Confusion over EU data bill costs

07.05.13 @ 08:19

  1. By Nikolaj Nielsen
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BRUSSELS - Those who support the EU's proposed data protection bill and those who oppose it are putting forward vastly different figures on the cost of the new law.

  • The European Commission says the data regulation will cut administrative costs and save industry billions (Photo: bourgeoisbee)

"It's been a massaging of the numbers on both sides," Chris Pounder, the director of the UK-based legal training company Amberhawk, told this website.

"This cost argument needs to be bottomed out," he added.

The European commission’s January 2012 report says the fragmented nature of current EU data protection directive creates annual administrative costs of some €3 billion.

Member states base their national data protection rules on the old directive. But divergent national rules and enforcement creates legal confusion whenever data is litigated across borders.

The new regulation proposes to bring all the rules on data protection under one umbrella and to have them applied uniformly across the Union.

The commission says the exercise would save industry €2.3 billion annually.

"The savings were mainly calculated on the basis of the costs that are incurred today by having 27 national and different rules instead of one single rule," EU spokeswoman Mina Andreeva said in an email.

She pointed out that the commission's impact assessments have to pass an independent impact assessment board.

Hewlett Packard, an IT firm which employs over 320,000 people worldwide, agrees that the commission's push to create a more simple EU-wide law will save it money.

"Having better harmonisation and having clear rules will generate some cost benefit," said Daniel Pradelles, a senior Hewlett Packard privacy officer.

Other big companies take a similar line.

But some also express concerns that heavy-handed regulation will drive innovation away from Europe.

An insider at the Swedish-based mobile company Eriksson says compliance costs are not the most important issue when it comes to the long term implications of the new regulation.

Instead it is the potentially lengthy time-to-market path for new products.

Such delays will drive up costs and make companies in the EU move their innovation investment outside the European Union, said the Eriksson contact.

For their part, euro-deputies in the civil liberties committee, which is examining the proposal, have not questioned the commission’s figure.

But others - like the UK government, the French postal service and the pro-business American Chamber of Commerce in Brussels - have done so.

They argue the regulation will bring in additional expenses and not the savings touted by the commission.

Allain Barrault, national secretary of the Paris-based CFDT trade union, said in a one page letter addressed to the European Parliament in April that "the direct marketing sector would be losing €1.25 billion and 25,000 jobs."

The American Chamber of Commerce in its report released in March says the regulation could slash up to 1.3 percent off the EU's GDP and that EU services exports to the United States would drop by 6.7 percent due to loss of competitiveness.

The regulation, it says, would cost each household in the EU up to €3,500.

Meanwhile, the UK, which has opposed the EU’s regulation from the outset, says British industry stands to lose between £100 million (€118m) and £360 million (€425m) a year.

"The two [UK and commission] numbers don't agree. That needs an explanation,” says Amberhawk's Pounder.

Pounder, who analysed the UK report, says they stretched the figures over a 10-year period.

"I’m sure they stretched the numbers over 10 years because 10 times a small number is a big number,” he noted.

The parliament’s civil liberties committee is currently going through some 4,000 amendments on the heavily-lobbied bill before they put it to a vote in June or July.

The committee’s secretariat told this website that it was not aware of any other member state, aside from the UK, that has conducted an impact assessment report.

The EU draft regulation aims to make it easier for people to control their personal data.

But the UK government estimates the commission’s proposal would prompt more people to ask to access their data and so add an annual administrative expense of around £30 million to the industry.

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