Götz Drauz, Partner at Howrey LLP in Brussels
After 25 years working at the European Commission, Götz Drauz left in May to become a partner in private practice.
Prior to his departure, Mr. Drauz was one of the Commission's top antitrust officials and the regulator's most senior merger official.
Brussels Legal spoke with Mr. Drauz about his reasons for entering private practice, the professional adjustment his new role requires and his reflections on some past and present antitrust matters.
BL: Why did you leave the Commission?
GD: There were a few reasons. The immediate reason was the Commission's new Mobility policy that now requires senior Commission officials to change position after 5-7 years. It raised the question: what do I do next? I had an offer at the time for another position within DG Competition but I did not take it in the end.
That was mainly due to a second factor: I wanted a change of perspective. I was curious to see the other side of the merger process; to understand the reasons why companies take certain decisions - to understand their thinking and procedures if you like. I felt there was an opportunity to influence the competition law aspects of transactions at a much earlier stage. As a regulator you can only really influence a transaction once it is notified.
Finally there were personal reasons. I have relatively young children and I wanted to start something new at the right time for my family.
I felt no dissatisfaction with the Commission. I took a decision that I wanted a new professional orientation.
BL: What was the Commission position offered and why did you decide not to take it?
GD: The position was to lead the reform of State Aid in DG Competition. It was an interesting offer as State Aid is growing in importance and arguably has not achieved all it could in terms of the penetration of economic thinking and analysis.
State Aid's role within DG Competition has not been satisfactory. It has not received the full attention it deserves, having had a somewhat "orphan" feel within the DG.
But State Aid remains an important policy area. To ensure it develops properly requires cooperative work with a number of interested parties, such as the Member States. The State Aid directors told me I was the right guy to make the necessary reforms based on my experience at the MTF (such as initiating and seeing through the merger review).
I thought hard about this position as I wanted to make the State Aid directorate proud about what it does, giving the staff the proper recognition they deserve for what they do. But in the end I decided the position was not for me.
I had a degree of independence in my activities at the Commission, particularly when leading the MTF. I had seen various activities: the law and economics, the political and lobbying process and the ever-present media "drama", and to some extent I foresaw a degree of repetition in this role.
But also State Aid requires a more political role as the Commissioners, as a College, collectively decide what decisions are politically acceptable. The role would have been more constrained than I would have liked.
BL: What was the reaction within the Commission when your departure was announced?
GD: My Commission colleagues were very positive and wished me well. Director General level colleagues congratulated me on the move. But Commissioner Kroes and Philip Lowe were a bit disappointed as they thought they had the right person to reform the State Aid area.
BL: So why did you choose private practice over other options?
GD: Large organisations, such as bureaucracies, require a certain type of person. Someone who is generally more cautious, career-driven and less minded for conflict.
By contrast, being successful in private practice demands a certain competitiveness and responsiveness to opportunities - being both a lawyer and an entrepreneur. For sometime I have had a personal affinity towards many private practitioners (having a good number of friends working in law firms) and to private practice in general.
It makes sense that different types of organisation require different types of people. I thought I could live in both worlds - and am now trying to do so!
Other options such as becoming a General Counsel or working for a National Competition Authority also involve working in a large organisation-type culture and so held little appeal for me at this stage. While the NCAs have grown in importance and are equal partners of the Commission, moving from an EU to a national perspective would be difficult.
BL: In moving to private practice, why did you join Howrey? And why did you become a partner rather than a counsel?
GD: I spent at least four months searching for the right firm. It was an important decision and there were four factors that ultimately attracted me to Howrey.
First, the firm focuses on three practice areas only: Antitrust, IP, and Global Litigation and is a market leader in those areas of expertise. I was impressed by the firm's focus and execution.
Also Howrey is a transatlantic firm. While it has a very strong US home base, the firm is also very open to European culture and does not impose a US culture on its overseas offices. It is clear Brussels is important to the firm's DC headquarters. Howrey's Brussels team is very bright but it is not made up of one type of lawyer. There are a very mixed bunch of personalities. Many Magic Circle offices in Brussels have a very "London" atmosphere. I think they miss out on some of the wild combinations of nationality and experience present in other law offices in Brussels.
The third reason concerns the successful transition experience of other partners from public agencies to the firm. Julian Joshua had already joined Howrey's Brussels office from DG Competition and I knew Jim Rill and Mark Schechter had made a similar move in DC. It gave me some comfort speaking to these partners before joining the firm.
Finally I saw the opportunity to further develop the firm's EU antitrust merger practice. It is not yet at the level where we want it to be and there is scope for me to help as we build it up. I have always enjoyed setting up and seeing through projects (such as the Commission's merger review). There is always a risk in starting such efforts, but great satisfaction when they succeed.
Alternative opportunities were available at some very respected firms that have very strong, well-established antitrust practices. But being well-established meant there was only a limited role for someone in my position to develop the antitrust practice. It would only be possible to play a certain advisor-type role in such an environment and I was looking for a role offering more development opportunities.
Regarding why I became a partner rather than a counsel, I wanted a full time, hands-on role. I was determined to participate fully in private practice and to prove to myself that I could take on the position and help the Brussels office continue to develop its client base. The greatest challenge as partner is to contribute to the development of client relationships rather than to just be an advisor to the client at selected moments. It is a challenge I enjoy.
I have arrived relatively late in private practice and so there is no expectation that I can build a huge client base for the future. It is realistic to work in a partnership with the younger partners. Here we have a number of partners who are younger than me and they have been very open about working together. Team spirit between the partners is critical for this success. I do not intend to work for longer than 10 years and many client relationships take time to develop.
BL: How have you found the adjustment to private practice after so many years at the Commission?
GD: The substantive work is not different as the analysis is very similar to the work undertaken at the Commission.
But fully understanding our clients' (and potential clients') needs has been an adjustment. It has required thinking about how best to integrate the client's interests and how to construct and present a case.
This adjustment requires what I can describe as "thinking from a positive side". At a government or public agency everyone is always trying to pinpoint the problems. Once the problems are identified, proposed remedies are then analysed to see if the problems are resolved.
From the private practice perspective, problems (and the "positive side" of those problems) require you to make creative moves at every opportunity. The type of mindset required concerns getting away from a problem-only viewpoint to considering the problem and the solution at the same time. This point sounds obvious but does require some adjustment.
It is also important to be credible with the client. On any given matter, the client not only wants an analysis of the risks involved, but wants advice on how to take the right approach.
In making the adjustment from public agency to private practice it helps to have someone who is an instinctive "street-wise" lawyer. Some partners are the archetypal "street-wise" lawyer: having the experience to position the right address to any given situation or client. It is so important to make the right connection with the client. I understand the basics, but am still learning. I look forward to developing these skills.
BL: Have you developed an "antenna" for pitching to and working with clients?
GD: I don't know whether I have a full "antenna" as yet, but it is developing!
During my short time at Howrey I have been involved in a number of client pitches. Initial feedback was that my perspective was too much that of a regulator. It was a real challenge to come down from the comfortable Commission perspective. But I understand now what is valued and how to focus on the client's interests.
Clients have a list of issues and problems that they have to deal with. They see the world from their perspective and understandably their problems are their only concerns. Clients don't want profound statements about antitrust, they need focused advice.
BL: Perhaps the Commission's Mobility policy will make more Commission officials than before consider a similar switch?
GD: Yes it is likely the new Mobility policy will have that fundamental effect. As senior officials are required to move position after 5-7 years, more will carefully think about their future and examine the alternatives. I am sure many more senior Commission officials are doing that.
BL: In considering a switch to private practice, what advice would you give to other officials?
GD: Both my colleague Jim Rill and Hew Pate, at Hunton & Williams, gave me similar advice about making this move to a law firm.
Senior public officials are used to others (such as colleagues or outside parties) approaching them each day for advice, discussion or seeking some approval or agreement for a decision.
But when at first you are no longer working for the regulator not many, if any, people come to you anymore. You have to be proactive and learn to go out to people. There will be an initial period of little or no reaction to you and it is likely there will be some delay before clients come to you. It is important not to despair; generally it is nothing personal, you are seen as untested in your new role.
All the people I know who have successfully made this professional change had a strong belief that they wanted to develop something new. They embraced the change in an extremely positive way while knowing there was a period of difficult adjustment ahead.
At client pitches, you have to be competitive, you will meet other lawyers and you have to fight for your place at the table. It is a very competitive world, you have to be able to present and have confidence (a well-developed ego is important!).
If an official is not convinced of this alternative path, it may be preferable to stay within the organisation. It is better to be in control of the change and to be able to prepare for it.
BL: You led the MTF during some eventful times (such as the 1999-2000 merger wave and CFI judgments). From a leadership perspective, how was that period?
GD: It is well-known that during that period the MTF lacked the resources to meet the demands of its workload.
DG Competition did not have the internal capacity to conduct the necessary economic studies and was unable to obtain appropriate external expertise (the Commission's external procurement process was often too cumbersome for the EU's deadline-driven merger process). There were times when we relied on some third party studies more than we should have done.
Also some Commission decisions were not sufficiently reasoned as there was not enough time to review and revise them as thoroughly as we wanted. The quality of decisions (rather than the decisions themselves) may not have been good enough due to the lack of resources within the tight merger deadlines. A judge could look at such decisions at leisure and take them apart.
After Airtours, morale across the MTF was low and it was important to build it up again. My leadership style was to be inclusive, to involve people. I always took time to meet MTF staff and was interested in the case work. It was crucial to have new ideas and a positive spirit to get us out of that situation. I was very grateful for everyone's full commitment to that process.
More generally, regarding the MTF and DG Competition, I was surprised at a perception within the rest of DG Competition about the MTF's distance from the rest of the DG. As MTF Director I should have taken steps to correct that perception.
I was sometimes critical of some approaches within DG Competition. But once we had agreed on a particular position or course of action, we spoke with one voice.
BL: After many years as an insider, you must now start to see the Commission from an outsider's perspective. Are there any observations you can share about recent EU competition law or practice developments?
GD: It has not been so long since I left, but here are a few points on some diverse topics.
One point concerns the issue of information gathering in the merger process. By contrast to the US - where big merger cases information gathering takes place through discovery - in the EU the Commission has to investigate through its Article 11 information requests. That investigative tool does not go deep enough, being time-limited and allowing the Commission insufficient opportunity to follow-up on the issues raised.
The Commission is starting to ask more open questions where it is looking for opinions, rather than treating the information request as a fact-finding exercise. For example, early on many interested parties are being asked whether cases raise concerns with customers and competitors. The scope and benefit of such questions remain unclear.
A particular challenge in recent times was to reorganise the MTF across sectoral lines. Merger know-how had to be maintained within the new organisational structure. That will be an ever-present challenge for DG Competition.
But one benefit arising from the organisational change is DG Competition is now more focused and prioritised in areas like antitrust. In the MTF we created teams according to whether a case had a heavy, medium or light workload. Resources were attributed according to that criteria and could be adjusted as an investigation developed. This prioritisation idea has spread and is now part of DG Competition's culture, as is seen in the sectoral enquiries.
Within any bureaucratic system, change has to be justified and so priorities are necessary for enabling that internal change. The energy enquiry and all the follow-up show that DG Competition cannot work on everything at the same time. There are clearly visible fixed priorities. This is also seen in high profile Article 82 and some cartel cases. It is important to centre resources on a limited number of high level matters.
One of Philip Lowe's great achievements has been to get senior officials within the DG to think about DG Competition as a whole rather than their particular part of the DG. Over two years, significant progress has been achieved in changing that "local" mindset.
BL: Good luck and thank you for your time.
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