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GDPR fines jump as EU regulators raise pressure on business

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Fines imposed under the General Data Protection Regulation have increased by almost a half over the past year as European authorities flexed their regulatory muscles despite disruption caused by the pandemic.

A total of €272m has been levied in fines by European data protection authorities since the introduction of the GDPR in 2018. Over half of those penalties were imposed by Italy and Germany.

According to research by DLA Piper, €159m of those fines were imposed in the past 12 months, an increase of nearly 40 per cent on the first 20-month period after GDPR came into force.

“Regulators have been testing the limits of their powers this year, issuing fines for a wide variety of infringements of Europe’s tough data protection laws,” said Ewa Kurowska-Tober, global co-chair of DLA Piper’s Data Protection & Security Group.

Bar chart of Top 10 countries by total GDPR fines (€m) showing Italy and Germany lead the way for GDPR fines

The largest fine imposed under GDPR so far came from the French data protection authority, the CNIL. In 2019, it issued a €50m fine against Google, saying that the tech group had failed to be transparent on how data were used and that it lacked a legal basis for personalising advertisements.

Other sectors that have been hit with large fines include retail, hospitality, telecoms and oil.

Germany and the Netherlands have had the most notifications from companies that suffered data breaches. The total of 121,165 notifications over the past year represents an increase of nearly 20 per cent compared with the same period from 2019-20.

France’s €50m fine for Google in 2019 remains largest single case, top 10 individual GDPR fines (Value in fines, €m)

However, the enforcement of GDPR in Europe has not been without hurdles.

“[Regulators] certainly haven’t had things all their own way, with some notable successful appeals and large reductions in proposed fines,” said Ms Kurowska-Tober.

Last month, the Austrian data protection authority’s €18m fine against the country’s postal service was overturned after it appealed against the decision in a federal court.

Bar chart of Top 10 countries by data breach notifications  (thousands, from May 25 2018 to present) showing Germany and Netherlands account for majority of breach notifications

Ross McKean, chair of DLA Piper’s UK Data Protection & Security Group, said that regulators had also shown a “degree of leniency” during the pandemic, reducing several high-profile fines because of financial hardship.

One notable case was the fine from the UK Information Commissioner’s Office against British Airways for a data breach in 2018 that was reduced from a proposed £183m down to £20m — still the fourth-largest GDPR fine on record.

Mr McKean said he expected additional enforcement actions to arise over the coming year as a result of the Schrems II case, which left questions remaining over whether data flows to the US were legal under its current surveillance laws.

“It is positive to see that the number and size of the fines imposed under the GDPR continues to grow,” said Estelle Massé, senior policy analyst at Access Now.

“Moving forward, DPAs should not only look at fines but also use all other punitive sanctions available under the GDPR, such as the possibility to suspend data transfers or to request data acquired unlawfully to be deleted,” she said.

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Europe

Germany’s CDU rocked by pandemic procurement scandal

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German chancellor Angela Merkel’s centre-right bloc has been rocked by scandal after two of its MPs announced they were resigning following disclosures that they had personally profited from government deals to procure coronavirus face masks.

The announcements risk damaging the party ahead of two important regional elections next Sunday in the western states of Baden-Württemberg and Rhineland-Palatinate.

The polls are seen as a critical test for Armin Laschet, the new leader of Merkel’s party, the Christian Democratic Union, who was only elected in January and is still seeking to stamp his authority on the party.

Nikolas Löbel, a CDU MP, announced on Sunday that he was retiring from politics after it emerged that a company he owned had earned a €250,000 commission by acting as a middleman between a mask supplier in Baden-Württemberg and two private companies in the state.

The MP, who is also managing director of a company in the south German town of Mannheim called Löbel Projektmanagement, said he was resigning his membership of the CDU/CSU parliamentary group with immediate effect. He also said he would step down from the Bundestag at the end of August, and not run again for parliament in elections in September.

“To be a member of the German Bundestag and be able to represent my home town Mannheim is a great honour and an especially moral obligation,” he wrote in a statement. “With my actions I have failed to live up to these standards. For that I would like to apologise to everyone in this country.”

But that didn’t go far enough for party leader Laschet, who said Löbel should quit parliament immediately.

“All of us — politicians on the federal, regional and municipal level — are doing all we can at the moment to bring this country through the crisis and protect people,” he said in a statement.

“And whoever does business with this protection, and who personally enriches himself from that, is no representative of the people. And he must leave parliament at once.”

A similar call came from Markus Söder, the powerful prime minister of Bavaria and leader of the CDU’s sister party, the CSU. “All those involved should wipe the slate clean and draw the fundamental consequences,” he tweeted. “Anything else harms people’s trust in politics.”

Löbel’s resignation came just two days after the CSU MP Georg Nüßlein was forced to resign as deputy leader of the CDU/CSU parliamentary group in a similar scandal. Nüßlein, who is now being investigated for corruption, also said he was retiring from politics, though like Löbel, he intends to remain an MP until September’s election.

Nüßlein earned a large commission after his consulting firm helped to negotiate a big delivery of face-masks from a Chinese supplier during the first wave of the coronavirus pandemic.

Police investigators searched premises in Germany and Liechtenstein last week, including Nüßlein’s office in the Bundestag and his constituency office in the southern state of Bavaria, in connection with the case. Nüßlein himself has denied the allegation of corruption.

Opposition politicians reacted with fury to the mask scandals. “It makes no sense to people when MPs from government parties use their contacts to gain a financial advantage from an emergency,” said Volker Wissing, general secretary of the liberal Free Democrats.



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Mario Draghi makes his mark with vaccine embargo

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It did not take Mario Draghi long to make a mark in Europe as Italian prime minister.

At his first EU summit as premier at the end of last month, the former head of the European Central Bank made a forceful intervention about the slow pace of Europe’s vaccination drive and the need to get tough with pharmaceutical companies over their failure to deliver promised vaccine supplies.

Seven days later, the Italian government confirmed that, with Brussels’ approval, it had blocked a consignment of doses of the Oxford/AstraZeneca vaccine destined for Australia under an EU-wide export authorisation scheme that has been criticised by other countries. The company has fallen far short of its promised deliveries to the EU in the first three months of 2021.

Draghi, a man who earned impeccable internationalist credentials as ECB president, became the first leader to trigger an EU mechanism that critics see as vaccine nationalism that risks undermining the global fight against the pandemic.

“Imagine what would have happened if [former PM Giuseppe] Conte or [Matteo] Salvini had taken such a stance,” said an official with the Democratic party, part of the governing coalition.

Salvini, leader of the nationalist League which is also in the coalition, said on Twitter that he was “proud Italy was the first European country to block exports outside the EU”.

Draghi was installed as prime minister last month to break Italy’s political paralysis and revamp plans to spend up to €200bn in EU funds to support an economic recovery and faster long-term growth. But an alarming resurgence of infections in recent weeks means fighting the pandemic is his overriding priority.

Vials of the AstraZeneca Covid vaccine © Remo Casilli/Reuters

His robust stance on export controls was an expression of “strong restlessness” about the EU’s handling of the vaccination campaign, said Giovanni Orsina, director of the LUISS school of government in Rome. 

“The current situation shows a strong fragility in Brussels’ negotiating position towards the big pharmaceutical companies,” Orsina added. “Draghi is using his political clout to redress the balance in this regard, clearly also in Italy’s favour. Absurdly, having a person of extraordinary international prestige allows for a much stronger approach to national protection than a pure sovereigntist as prime minister.”

At the EU summit Draghi asked why the bloc had not imposed stricter vaccine export controls for companies that failed to meet their contractual commitments. Speaking to Ursula von der Leyen, European Commission president, by phone this week, he stressed “the priority goal of a more rapid European health response to Covid-19, especially on vaccines”, according to his office.

Meanwhile he has set out to reboot Italy’s vaccination programme which is run, with varying degrees of success, by regional governments. As of March 5, Italy had administered only 5.2m doses, or 8.6 per 100 people, below the EU average. More ambitious vaccination targets are expected within days.

Draghi has also replaced the coronavirus commissioner with an army logistics general who has experience in Afghanistan and Kosovo and who will work alongside a new head of the civil protection agency. The aim is to speed up vaccination across the country. The government is also weighing up whether to extend the interval between doses in order to increase coverage, as in the UK. 

Drive-through testing centres and other sites are being converted into vaccination facilities, and a €500m investment in a new manufacturing plant is planned.

“The Italian pharmaceutical industry is a sector to be proud of, and it is capable of ensuring the production of vaccines at all stages,” Giancarlo Giorgetti, economic development minister and League politician, said earlier this week.

The Democratic party official said replacing the Covid commissioner with a general was “concerning”, but Draghi’s efforts have otherwise drawn broad support.

Raffaele Trano, a former Five Star MP now in opposition, said “the muscular approach and the logistical revolution seem to be paying off, even against the big pharmaceutical companies who are not being reliable at all and whose priority is clearly to put profit before the health of citizens”.

“There is a need to act promptly, and Draghi is doing what he was called to do: speeding up the process as much as possible,” said Paola Boldrini, a centre-left member of the senate who sits on its health committee.

“Europe has acted as best it could, but Italy is in an emergency situation, which is the reason why the current government was formed,” Boldrini added. “Unfortunately, despite the great co-ordination in disbursing recovery funds, with vaccines the EU was not as efficient, the contracts that were signed [with pharmaceutical companies] underestimated the real production capacity of vaccines and Brussels found itself unprepared.”

Italian officials stress that the decision to block the vaccine consignment from Catalent, a Lazio-based fill-and-finish contractor, was taken jointly with the commission in accordance with the export transparency mechanism introduced in January.

“I would not interpret Draghi’s move, co-ordinated with the commission, through the lens of vaccine nationalism but rather of the EU’s willingness and ability to stand up to big pharma to protect its citizens,” said Nathalie Tocci, director of the Institute for International Affairs in Rome. The doses were intended for Australia, a country with few new infections and where the vaccination programme is still in its early stages.

“I don’t think that Italy would have taken this initiative if the country in question was either a developing country or one living through an emergency to the same extent EU member states are.”

“Recently the intra-EU controversy has been between institutions and big pharma, where the accusation is that the EU has not been able to stand up to companies, thus gambling on the lives of citizens,” Tocci added. “Seen through this lens, Draghi’s move, far from being an act of nationalism, could be read as the necessary step to prevent reigniting dangerous Euroscepticism.”

Additional reporting by Silvia Sciorilli Borrelli in Milan



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‘After a year we’re back to square one’: Milan locked in Covid’s grasp

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This time last year, chef Andrea Berton thought customers “might be overreacting” when they began cancelling tables at his Michelin-starred Milan restaurant amid a rise in cases of the concerning new coronavirus.

“It was a strange atmosphere,” he recalled this week. “The restaurant was suddenly empty at lunchtime and international customers kept calling to cancel bookings and events around the Salone del Mobile,” he added, referring to Milan’s annual furniture fair.

Neither he nor anyone else could have foreseen what would happen next. Days later, on March 8, Italy’s government ordered the immediate lockdown of the wealthy Lombardy region that includes Milan in an effort to stem the spread of Covid-19. The unheard-of restrictions were extended across the whole country the following day, confining 60m people to their homes.

It was the moment that Europe finally woke up to the threat from a virus that had emerged in China around the turn of the year. Within weeks, the entire continent — and soon the whole world — had been brought to heel by the pandemic.

“We were confronted with a virus we knew nothing about,” said Francesco Passerini, mayor of the small town of Codogno, an hour from Milan, where one of Italy’s earliest confirmed Covid-19 cases had been discovered in late February. “We didn’t know how to protect our community and we had people who were very ill. It felt like an impossible fight.”

Doctor Annalisa Malara with a patient in the coronavirus intensive care unit at a hospital in Lodi, near Milan, last month
Inside a coronavirus intensive care unit at a hospital in the city of Lodi, near Milan © Emanuele Cremaschi/Getty Images

A year on, an end to Europe’s coronavirus crisis still seems some way off despite the hope offered by vaccines. Most of the continent’s 750m citizens continue to endure curbs on their daily lives and the economic and social toll has been enormous.

In Italy — as in some other EU countries such as nearby Greece and the Czech Republic — the number of new infections is rising as concerns intensify over the threat from new variants. Lombardy, still Italy’s worst-affected region, is grappling with thousands of new cases daily and hundreds of deaths each week.

On Friday, a new two-week partial lockdown came into force across the region, with offices closed and employees told to work from home. Schools and playgrounds are shut and hospitality and travel are banned, although shops remain open — for now.

Yet as cases tick higher, experts fear it is only a matter of time before the curbs are extended.

“It won’t be long before the whole country goes back into the ‘red zone’,” said Guido Bertolaso, Lombardy’s vaccine adviser, this week, referring to the most stringent level in Italy’s coloured tier system.

Chart showing that cases and ICU admissions are rising again in Lombardy, with the number of ICU patients climbing 30 per cent in the last week

“Unfortunately it’s not over,” said Passerini, the Codogno mayor. “But it’s not comparable with last year because we’ve learned to live with the virus and now we have a vaccine. So we have something to look forward to.”

Looking back evokes painful memories. The most vivid was the day he and other volunteers had to empty a church to make room for dozens of coffins. “I remember watching the dead bodies being brought in and the church, a place of hope, suddenly turn into a morgue. I couldn’t believe it was happening,” he said.

In the weeks and months that followed, Carla Sozzani, founder of 10 Corso Como, a cultural, shopping and dining destination in Milan’s nightlife district, could not get used to the silence in a city known as a teeming hub for industry, banking and fashion.

“The only noises you could hear, day and night, were the ambulances and the drones they used to check nobody was leaving their homes,” she said. “It was unsettling.”

Mired in a series of lockdowns, Milan has welcomed only a fraction of the 10m tourists who came in 2019, a shortfall that has put immense strain on its economy.

There is hope that the new government of Mario Draghi, an experienced crisis manager who formerly ran the European Central Bank, can bring improvements by speeding up the vaccine rollout and leading an economic recovery.

Sozzani, a self-confessed optimist by nature, was certain that Milan would regain its vigour in time for the rescheduled Salone del Mobile in September, once more people had been inoculated. “The fair is a symbol of Milan and it will represent its rebirth,” she said.

Chef Andrea Berton has been forced to close his Michelin-starred Milan restaurant once again

In a sign of his frustration at the slow rollout, Draghi has moved to block the export of 250,000 Oxford/AstraZeneca doses destined for Australia so they could be used in Italy. As of this week, however, under 6 per cent of Italians had received a first vaccine dose.

One Milan-based anaesthesiologist, who did not wish to be named, also warned that intensive care units in hospitals across the region were rapidly filling up again.

“It reminds me of last spring,” she said. “The vaccine makes us hope for the best but we need to plan for the worst, because the rollout is too slow and people are dying.”

Berton was this week forced to close his restaurant again, a “stop-go approach” that he said would be the death of his and other businesses in the city.

“I would never have imagined it would last this long,” he added. “After a year we’re back to square one.”

 



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