With the EU Due Diligence Legislation in play, the concept of mandatory human rights due diligence for companies is gaining momentum among governments and businesses in Europe. So how does this legislation matter? In terms of working conditions in India, for example, a government report found that:
The tragic collapse of the Rana Plaza factory in Bangladesh in 2013, which claimed the lives of over 1,000 people, confirmed for European lawmakers the need to establish a strict liability regime for corporate supply chains, says a report by Dr Daniel Sharma on dlapiper.com
The EU Due Diligence Legislation imposes liabilities on companies that procure their products through supply chains from India and South Asia and sell them in Europe. The aim is to establish sanctions under public law and establish complaint procedures for affected parties.
Let us take a look at how companies with supply chains to India and South Asia can safely navigate this new regulatory landscape at the EU level:
Implementing the above will allow companies to safely navigate European supply chain legislation without exposing themselves to sanctions or penalties.
The CRI Group™ has developed a highly specialised assessment solution for Corporate Due Diligence to assist organisations in accurately identifying, preventing, mitigating and addressing actual and potential adverse impacts of affiliating with global partners and complying with all EU mandates.
From enhanced due diligence to identify non-compliance with the regulatory framework and damaging environmental allegations to investigating company (or stakeholder) human rights violations related to labour laws, child labour or human trafficking, CRI Group™ experts help determine the legal compliance, financial viability, and integrity levels of outside partners and suppliers affiliated with your company’s value chain.
Based in London, CRI Group works with companies across the Americas, Europe, Africa, the Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research Solutions provider.
We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are, we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications and is an HRO-certified provider and partners with Oracle.
In 2016, CRI Group launched the Anti-Bribery Anti-Corruption (ABAC™) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification.
ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC™ for more on ISO Certification and training.
The most popular type of fraud is misappropriation of assets, including theft of cash and inventories. The motivation to commit fraud include a lack of understanding about fraud behaviour, opportunity to commit fraud and lifestyle and financial pressure.
The motivation for employee to commit fraud stems from three conditions:
Let us look at this case from 2019 which resulted in the conviction of a UK solicitor for fraud.
A former senior partner, the UK solicitor, has been jailed for four years after defrauding his firm out of a total of £2.3m. Andrew Davies, 59, paid personal invoices to himself from the business and under-declared £1.1m in stamp duty land tax to HM Revenue and Customs (HMRC) for over nine years.
Davies pleaded guilty to one count of fraud by false representation at Reading Crown Court in 2019 and was sentenced to four years imprisonment in January this year. As a senior partner at the firm, Andrew Davies managed to defraud it out of the money by paying personal invoices to himself from the business account.
The 59-year-old also under-declared £1.1m in Stamp Duty Land Tax to HMRC over nine years, over-declaring tax to clients and then taking money from the solicitor’s firms account for himself, both defrauding the company he worked for and HMRC at the same time.
Davies also raised invoices to pay over £1.6 million to his friend Stephen Allan, who worked as a property developer and was a firm client. The 62-year-old from Bishop’s Stortford was convicted at Reading Crown Court on one count of money laundering and jailed for three years.
In a statement, police mentioned the convictions and sentencing of a solicitor’s firm in Berkshire defrauded out of £2.3m between 2010 and 2017.
Allan then made smaller payments into Davies’ account and also pocketed around £400,000 himself. The solicitor extracted funds from the firm’s client account, paying it to Allan in transactions described as ‘fees’, but there was no known work for this.
Davies of The Street, West Clandon, Guildford, and Allan of Thornberry Road, Bishops Stortford, Hertfordshire, was charged by police officers in August 2019.
The statement did not name the firm, but a Solicitors Regulation Authority notice has previously stated that Davies worked for Reading firm Pitmans LLP, which has since become part of another practice. Davies has already been struck by the Solicitors’ Disciplinary Tribunal and ordered to pay £17,000 in costs.
Investigating officer Detective Constable Katie Taylor of Thames Valley Police’s Economic Crime Unit said: ‘In this case, a solicitor trusted to safeguard client funds abused this position and systematically defrauded his firm of large sums of money for his benefit.
‘He then used a corrupt relationship to launder the proceeds of his crime through a property developer. These professional enablers of organised crime represent a significant risk, and we hope that the conviction and sentence, in this case, will act as a deterrent to others.’
Source: Financial Crime News & The Law Society Gazette
Employee background check and employment history check is vital to avoid horror stories and taboo tales within HR, your business, or your brand. Simply investing in sufficient employment screening services can save you time, money and heartbreak.
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Based in London, CRI Group™ works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are, we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.
In 2016, the CRI Group launched the Anti-Bribery Anti-Corruption (ABAC™) Center of Excellence – an independent certification body established for ISO 37001 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000 Risk Management, providing training and certification. ABAC™ operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations.
There is growing momentum among governments all over the world that calls for Mandatory Due Diligence. This requires companies to undertake human rights and environmental due diligence. We now have the French Duty of Vigilance Law and the adoption in 2021 of new laws in Germany and Norway to the publication of a proposal for an EU-wide law in 2022, all moving in this direction. Major investors and companies are also speaking out in favour of such legislation, according to business-humanrights.org
Corporates will not be allowed anymore to focus on short-term benefits at the expense of long-term sustainable value creation. Environmental and social interests will also need to be fully woven into business strategies of the corporates.
Corporates are bound to get in line with human rights due diligence guidelines, as prescribed by the UN Guiding Principles on Business and Human Rights. Yet very few actually comply with the standards and nearly half of the biggest companies in the world analysed in the latest Corporate Human Rights Benchmark could not produce any proof of mitigating human rights issues in their supply chains.
The KnowTheChain benchmarks showed companies scoring a poor 29% for their human rights due diligence efforts — something that mandatory human rights and environmental due diligence laws seek to address.
For these laws should to be effective, a few important factors need to be factored in, such as a due diligence obligation for businesses across their global value chains; an effective and safe stakeholder engagement; mandatory requirements that go beyond routine check and audits, a thorough look at irresponsible business models and purchasing practices, and strong civil liability enforcement.
The CRI Group™ has developed a highly specialised assessment solution for Corporate Due Diligence and Third-Party Risk Management to assist organisations in accurately identifying, preventing, mitigating and addressing actual and potential adverse impacts of affiliating with global partners and complies with all EU mandates.
From enhanced due diligence to identify non-compliance of the regulatory framework and damaging environmental allegations to investigating company (or stakeholder) human rights violations related to labour laws, child labour or human trafficking, CRI Group experts help determine the legal compliance, financial viability, and integrity levels of outside partners and suppliers affiliated with your company’s value chain.
Recent studies have demonstrated a positive correlation between the extent to which companies implement environmental, social and good governance policies, and their overall economic performance, all while contributing to a more stable global marketplace. Such responsible business conduct will:
Further, apart from general compliance with EU mandates, such organisations will benefit from:
CRI Group’s corporate due diligence and accountability solutions can help your organisation comply with a growing list of global regulations and mandates related to human rights and the environment while acting as an integral part of your business decision-making and risk management systems.
Contact the CRI Group to learn more about our Corporate Due Diligence and Accountability solutions and stay one step ahead of the pending EU mandates. We look forward to assisting you.
Based in London, CRI Group™ works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider.
We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are, we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.
In 2016, CRI Group launched the Anti-Bribery Anti-Corruption (ABAC™) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification.
ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC™ for more on ISO Certification and training.
The Intellectual Property Commission estimates that IP infringements in the form of counterfeit goods, trade secret theft, and pirated software costs the US economy $225 billion to $600 billion.
Following the outbreak of the COVID-19 pandemic in late 2019 and its subsequent spread around the world, counterfeiters have turned their attention to producing fake testing kits, counterfeit personal protection equipment and, even before the authorities have approved treatments, fake medicines purporting to cure the disease, according to the 2020 status report by the European Union Intellectual Property Office (EUIPO) and the Organisation for Economic Co-operation and Development (OECD).
The joint report on counterfeit medicines showed that not only ‘lifestyle’ medicines but also medicines to treat serious diseases, including antibiotics, cancer therapies or heart disease medications, are subject to being counterfeited, with potentially deadly consequences for the patients who consume those medicines.
This report underlines the importance of IP rights to the EU economy and, therefore, to any recovery from the Covid-19 crisis, which has dominated the first half of 2020 and threatens to have long-lasting effects. It brings together the findings of the research carried out in recent years by the EUIPO, through the European Observatory on the infringement of Intellectual Property Rights, on the extent, scope and economic consequences of Intellectual Property Right (IPR) infringement in the EU.
The Status Report also contains research on the volume of counterfeit and pirated goods in international trade and the economic contribution of intellectual property-rights intensive industries to economic growth and jobs.
Depending on the type of business you are involved in, it is likely that your employees will create certain types of intellectual property in the course of their employment with you. This is especially true if they are involved in compiling databases, creating marketing material and training brochures. Since the IP rights here belong to the company they work for, an employee contract will serve to protect you here.
It is also vital here to run background checks on employees before you hire them.
Simply investing in sufficient employment screening services can save you time, money and heartbreak. The CRI Group is a leading worldwide provider, specialising in local and international employee background check, including pre employment background check.
Our employee background checks services, also known as EmploySmart™, is a robust new pre employment screening service certified for BS7858 to avoid negligent hiring liabilities and prevent horror stories and taboo tales within HR, your business, or your brand.
CRI Group’s Intellectual Property Investigations team helps companies identify threats to IP and confidential information internally and throughout their supply chain, develop the appropriate mitigation strategies and investigate suspected infringements.
For further information on IPR infringement or to book a meeting with our experts, click here.
The European Commission on 23 February 2022 adopted a long-awaited proposal for a Directive on mandatory corporate sustainability due diligence for widely-defined specified “companies”. The proposals cover obligations throughout the value chain and also attach to non-EU companies which meet specific criteria.
Companies need to prepare now both across their own business operations and their value chain to comply with the proposed Directive. While 2024 is the earliest the Directive will come into effect, the lead time will be needed to put compliant measures in place, or to face civil liabilities and significant fines based on turnover.
The proposed Directive establishes a corporate sustainability due diligence duty requiring specific companies to identify and, where necessary, prevent, end or mitigate the potential or actual adverse impacts of their activities on human rights and the environment. Companies will have to publicly communicate their findings in an annual report and there are express directors’ duties. A European Network of Supervisory Authorities will be created to ensure coordination and alignment between Member States, as per a report on cms-lawnow.com
The proposal recognises the important role that directors will play in this process, such that new directors’ duties are proposed to set up and oversee the implementation and integration of sustainable due diligence into the corporate strategy, and a remunerative incentivisation used to ensure climate change is incorporated within the scope of the corporate plan. A director’s duty to act in the best interest of a company will now include expressly taking into account the human rights, climate change and environmental consequences of their decisions in the near, medium and long term.
Although SMEs are not directly in scope of the proposal, the Commission proposes accompanying measures to support all companies that may be indirectly affected by the broad application of the draft Directive.
Member States are required to ensure that natural and legal persons are entitled to submit substantiated concerns to any supervisory authority when they have reasons to believe, on the basis of objective circumstances, that a company is failing to comply with the national provisions adopted pursuant to the Directive. They are also obliged to establish civil liability regimes where companies are liable for damages if they fail to comply with the due diligence rules and as a result of this failure an adverse impact that should have been identified, prevented, mitigated, brought to an end or its extent minimised through appropriate measures occurs and leads to damage.
Once the final version of the Directive is transposed, procedures and training will be required to ensure that companies have the requisite systems in place to be able to comply with the obligations and provide such reports. This will involve dialogue throughout the value chain and changes to existing contractual arrangements. Those not directly in scope should also consider their position and potential new requests for information to assist in the due diligence process by others. Once legislation is implemented, non-compliance can result in fines or orders issued requiring the company to comply with the due diligence obligation. Victims could also obtain compensation for damage due to non-compliance with this legislation, says cms-lawnow.com
The proposal will be presented to the European Parliament and the Council for debate. Once a text is agreed, approved, and then adopted, Member States will have two years to transpose it into national law. This initiative is part of a wider corporate sustainability package intended to advance the European Green Deal which also announced an agreed Council position on the Commission’s proposal for a Corporate Sustainability Reporting Directive.
In January 2023 a new German law, known as the Supply Chain Due Diligence Act, becomes effective and applies to companies operating or trading in Germany. The law introduces a legal requirement for businesses to manage social and environmental issues in their supply chains, through more responsible business practices.
The Act requires businesses to undergo significant efforts in order to achieve compliance. In this eBook, we will provide a first outline of the Act’s material contents and an in-depth analysis of the applicability of the Act to various corporate structures.
This eBook is the collection of a series of articles in which we will take a closer look at key issues, especially addressing the question of what you can do to adequately prepare yourself at this early stage. We would be happy to provide you with individual advice, as well. Please do not hesitate to contact us. If you cannot find what you are looking for, please feel free to get in touch with the team! Let’s talk
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Is Employee Background Screening as critical as they make it out to be?
A former builder who faked his CV to land a series of top NHS jobs has finally been forced to pay the full price for his ‘staggering lies’, says a shocking report on timesnewsuk.com/
Jon Andrewes, 69, spent a decade working as chairman of two NHS trusts and chief executive of a hospice after pretending to have a PhD, an MBA and a history of senior management roles. Mr Andrewes had been appointed chairman of the Royal Cornwall Hospitals NHS Trust (RCHT) ahead of 117 other candidates.
After Andrewes was exposed he was convicted of fraud, jailed for two years and ordered to hand over all his remaining assets of £96,737. But the confiscation order was overturned by the Court of Appeal two years ago when judges ruled he had given ‘full value’ for his salary in the jobs he did. Now, more than five years after pleading guilty to fraud charges, Andrewes has had the financial penalty reinstated by the Supreme Court and must pay back nearly £100,000.
Under his fake persona, Andrewes insisted on staff calling him ‘Dr’ and claimed to have degrees from three universities. But his only genuine higher education qualification was a certificate in social work. After starting as a builder he spent much of his career as a probation officer, customs officer or youth worker before inventing a new life for himself as an NHS manager.
His senior health jobs, which included a £75,000-a-year role as chief executive of a hospice in Taunton, earned him £643,602. He was appointed in 2004. He then led the Torbay NHS Trust in Devon for nearly a decade, before becoming chairman of the Royal Cornwall NHS Hospital Trust in 2015.
However, an investigation at the hospice uncovered discrepancies in his CV and led to police being called in. ‘He came across as very knowledgeable and competent,’ recalled David Shepperd, former head of legal services at Plymouth City Council, who liaised closely with Andrewes on a council-funded green project. ‘He was an affable, nice guy to deal with.’
‘It beggars belief that no due diligence was carried out when he was appointed to these roles in the NHS,’ says an NHS source, quoted in the timesnewsuk.com report.
The UK Screening Module covers:
More details on the UK Screening Module can be had here.
A business must understand its exposure when hiring and type of insurance coverage and limits – does your policy cover a negligent hiring lawsuit? The checks are critical to any company’s success – hiring qualified, honest, and hard-working employees is an integral part of thriving in the business community.
The CRI Group™ is hosting a series of webinars on Due Diligence Investigations. The insightful webinars will help you go deep into crucial aspects of Due Diligence Investigations with lessons learned by industry leaders in various areas of business and best practices that you should adopt.
Details:
Learning points:
The first webinar will be on “The A-Z on how the examiner conducts due diligence investigation” while the topic for the second webinar/podcast is “Web-based or On-site due diligence investigation. When and why do you need it? And who’s going to need it?”
The webinars will be addressed by CRI Group experts and will be of one-hour duration followed by a 15 minutes Q&A session. The dates for these webinars will be confirmed shortly. It is recommended that you register your interest here so that you are kept updated on the webinars.
Ashelea is the Investigations Manager, leading the due diligence, C-level background screening, insurance claim and corporate investigations for multinational clients across various key industry sectors: public relations and advertising agencies of global brands, international law firms, aerospace and defence, and nuclear and energy companies. Her work includes multi-jurisdictional investigations in MENA, Europe and the Americas.
Before joining CRI Group™, she leveraged her knowledge of international law and politics as part of diplomatic and consular practices after working with the Department of Foreign Affairs in Manila. She graduated from Lyceum of the Philippines University with a bachelor’s degree in International Relations with a major in Diplomacy – and currently pursuing her master’s in Corruption and Governance at the University of Sussex. She became a Certified Fraud Examiner in 2018.
At CRI™, we provide due diligence services where ever you are. Use our DueDiligence360™ reports to help you comply with anti-money laundering, anti-bribery, and anti-corruption regulations ahead of a merger, acquisition, or joint venture. You can also use them for third-party risk assessment, onboarding decision-making, and identifying beneficial ownership structures.
Due Diligence helps you Identify key risk issues clearly and concisely using accurate information in a well-structured and transparent report format. Our comprehensive range of reports includes specialised reports that support specific compliance requirements. Protect your reputation and the risk of financial damage and regulator action using our detailed reports. They enhance your knowledge and understanding of the customer, supplier, and third-party risk, helping you avoid those involved with financial crime.
The CRI Group™ invites you to schedule a quick appointment with them to discuss in more detail how conducting due diligence and compliance can help you and your organisation.
Based in London, CRI Group™ works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, TPRM, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider.
We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group™ also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.
This article looks at the Supply Chain Due Diligence Act (LkSG) that applies to companies operating or trading in Germany and will enter into force on 1 January 2023.
The new German law, known as the Supply Chain Due Diligence Act (LkSG, short for Lieferkettensorgfaltspflichtengesetz in German) imposes due diligence obligations on environmental protection and on human rights, with all businesses having to introduce iterative and ongoing, or in certain circumstances ad hoc, due diligence processes specified by the Act.
Identification and management of an organisation’s supply chain and the risks that come with it require the implementation of due diligence processes.
The term “supply chain” refers to all products/services of a business, including all manufacturing and services, in Germany and/or abroad, from the extraction of raw materials to their delivery to the end customer.
Furthermore, due diligence processes should implement the following criteria:
More details can be had in our FREE Supply Chain Due Diligence Act (LkSG) eBook.
From 2024, the law will apply to businesses with more than 1,000 employees.
Even if companies with fewer employees are not addressees of the Supply Chain Act, they may still be indirectly affected. This is because the companies directly affected would be obliged to enforce compliance to the best of their ability with human rights in their supply chain. The measures necessary for this can have a direct impact on their suppliers, for example, through the implementation of a code of conduct. In addition, the directly affected companies will often be dependent on the active support of their suppliers and thus have this support be contractually assured, e.g. in the form of reporting obligations as part of their risk analysis.
DOWNLOAD THE SUPPLY CHAIN DUE DILIGENCE ACT (LkSG) EBOOK.
At CRI®, we provide corporate reporting and due diligence services wherever you are. Use our DueDiligence360™ reports to help you comply with anti-money laundering, anti-bribery, and anti-corruption regulations ahead of a merger, acquisition, or joint venture. You can also use them for third-party risk assessment, onboarding decision-making, and identifying beneficial ownership structures.
Due Diligence helps you Identify key risk issues clearly and concisely using accurate information in a well-structured and transparent report format. Our comprehensive range of reports includes specialised reports that support specific compliance requirements. Protect your reputation and the risk of financial damage and regulator action using our detailed reports. They enhance your knowledge and understanding of the customer, supplier, and third-party risk, helping you avoid those involved with financial crime.
The CRI® Group invites you to schedule a quick appointment with them to discuss in more detail how conducting due diligence and compliance can help you and your organisation.
Based in London, CRI Group™ works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, TPRM, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider.
We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group™ also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.
In January 2023 a new German law, known as the Supply Chain Due Diligence Act (LkSG, short for Lieferkettensorgfaltspflichtengesetz in German), becomes effective and applies to companies operating or trading in Germany. This eBook looks at the key issues in the Supply Chain Due Diligence Act.
The Supply Chain Due Diligence Act requires businesses to undergo significant efforts in order to achieve compliance. The law introduces a legal requirement for businesses to manage social and environmental issues in their supply chains, through more responsible business practices. We’ve compiled more details on the act in our FREE ebook that can be downloaded now!
In Part 1 of this eBook, we will provide a first outline of the Act’s material contents and an in-depth analysis of the applicability of the Act to various corporate structures.
The eBook is the collection of a series of articles in which we will take a closer look at key issues. It addresses the question of what you can do to adequately prepare yourself at this early stage rather than wait till later in the year. We would be happy to provide you with individual advice, as well. Please do not hesitate to contact us.
In Part Two of the Playbook, we’ll explore what preparatory actions you can take and how an effective risk management plan can be achieved and implemented through several services including due diligence.
Global integrity due diligence investigations provide your business with the critical information it needs in making sound decisions regarding mergers and acquisitions, strategic partnerships and the selection of vendors and suppliers. The level of due diligence will ensure that working with a potential i.e. trade partner will ultimately achieve your organisation’s strategic and financial goals.
Operating in the international market requires organisations to establish partnerships with numerous third parties, which supply raw materials, run business operations abroad and/or act as agents. At the same time, third parties are considered as the greatest area of bribery risks for international enterprises. Under the Bribery Act 2010, British-based organisations have to conduct due diligence on their third parties as the core principle of meeting the adequate procedures requirement.
IF YOU CANNOT FIND WHAT YOU ARE LOOKING FOR, PLEASE FEEL FREE TO GET IN TOUCH WITH THE TEAM!
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Intellectual property can be a business’s most valuable asset. So when outside parties threaten to steal your ideas, copy your products or disrupt your marketing channels, corrective action on your part can become tedious, time-consuming and expensive. Also, because of the high value associated with Intellectual Property Right (IPR), infringement of those rights is a lucrative criminal activity, which generates significant costs to the rights owners and to the economy in general. In fact around 12,000 IP infringement cases are filed each year.
Now, a study conducted by the European Union Intellectual Property Office (EUIPO) in partnership with the European Patent Office (EPO) found that the total contribution of IPR-intensive industries to the EU economy accounts for approximately 42% of GDP (€5.7 trillion) and 28% of employment plus another 10% in indirect employment effects in non-IPR intensive sectors. Those sectors also generate a trade surplus of approximately €96 billion with the rest of the world and pay their workers 46% higher salaries than other sectors.
This IP infringement report brings together the findings of the research carried out in recent years by the EUIPO, through the European Observatory on the Infringement of Intellectual Property Rights, on the extent, scope and economic consequences of IPR infringement in the EU. Evidence on the economic value of IPRs in the EU economy, the extent to which this value is exploited, the infringement mechanisms used to capture that value and the actions being taken in response to these challenges are outlined and discussed in the report as well.
According to a study carried out by EUIPO and the Organization for Economic Co-operation and Development (OECD) in 2019, estimates of IPR infringement in international trade in 2016 could reach as much as 3.3% of world trade. Up to 6.8% of EU imports, or €121 billion per year, consist of fake goods. Both sets of figures are significantly higher than those found in study by the two organisations published in 2016, indicating that the problem has grown even more serious in recent years.
In a series of sectorial studies, the EUIPO fears it has lost sales in 11 sectors in the EU, as a result of counterfeiting. These losses have occurred directly in the industries being analysed and across their associated supply chains and totalled more than €92 billion per year during 2012-16.
Abundant value, lenient sentences and high returns on investment together make it attractive for criminal gangs to engage in counterfeiting activities. The modus operandi of such gangs is becoming increasingly complex as technology and distribution channels evolve, hand in hand with the breadth of products being counterfeited.
The business models adopted by counterfeiters make significant use of the internet to distribute their products and to promote the distribution and consumption of illegal digital content. Internet sites selling counterfeit goods benefit from additional advertising revenues from both “high risk” ads (adult, gaming, and malware) and, paradoxically, also from legitimate brands, which then suffer in two ways from advertising on such sites: damage to their own brand and provision of credibility to the hosting website.
In addition to analysing the supply of counterfeit goods and pirated content, the EUIPO has also studied the demand side, that is, the attitudes of EU citizens towards IPR and their willingness to consume IPR-infringing goods and services. The incentives for consumers to purchase counterfeit goods and to access copyright-protected content illegally include lower prices, easy accessibility and a low degree of social stigma associated with such activities.
In response to these developments the EUIPO, together with public and private partners, is undertaking and supporting a number of actions to meet these challenges.
The actions by the EUIPO range from providing rights owners with information on the changing infringement landscape and working with Europol on wider responses to IP crime. It also included participating in the funding of a specialised IP crime unit within Europol, supporting the European Commission’s efforts to address the supply of counterfeit goods in third countries and to help Small and Medium-Sized Enterprises (SMEs) protect their IPRs. This was done by providing citizens with information on the availability of legally accessible digital content and on the economic and social impact of purchasing counterfeit goods or accessing digital content illegally.
CRI Group’s Intellectual Property Investigations team helps companies identify threats to IP and confidential information internally and throughout their supply chain, develop the appropriate mitigation strategies and investigate suspected infringements.
For further information on IPR infringement or to book a meeting with our experts, click here.
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