The EU's new packaging rules just took effect. Within weeks, they are already being reframed as a "bureaucratic bungle" and facing simplification pushes—which is the kindest way Brussels knows to say: we built something so technically intricate that compliance is itself the business model, and only enterprises large enough to hire compliance departments can afford to play.

This is the inverse of what regulation is supposed to do. A real rule solves a problem. This one creates a new industry. Small and medium enterprises—the firms that actually fill 99 percent of European supply chains—are now trapped between two choices: hire lawyers and consultants to decode packaging requirements that even The Economist notes are incoherent, or risk fines for non-compliance they never fully understood. The larger firms absorb the compliance cost as a line item and pass it to consumers. The smaller ones fold or leave.

The packaging directive is the perfect museum piece of modern Brussels dysfunction. It was written to address something real—resource waste, circular economy, environmental standards—which are actual problems. But instead of specifying the outcome (your packaging must achieve X waste reduction and Y recyclability), it specified the method (your packaging must meet 47 subcategories of material composition tracking, labeling format, recycling stream compatibility, and reporting cadence). That is not environmental policy. That is architecture for auditors.

And the EU knew this was coming. Companies have been preparing for months. Consultancies published guides. Trade associations published warnings. The deadline arrived. And by September, the Commission was already receiving quiet calls for a "simplification" phase—which in Brussels-speak means: we are going to spend the next two years writing amendments that acknowledge what we already know, which is that we built the thing backwards.

The pattern is now familiar across every major EU directive of the past five years. The DSA, the DMA, the AI Act—each one launched with proclamations about defending values, protecting citizens, ensuring fairness. Each one immediately encountered the same friction: implementation is impossible at the speed and scale Brussels demanded, so it becomes negotiation with the largest firms who can afford to be heard, and compliance hell for everyone else. The mid-market disappears. The large firms pay and survive. The small ones rationalize it or exit.

This is what regulatory capture looks like in slow motion. Not corruption in the classical sense—no one took a bribe—but something more total: the regulatory apparatus has become a system for converting government intent into consulting hours and legal fees. The outcome stops mattering because the process has become the point.

The Economist called it a bungle. That is generous. A bungle suggests good intentions executed badly. This is good intentions executed exactly as designed—for large enterprises, by bureaucrats who think in spreadsheets and legal liability, not in the lived experience of building and selling a product.

The real cost won't appear in fines or amendments. It will appear in the slow hollowing of European supply chains as firms migrate to jurisdictions where regulation still attempts to be comprehensible. That is already happening. Watch what shipping goes where over the next three years.