the discussions going with your works council in certain European countries where you have to, and just implementing disciplinary procedures, et cetera. I think it's not too early to start with that. Indeed, it's a good time to start
Michael P.A. Cohen:
That's so super interesting. What did you call that? A dry eye topic? I didn't catch that phrase [crosstalk].
Oliver Heinisch:
A dry eye topic than the other ones. Talking to the audience about legal obligations is never so much fun, but it's just part of the game.
Michael P.A. Cohen:
It's not legal. I mean, it is a legal obligation, but it's whistle blowing, man. That's a big deal.
Oliver Heinisch:
Absolutely.
Michael P.A. Cohen:
This is stuff from movies. Everybody ought to be engaged in that, and it is somewhat transformative. Oliver, let me just ask you one follow up before we wrap up here in this area, because I share your weight, the weight you've afforded this topic. I think it's important for our multinational business audience to know that there are going to be laws in Europe that encourage people to tattle on violations of important areas and their stand to be regulatory schemes to enforce those violations once reported.
Michael P.A. Cohen:
The question I wanted to follow up on is this, in America that has been incentivized by profit, so in other words, in two ways, really, states' attorney generals have made lots of money off of whistleblower statutes, and so government that recovers sums for violations tend to get more staff, more resources, and so those departments grow and that kind and fuels itself. The other thing that has mattered, I think a great deal in America, is that there are many statutes that essentially create incentives for private actions to enforce whistleblower claims.
Michael P.A. Cohen:
If those actions are proved to be correct, it is lucrative for the private enforcers, the attorneys and the whistleblower, and that has mattered a great deal. Will there be any type of private enforcement in Europe, or is this going to kind of go the way of government enforcement? I'm reminded of the whole debate in competition law between the kind of treble damages and private civil enforcement you see in America, of the competition statutes. I will say, not as robust a private action scheme in Europe for enforcement of [crosstalk] laws.
Oliver Heinisch:
Absolutely. No, I think, look, the whistleblower directive really goes towards the protection of the whistleblower in terms of retaliation by the employer. That's the sort of core of it and incentivizing actually whistleblowers coming forward. We don't have that business yet where we have enough whistleblowers going forward, so this is trying to incentivize that. Then of course, private actions as a result of that increase, I think that can be expected.
Michael P.A. Cohen:
Interesting. Well, we'll certainly keep an eye on that. Well, we're just about at the end of our time. Thank you so much, Oliver, for the wonderful journey through the year, Q1, Q2, Q3, Q4. It has been such a privilege and a pleasure to spend each turn of the season with you. I look forward to seeing you around the planet, as always. It's just been a real honor.
Oliver Heinisch:
Yeah, it's been my honor. Thanks very much for having me this time.
Michael P.A. Cohen:
You bet. Well, that's it for this week, folks. I hope you have enjoyed the show. Next week, we turn to Africa, with Primerio's Africa expert, Andreas Stargard. Until then, please be well.
Contact Information:
Oliver’s Bio: https://www.sheppardmullin.com/oheinisch
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