DSMI Premise and Theory
The premise and theory
Europe’s problem is not the number of rules, but the way those rules interact.
The Premise
Compatibility, not quantity
The Institute starts from a simple premise: Europe’s problem is not the number of rules, but the way those rules interact.
The question is therefore not whether Europe should regulate more or less. It is how to make European rules work together, and how to prevent overlapping regulators from reproducing fragmentation through enforcement.
This leads the Institute to formulate the Regulatory compatibility theory.
Fundamental questions
Two questions, one overarching goal
Normative
Do the rules work together without contradiction and conflict?
Institutional
Do European regulators work together and act coherently?
These lead to one overarching question: How can European rules be made more compatible, and European regulators better coordinated, so that regulation strengthens rather than fragments the Single Market?
The Diagnosis
Regulatory autoimmunity
The Single Market was built to remove barriers to the free movement of goods, services, capital and persons.
Yet the accumulation of European regulations, regulatory standards and enforcement structures can recreate the very barriers the Single Market was designed to remove.
Each rule may be justified on its own. The problem arises from their compatibility.
Overlapping obligations, inconsistent requirements and multiple regulators increase the cost of exercising the freedoms of the Single Market. They make it harder and more expensive for firms to operate across borders, turning legal complexity into a new barrier to free movement.
This is the paradox of regulatory autoimmunity. Like an autoimmune disease, the legal system begins to attack the objective it was designed to achieve. Rules intended to build and protect the Single Market end up creating new obstacles within it: instead of increasing freedom of movement, their interaction restricts it.
The Effect
From friction to competitiveness
More regulatory friction → less economic freedom → more barriers to cross-border activity → less investment and scale → lower European competitiveness.
For smaller and growing firms, these costs are particularly significant. Large incumbents are better able to absorb regulatory complexity. European challengers are more likely to be constrained by it.
The Framework
Two forms of fragmentation
Regulatory fragmentation
How do European rules interact? Where do they overlap, duplicate, conflict or create unnecessary cumulative burdens?
Institutional fragmentation
How do regulators interact? Where do competences overlap, enforcement approaches diverge or multiple authorities impose parallel requirements?
The objective
Identify, measure and remove friction
The objective is simple: identify regulatory friction, measure its effects on European firms, and propose ways to remove it.