I think I understand. Since I'm not really well qualified in these matters, I can only fall back on what I repeatedly and increasingly perceive, across all sectors of the economy. The state regulatory apparatus does indeed seem to me to be a major problem, as even with its best intentions it excludes competitors through, as you aptly point out, strict regulations. I don't know the facts, but it seems to me that companies are all treated equally in terms of the stringency of regulation and compliance and no good distinction is made based on the size and shape of the company.
A rather trivial example, but maybe that's what you meant:
A few years ago, all retail shops were required to install electronic cash registers in their shops in order to standardise tax documentation. If it was just this one item, you could say that the small retailer needn't be upset about it. However, it is in total what makes entrepreneurship and its foundation impossible or difficult, both in terms of the procurement of technology and equipment in a company and in terms of bureaucratic and safety-related official requirements. Added to this are various compulsory memberships in associations and co-operatives. (My own solution to the problem of small companies would be to just guarantee them a separate department on the regulators side in order to meet their circumstances and treat them differently. But I would need to look that up in order to find out if my assumptions are correct).
If you add it all up, an entrepreneur who complies with all these regulations needs a considerable part of his turnover for all these regulations alone. It seems to me that treating everyone equally is not appropriate here. But perhaps small businesses are so insignificant in politics that little attention is paid to them. However, this is at odds with what I have experienced with regard to audits of small companies by the social security and tax funds. They are very meticulous here.
I agree that companies which miss manage their customers needs need not to be protected.
P.S. Since my own competence lies somewhere else and I deal with what I face as problematic on another level, I would like you to support my newest blog post, if that what I express there, meets your sets of values.