Hyper-compliance in the EU: Inês Ferrari Careto warns of the costs of the new European regulation for businesses

The Morais Leitão principal associate was one of the voices featured by Advocatus in the special report "Hyper-compliance or the new normal? The impact of European regulation on businesses", in which she analyses the growing weight of compliance in corporate strategy.

A necessity with real costs

For Inês Ferrari Careto, the EU's regulatory intensification — from the AI Act to the Digital Services Act — reflects a necessity rather than a structural shift, even though it poses significant challenges for businesses. "The question that arises – and the Draghi report itself pointed in this direction – is whether the volume and complexity of this regulation may end up hindering innovation and leaving Europe behind other regions. For businesses, the challenge is real: they have to adapt to an increasingly dense regulatory framework, and that comes at a cost," she states.

When confronted with the debate between hyper-compliance and the new normal, the lawyer argues that both readings coexist.

Compliance is no longer a secondary area

One of the most visible transformations, she argues, is the weight that compliance and regulatory functions have gained within organisations, moving from "secondary" to "central". "Beyond public enforcement, which as we have seen is growing, it is to be expected that private enforcement will also gain significant relevance in this context," she anticipates.

AI Act and DSA: challenges ahead

On the AI Act, she anticipates a gradual implementation: "Its application will be phased, and the Commission itself has already acknowledged that there are implementation challenges, having proposed simplifications for SMEs. But the signal is clear: companies using AI will have to prepare."

On the DSA front, Inês Ferrari Careto draws attention to the constraints at the level of national enforcement. "Portugal is one such case: although ANACOM has been designated as the Digital Services Coordinator, the Commission considered that it has not been granted the necessary powers under the DSA, nor have the rules on applicable sanctions been established, which is a cause for concern," she stresses.

Regulatory risk enters corporate strategy

For the lawyer, one of the most relevant transformations of recent years is the way in which regulatory risk has become structurally embedded in corporate decision-making. "The European regulatory framework is no longer an issue to be analysed on an ad hoc basis. It has become a permanent factor in corporate strategy," she concludes.

The full special report is available on Advocatus.