Piepergate: VDL propels anti-regulation zealot into a major new Commission job

European Commission President von der Leyen has created a new and apparently powerful position; while many eyebrows have been raised by the way she propelled German conservative MEP Markus Pieper into the job. The role is EU SME Envoy (SME means small and medium enterprises), a newly created post which reports directly to her as Commission President; during a press conference, von der Leyen hailed Pieper as “the new SME Commissioner” indicating the role will be a significant one. Given his record, it's clear that Pieper's appointment is part of a further deepening of the Commission’s so called 'Better Regulation' agenda that in reality boosts corporate lobbying power and throws up hurdles for much-needed social and environmental protection initiatives.

Cronyism and controversy

The appointment – a four year term, without a clear starting date – is, ostensibly according to the Commission to provide them with "guidance and advice... on SME issues and to advocate SME interests externally". But it has run into major controversy after La Matinale Europeenne revealed that von der Leyen pushed through Pieper’s appointment despite the fact that two other women candidates had been ranked as more qualified in the Commission’s recruitment process. As the news site reports, “von der Leyen is suspected of having chosen Pieper to secure the support of the CDU [the German Christian Democratic Union political party] for a second term as Commission president”. Meanwhile EurActiv reports that Czech MEP Martina Dlabajová and Sweden’s Anna Stellinger “both scored higher than Pieper in the assessments by at least 30%”. The term ‘Piepergate’ is now used to describe von der Leyen’s heavy-handed bypassing of official EU recruitment procedures.

Transparency International EU has demanded an independent investigation into Pieper’s appointment. A cross-party group of MEPs has submitted a written question
about the flawed appointment procedure, asking the Commission whether Pieper's affiliation to the CDU played any part in his appointment. And MEP Dlabajová, who was one of the two other candidates, has challenged the European Commission over Pieper’s appointment, “questioning whether the selection process was based on merit and equal opportunities”.

In addition to von der Leyen’s opportunistic intervention in the recruitment procedure, there are other reasons to be deeply concerned about the catapulting of Pieper into this powerful new role. It's not clear whether actual small business interests will truly be served, given Pieper's procovlivity to push policies friendly to large multinational corporations. He has a highly problematic track record: during his years as an MEP Pieper revealed himself as an anti-regulation crusader and a close friend of the fossil fuel industry (see boxes and the sections below). We consider that this track record makes him a really inappropriate pick for any EU top job. 

Centring 'competitiveness' 

Pieper's appointment comes during a worrying political context. As the German newspaper Handelsblatt wrote in its coverage of Pieper’s appointment, "Commission chief von der Leyen is preparing to make strengthening European competitiveness the central theme of a possible second term in office.” Gitta Connemann, chair of MIT, a pro-business grouping in the CDU, welcomed Pieper’s appointment and described him as “an experienced and committed advocate who will fight for the companies”. Similarly a German business magazine called Markus Pieper's appointment “excellent news for the German and European economies", stating that "he will be an excellent contact for representatives of European business." Handelsblatt argues that Pieper’s appointment comes as a response to dissatisfaction in German business circles: "European politics has lost its reputation in the economy in recent years. Support for Brussels initiatives is dwindling, especially among German medium-sized businesses and increasingly in industry. Many companies find the total number of regulatory projects overwhelming.” According to the newspaper, the EU initiatives that have disgruntled German industry include laws to protect virgin forests, an import ban on products made from forced labor, the taxonomy for green investments, and the ‘Fit for 55’ climate package. In an op-ed published on the website of the German employers’ federation last year, Pieper rallied against almost all these pieces of legislation and more, warned against “ecological overregulation” and called for a “regulatory break”. 

Whereas the launching of an EU SME Envoy position was a demand by small business lobby groups like SMEunited, powerful big business lobby groups like BusinessEurope (which represents numerous large corporations) and EUROCHAMBRES were equally eager to get the new role launched. In Autumn 2021, for instance, BusinessEurope's President called for the “urgent” appointment of a European SME Envoy. It should be noted that the category SME includes some fairly large businesses, including those with up to 250 employees. The interests of small companies are far from identical with those of large multinational companies, for instance when it comes to the EU’s public procurement rules which currently favour multinational giants. Cities from Preston to Barcelona have directed their procurement budgets towards supporting small local businesses and socially oriented companies, with large tenders split into smaller contracts to enable local SMEs to have a fairer chance, and social clauses are attached. This approach has given a boost to local economic development, and reduced dependency on multinational corporations. EU procurement rules should urgently be overhauled to remove hurdles for cities wanting to redirect their procurement budgets this way. But these are not the kind of SME-support-policies that a neoliberal hardliner like Pieper will pursue.

A back door for corporate lobbyists

The Commission's statement on Pieper’s appointment presents a very general picture of the role of the EU SME Envoy: Pieper is to "provide guidance and advice to the Commission on SME issues and to advocate SME interests externally ensuring that the 'Think Small First' principle is applied effectively”. The EU SME Envoy will also "work together with business associations to advocate for the special concerns and needs of SMEs within the Commission, in line with the Commission’s Better Regulation agenda”. ‘Better Regulation’, which a Corporate Europe Observatory report nicknamed "corporate-friendly deregulation in disguise", is a set of mechanisms introduced by the Commission over the last decade that lead to weakening of rules protecting consumers and the environment, and the obstruction of new rules. 

‘Better Regulation’, introduced after heavy corporate lobbying, has changed how EU rules get made and given business a bigger say in the process. The Commission statement specifies that Pieper’s role includes “filtering upcoming SME-related EU legislation and signalling to the Commission those that merit close attention from an SME perspective, in a regular dialogue with the Regulatory Scrutiny Board." The Regulatory Scrutiny Board scrutinises all draft laws, and intervenes in a very large number of cases, demanding changes to these laws. The RSB, for instance, gave negative opinions on proposals for the CSDDD [Corporate Sustainability Due Diligence Directive, and the Right to Repair directives]. This is one of the reasons that the RSB, in effect more of a 'de-regulatory board', has run into controversy in recent years. In spring 2023, the European Ombudsman opened an investigation into the RSB, after a complaint by Corporate Europe Observatory that the RSB has been too available to industry and others with a deregulatory agenda, and is not properly transparent about its work. Pieper will report directly to President von der Leyen. But much remains unclear about the precise remit of the SME Envoy post, including the transparency requirements around the activities of the Envoy and other rules that will apply to the role. Corporate Europe Observatory has therefore submitted a FOI request to get hold of documents that might provide a more detailed insight to Pieper's new role. 

Remarkably, von der Leyen appointed someone else as EU SME Envoy in May 2021. Back then the European Commission announced that it had installed Vazil Hudák as the EU SME Envoy, but he never actually started the job. His appointment quickly ran into controversy, among other things because of his background having worked for mega-banks like Citigroup and JPMorgan Chase Bank. At that time the CDU’s parent political group, the EPP attacked the candidacy of Vazil Hudák, questioning his credentials for the job. Among the most vocal critics were MEP Pieper and fellow CDU MEP Ehler, who didn’t mince his words: “This nomination... confirms that the Commission treats small enterprises with contempt.” Despite having been appointed, Hudák never actually started work as SME Envoy. The EPP insisted it should be a full-time job and that the envoy should report directly to von Der Leyen. These demands have now been fulfilled in the new setup around the SME Envoy. And Pieper, one of the most vocal critics of Hudák’s appointment, now has taken the job himself!

Attack dog

It's not just Pieper's corporate-friendly policies or deregulatory zeal that make him a deeply troubling appointment. He has had both the European Ombudsman – whose role is to investigate complaints about poor administration by EU institutions or other EU bodies – and NGOs in his sights too. 

Pieper has on several occasions tried to undermine the work of Ombudsman Emily O’Reilly who dared to investigate some of his political priorities. Pieper voted against the discharge of the Ombudsman’s 2018 budget and called for the postponement of the discharge of her 2019 budget. He also submitted an amendment calling into question her inquiry (sparked by a complaint from NGOs) about the inclusion of gas projects in the Commission’s PCI list (see above). Pieper claimed that the Ombudsman had a “partisan political position” by requesting clarifications about the inclusion of gas projects. He was also concerned over the Ombudsman's inquiry into the Commission’s decision to award Blackrock Investments a contract to provide advice on sustainable investments. Corporate Europe Observatory and other NGOs had complained against Blackrock’s advisory role, given its massive unsustainable investments and a track record of lobbying against strong environmental, social, and governance (ESG) rules. 

And that's not the only run-in Pieper has had with civil society. From 2017 onwards he has been on a mission to get the European Parliament to endorse his own-initiative report criticising non-governmental organisations (NGOs). This was clearly motivated by anger about the civil society campaigns that successfully alerted the public to the harmful impacts of proposed free trade deal with the US, TTIP. When he first tried to get an own-initiative report about NGOs through Parliament in 2017, Pieper advocated that NGOs should only be eligible for EU funding if their objectives are not contrary to “strategic commercial and security-policy objectives” of the EU institutions. The motive, clearly was to punish NGOs such as those who alerted to the dangers of the proposed TTIP agreement, including the risk of corporations using investor-to-state dispute settlement (ISDS) to challenge government policies they disliked, including climate policy. Today, the EU itself is aware of these risks, as seen from the EU’s withdrawal from the Energy Charter Treaty. 

Pieper’s initiative was heavily criticised by other MEPs. The Greens, for instance, referred to the report as “a badly-disguised attack on non-governmental organisations" and were “extremely concerned about this increasing aggressiveness towards the public and organised citizens”. His report was voted down in the end, but after the Qatargate scandal broke in December 2022, Pieper saw a golden opportunity to renew the assault, and this time with more success. The scandal centred around former and current MEPs and their assistants accepting bribes from the Qatari government in return for influencing parliamentary decisions. It involved a fake front organisation set up under Belgian law as part of the corruption scheme, and Pieper and his EPP colleagues disingenuously used this as an excuse to launch a new attack on all NGOs. In this new context, Pieper’s own-initiative report was approved by the European Parliament’s plenary, although in a softened version. The Civil Society Europe coalition blasted the report for being “largely based on assumptions or opinions and is not justified by any substantiated analysis by EU institutions and bodies or verified risks or malpractice”. It further warned that the report “contributes to a dangerous narrative about NGOs" given the "context where the space for civil society is shrinking”, and “has the dangerous potential to weaken NGOs’ work in holding EU institutions accountable”. 

It is troubling that Pieper may now continue these political crusades from his new role at the Commission.

Holding VDL accountable

To sum up, Pieper’s appointment as SME Envoy fits with the rightwing, anti-regulation turn that UrsulaVon der Leyen has chosen for her bid for a second term as Commission President. There’s every reason to be concerned about the damage Pieper could do in an official role so close to the top of the Commission. 

This includes predictably intervening against any progressive social or environmental policy initiative, with claims that these are harmful for SMEs. The idea that his policies will now be promoted on behalf of small and medium-sized enterprises also gives political cover to push the same corporate-friendly policies he has consistently pursued. Pieper’s appointment spells disaster for a return of the many important pieces of European Green Deal legislation (REACH revision, pesticides reduction law, etc) that got stuck during the last year of the first VDL Commission. Pieper may also use his new role to promote his long-standing agenda, such as initiatives to restrict the funding and activities of NGOs. 

It is therefore crucial that MEPs insist on holding VDL accountable for her decision to hand the job to Pieper, thereby bypassing normal appointment procedures for Commission top jobs. And whether Pieper or someone else starts in the SME Envoy job, political scrutiny of this and other aspects of the Commission’s increasingly aggressive ‘Better Regulation’ drive will be more important than ever.