One EU data protection authority to rule them all, under new proposal

But member states disagree on how to implement the rule

A proposal for a unified approach to policing European Union data was released Tuesday, but member states are likely to bicker over it.

The new law would apply to all companies operating in the European Union, no matter where they are based, and authorities would have the power to impose multimillion-dollar fines on any company that misuses Europeans' data.

Home Affairs ministers from all 28 EU member states will meet June 6 to try to come to an agreement on which authorities should handle complaints about the misuse of data when the companies and complainants are in different countries. But Dutch Data Protection Commissioner Jacob Kohnstamm said he doubts they will reach even partial agreement due to in-fighting between member states. Once agreed at the EU level, the regulation would not be implemented at the national level for another two years, giving businesses time to comply.

The text released Tuesday shows that the current compromise proposal is for a two-tier system: a local data protection authority in the country of the complainant and a lead authority in the country of the company. This in itself is not new, but some member states have complained about the plan, forcing the Council to come up with tighter rules about which authority is involved and when. Some member states fear that they could become subject to data laws from another country.

A local supervisory authority will deal with "local cases" when both complainant and company are in the same country. They will also have the right to make decisions on amicable settlements if only one person is involved, as well as the possibility of submitting a draft decision to the lead authority if they feel strongly about a case.

Under the new plan, local data-protection authorities will also have four weeks to object to a decision by a lead authority and the matter will then be referred to the European Data Protection Board.

"The lead authority cannot adopt a 'go-it-alone' attitude but needs to cooperate with the local authority and must, where appropriate, draw up a draft decision on the measure to be taken and submit it to all authorities concerned for their opinion and take due account of their views," the proposal says.

This tightening of the rules may appease countries like Germany, which wants its own stringent privacy rules to set the standard and not be watered down by regulators in other countries.

Meanwhile, although some companies have welcomed the plan to have a single point of contact rather than comply with regulators in 28 different countries, John Higgins, director general of Digital Europe, a trade body whose members include Microsoft and Apple, said he was concerned that "the new rules will remain as fragmented as they are today, but it will cost more to comply."

The proposal seems that it would have the most impact in Ireland where many U.S. technology companies, including Facebook, Google and Amazon, have European headquarters because of low tax rates.

However, there are worries that the relatively small EU country would not be able to handle a surge in complaints.

"Currently, it's probably operating at the edge of its capacity," said Simon McGarr, lead solicitor at McGarr Solicitors in Ireland. "Although there have been promises from the Irish justice minister that he would increase resources in order to meet any additional needs."

According to Irish Data Protection Authority (DPA) figures, during 2012 the office opened 1,349 complaints for investigation, with just under a third related to individuals having difficulty gaining access to their personal data held by organizations. In 2012 the DPA's running costs were just over €1.5 million (US$2 million), of which 85 percent were staff costs.

But Irish Data Commissioner Billy Hawkes is bullish about his office's ability to cope. "I noted that pressure was likely to increase under the one-stop-shop arrangement, but we are well-placed to discharge the additional responsibilities that arise from the increasing number of information-rich multinational companies that are choosing Ireland as a base," he said in his annual statement.

"It's still too early to tell if there really will be a massive influx of cases to Ireland," McGarr said. "After the recent European Court of Justice ruling on the right to be forgotten, Google was alarmed at the number of requests it received to delete links -- something in the region of 15,000 complaints for the entire EU. That would have a very large impact, but it's still not clear that Ireland would be the lead authority in such a case."

Despite some concerns, McGarr said that he doesn't think jurisdiction shopping, where companies relocate to the country with the most favorable interpretation of the legislation, would prove to be a problem for Ireland.

"Short-term data regulations might become one of those commercial differentiators. But long term, as we found in Ireland, stability of the location and consistent legislation is more important," he said.

Although the new law would have to be written verbatim into national laws, there will still be room for national rules, for example in journalism and freedom of expression, explained one regulator, adding, "However, forum shopping can be avoided if several conditions are met, for example, powers and duties of data protection authorities are harmonized to a greater extent and are given sufficient resources."

The proposed law has been discussed since 2012 and was approved by the European Parliament in March. However, a new Parliament has since been elected and will have to negotiate with the member states to come to an agreement on the law.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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