Publication of the first extensive and in-depth Situation Report on Counterfeiting in the European Union (EU) is the direct result of a joint project carried out by EU agencies Europol and the Office for Harmonisation in the Internal Market (OHIM) through the European Observatory on Infringements of Intellectual Property Rights.
Although the majority of counterfeit products in circulation within Europe are manufactured outside the EU – and evade detection at the EU’s external borders – research for the report highlights how domestic EU production is on the rise with cases originating in Belgium, the Czech Republic, Italy, Poland, Portugal, Spain and, indeed, here in the UK.
This large-scale domestic production of counterfeit goods in the EU is becoming an increasingly profitable business for organised crime groups and organisations. Counterfeiters, who operate with significantly lower risks, have been found to have links with other forms of crime such as trafficking in human beings – notably for labour exploitation – as well as with other criminal groups originating from different countries both within and outside Europe.
The most significant ‘enabler’ for distributing these counterfeit goods is the Internet. Consumers are drawn to websites due to their prices, 24/7 availability and direct delivery. Some websites are now of such high quality that they rival those of the rights holder.
Online counterfeiters are able to function across multiple jurisdictions, evading capture, and are also able to take down and set up new websites overnight without losing their customer base.
Tackling counterfeit goods production
“This detailed report on counterfeit goods is the first of its kind, combining public and private sector knowledge,” said Rob Wainwright, director of Europol. “Although there’s a noted rise in the amount of counterfeit goods being produced in the EU, over two thirds of counterfeits come into the EU from China. We’re therefore very pleased to see that the Chinese authorities are increasing their efforts to tackle counterfeit goods production, particularly so now that their own brands are being infringed.”
António Campinos, the OHIM President, added: “A more structured and systematic intelligence effort on the criminal dimension of counterfeiting is seriously needed and would benefit national operational initiatives. OHIM is determined to strengthen its co-operation with Europol by supporting information gathering, particularly in the online environment, and by providing easy and secure access to IT tools aimed at facilitating the exchange of information between rights holders and enforcement authorities.”
The 2015 Situation Report on Counterfeiting in the European Union describes how Chinese organised criminal groups involved in distributing counterfeit goods are highly mobile and specialised teams. Those operating in Italy are known to have close relationships with the Camorra and collaborate to import counterfeit goods.
Chinese diaspora communities across Europe are extensive and there’s a concentration of Chinese counterfeit businesses in several Italian provinces all associated with the textile and fashion industries.
Parts of Madrid and its suburbs have also been infiltrated by Chinese organised crime groups.
These criminal groups operate across Europe and use legitimate businesses to facilitate the movement of counterfeit products. They’ve also established and developed collusive relationships with a network of money transfer agencies, in turn enabling them to launder and send significant amounts of money to China.
After China, India is the next priority concern due to its impact on the EU through counterfeit pharmaceutical products, with Turkey a concern for foodstuffs, Indonesia for weak legislation and corruption issues and the Philippines in relation to low rates of enforcement.
The criminals’ modus operandi
The 2015 Situation Report on Counterfeiting in the European Union is designed to inform members of the public, industry leaders, policy makers and practitioners at EU and national level about the current situation regarding organised criminal groups involved in the production and distribution of counterfeit goods on EU territory.
Covering information on routes, entry points, criminals’ modus operandi and current activities being carried out by law enforcement and the private sector, the report also explores the links between counterfeiting and other areas of criminality.
As well as presenting details on the scale and scope of product counterfeiting within the EU, practices and opportunities to detect, prevent and reduce the impact of counterfeiting are also highlighted.
Europol’s Serious Organised Crime Threat Assessment 2013 identified ‘counterfeit goods with an impact on public Health and Safety’ as a recommended priority crime area as part of the EU Policy Cycle 2014-2017.
Within the framework of the European Multidisciplinary Platform Against Criminal Threats, EU Member States and EU agencies participating in the priority area of counterfeit goods highlighted a need for a better intelligence picture on the production and trafficking of counterfeit goods in the EU. To fill that intelligence gap, Europol and OHIM were tasked with producing this comprehensive report.