The Methodology of Regulatory Sandboxes in the EU: A Preliminary Assessment from A Competition Law Perspective

A regulatory sandbox is a framework set up by a regulator to allow small-scale, live testing of innovations by private companies in a controlled environment under the supervision of the regulatory authority (and operating under a special exemption, allowance, or other limited time-bound exceptions). Competition law scholars have not yet explored the relationship between competition law and regulatory sandboxes in detail, while authorities - starting with the pioneer in this context, namely the UK Financial Competition Authority - argue that, in principle, sandboxes may “promote” innovation and competition between companies. Therefore, our paper firstly intends to put forward a more accurate theory of the phenomenon of regulatory sandboxes and its development, and secondly to assess critically the institute of regulatory sandboxes from the perspective of competition law. Theoretically, the reliance on sandboxes implies at least two significant new approaches in competition law, namely, to design and test ex ante pro-competitive ecosystems and, thus, to connect the different perspectives of competition and regulation. Our paper concludes the investigation by noting the emergence of this new approach in competition law for digital markets and discussing the potentialities of this methodology, and its benefits and risks