Compliance and Regulation Law Glossary

Asymmetry is a key concept of regulation. Indeed, a competitive market works well when operators are in symmetrical relationships, ie there is no structural obstacle which prevents an agent from increasing his power solely on his merits (" competition by merits "). If there is an asymmetry, for example because a sector is monopolistic and the legislator has just declared it open to competition, there is a temporary asymmetry between the installed companies, the incumbent operators and the willing companies to enter this new market, the "new entrants". Historical operators, such as in the telecommunications or energy sector, when they were opened to competition by European directives, transposed by national laws (in french Law in 1996 for telecommunications and gas, in 2000 for electricity), benefit (sometimes referred to as grandfather clause), in particular because they have all the clients or all the know-how or all the patents, and that, in fact, the competitors can not enter the market. It is then necessary to establish a regulator also a priori temporary itself  to establish to forceps the competition, by an asymmetrical regulation.
Asymmetric regulation, particularly applied in Great Britain at the time of the liberalization of the aforementioned sectors, means that the regulator will systematically favor new entrants, for example by dispossessing the incumbents for their benefit to make them on the market. Today, in the telecommunications sector, competition, notably on mobiles, is established, but the regulator does not intend to leave its place to disappear and today supports "symmetric regulation" .... Instead, it acts as a specialized competition authority.
Asymmetry may not be temporary but definitive, when inequality between operators, regardless of merit, does not come from a context of liberalization but from a structural failure of the market. For example, there are transport networks, transport of passengers or goods, railways or airstrip for airplanes, data or voice communication networks, pipes where gas or electricity circulate, etc., which belong to a single operator because they constitute economically natural monopolies. Under these conditions, the competitors of the monopoly must nevertheless have fair and effective access to this service and a regulator must necessarily be established for the effectiveness of that right (see Access).
Moreover, the Nobel Prize of Joseph Stiglitz (2001) was justified by his work on the asymmetry of information on certain markets, in particular the financial markets on which companies offer securities. Through the theory of the agency, it appears that the ordinary partners or ordinary investors have less information than the managers, even though the latter have the function of making decisions that bring the most to the former. But information asymmetry offers managers an "information rent" that allows them to offer many benefits and transfer risks to others. Regulators, in particular banking and financial regulators, are needed to combat information asymmetry. Transparency is one of the procedural means to combat this asymmetry. The financial and banking crisis of 2008 showed the extent of this asymmetry and, in fact, the inability of regulators to remedy it, for example, the British government estimated in 2010 that it was the financial regulator itself that was responsible for the crisis for not having sufficiently watched over conflicts of interest. In general, the global financial crisis was often later characterized as a crisis of regulators and regulation.

Compliance and Regulation Law Glossary

Links : United States of America

June 22, 2016

Breaking news

It is sometimes argued that the competitive freedom will destroy the "old regulated world", platforms being the perfect example of this fresh wind, the invention of the adjective "disruptive" which could express a "novelty" before which it is only suitable to bow.

It would be therefore necessary to smile or even laugh, what would be a "rearguard battle" when the Conseil Constitutionnel (French Constitutional Council) in a decision of 22 May 2014 had limited the expansion of Uber, protecting the correspondingly monopoly holders of a municipal taxi license.

But in the US, cities adopt regulations. So on the next city council of the city of Chicago, will be proposed the vote of an order to compel the rideshare drivers.

In 2014, the French Constitutional Council justified its decision by referring to "the public order of parking", which the municipality is mistress... The justification given here is to protect the occupant.

Indeed all rideshare drivers will be obliged provide proof that they are subject to health checks, especially on drugs and provide criminel check also.
This is justified because Regulation of an activity implies control of those who exercise it and equal competitors can justify that for the same activity some are removed, especialy  in view of the protection of the person transported.

The third new requirement is of a different nature: the driver must prove that it is not in debt to the municipality. Why not, since the infrastructure of the city allows them to exercise the economic activity in question. This is another underlying objective, which lies rather in the idea of an exchange between the city and the one who transports people, the beneficiary of infrastructure should not be otherwise debtor that it enjoys public infrastructure.
The latter provision shows that the "contract" is increasingly not between the carrier and transported - via the virtual platform - but between the very concrete public space and one that circulates and do not live there.


Dec. 2, 2015

Compliance and Regulation Law Glossary


The airline industry was the first regulated sector in the 1920s This reflects the fact that air transport implies that people can travel from one state to another state, which justified an early multilateral system of international agreements between States , under public international law, each retaining its share of sovereignty and its national company (eg. British Airways).

But the principle of competition making the organization more complex through the mechanisms of open sky that allow an airline company to offer its services abroad, regulation must be more open to competition.

In addition, the regulation of air cares more risks by adopting global safety standards to be imposed on all operators in the conduct and maintenance procedures of the equipment.

Sept. 2, 2015

Sectorial Analysis

Passenger transport markets in Europe have been, and continue to be, liberalised across jurisdictions and sectors.

Since July 2015, passenger coach operators in France have been allowed to operate without regulation on longer routes (over 100km). For shorter routes, ARAFER, the French regulator for rail and roads, will test whether the coach service is likely to threaten the viability of the public rail service offered by SNCF on the same route. What changes could this reform bring, and how might the economic test be applied?

May 22, 2015

Translated Summaries : 01. Transports

Feb. 23, 2015

Breaking news

The theme of the relationship between regulation and innovation finds every day new illustrations. The example of the drone is particularly noteworthy.

Indeed, the drone is a technical object that moves in the air without being driven in an immediate way by the hand of man.

The legal mechanism of qualification brought the drone in the category of "aircraft" and submit it to the regulatory power of the civil aviation regulator.

The regulation of civil aviation is primarily a safety regulation, not a regulation of the sector's economic deployment.

This is why regulators have taken restrictive positions on drones used for commercial purposes, to the extent that the presence of human beings, most the pilots, are the condition for the safety of people. The fact that the drones fly with "no one" led to consider as a danger a prior, which led regulators to take restrictive measures on flying drones for commercial purposes, restricton consistent with the regulator's intervention criteria, without taking into account external rules, such as the protection of privacy.

But whatever the sector, regulators see themselves increasingly as economic regulators. If we adopt this perspective, a restrictive approach appears to be nonsense.

In the interests of balance in both approaches, the safety of people and the economic development through innovation, the US civil aviation regulator, the Federal Aviation Administration is developing new rules.

February 11, 2015, Federal Aviation Administration raised the need for a legal framework for commercial drones. The reason for this is economic. As it writes: "It is anticipated that this activity will result in significant economic benefits" Indeed, Article 333 of the 2012 ACT of modernization and reform  imposes registration procedure for every commercial unmanned flying object in the sky!footnote-28. But this hinders business development, and therefore the incentive to technical innovation drone.

It was necessary to find a balance between security of persons and lifting of barriers to economic development. This is why the FAA will distinguish between "small" and other drones. The former are particularly useful in agriculture. To the extent that the former do not constitute danger to persons, an exemption from this procedure (Article 333 exemption) may be given concerning them.

One can analyze this evolution of air Regulation in two ways. First, it is for air regulator to take into account fundamental innovation of flying machines with "no one": innovation will be the base of a huge market for which strict regulatory rules could have been the troublemaker. The consideration of the safety of people remains since only drones "small" are allowed. In addition, they will have to remain at low level and away from airports and housing.

Second, the Regulator reacts by pragmatism. The ban on commercial flight drones hasn't prevented investment in this area. So far, the regulator had instead chosen not to react to the open violations of the standards, from the moment that the safety of the people wasn't in danger. The idea of the new conception is to promote this new market by putting the rules protecting the physical safety of people.

Feb. 18, 2015

Sectorial Analysis

February 17, 2015, as the previous "Contrat de Régulation Économique" (Economie Regulatory Contract), the firm Aéroport de Paris (ADP)  has made available on its site to all "for consultation" the draft  "Contrat de Régulation Economique ("Economic Regulatory Contract)  for the period 2016 -2020.

Published in the wake of the meeting of the Board of ADP, the text is presented as a tool "for the Paris place", especially for air transport.

This shows that the document is primarily intended for investors and financial markets, the document being placed on the company website in the section for the "investors".

This illustrates the evolution from the traditional "contrats de plan" (plan contracts). But then, who are the parties to these types of contract?

Indeed, the very term "Regulatory contract"  is new in public Law. It appears as a sort of  modernization of "plan contract." The Conseil d'État (French State Council) finally admitted the contractual nature of these planning contracts. In these contracts, are parties were the State and the company in charge of a public service.

Because here the contract is an instrument of "economic regulation" the open public consultation draft rather expresses a global conception of  ADP, the company which manages the Paris airports,  for the future of the development of critical infrastructure that is the airport as the heart of global development of air transport.

The enterprise manager of the airport in the heart of the contract (rather than the State) in setting objectives for the coming four years is the letter and spirit of the French law of 20 April 2005 about Airports, which put the apparatus of this "Contrat de Régulation Economique" in place.

In this, the infrastructure manager is set by law as a "regulator of second degree", as can be a financial market enterprise. The company that manages and develops the Paris airports undoubtedly belongs to the category of " critical firms", as well it manages the future of the sector and helps to keep France a place in the world.

More, A.D.P. behaves like a Regulator, since it is carrying out the "public consultation", the consultation paper prepared by it,  being placed on its site and developing its ambitions for the sector and for France. But A.D.P. also expressed as a financial and economic actor, emphasizing the competitive environment,  demanding in passing more stability and clarity in the regulation in which it moves ...

That is why the consultation mechanism provided by the law must be more complex. Indeed, ADP can not be judge and jury. Therefore if the project raises observations, they must be formuled not to ADP but to the Ministries of Aviation and Economy, within a month. They shall communicate theiir content to ADP . Then the Commission consultative aéroportaire (French Airport Consultative Committee) will be consulted. At the end of this process, the "Contrat de Régulation Economique" will be signed.

Seing the end of the process, it remains in line with the plan contracts, since it remains the Economic Regulatory Contract is signed between the State and the essential infrastructure manager. But the consultation process shows firstly investors are the first recipients of the statements made by a privatized company presenting its draft primarily in terms of competitive context and international development and secondly the airlines that use daily services of the airports are also directly involved by theses questions of tarification.

Airlines protest against the increase in the money that will be asked. This will be imposed, since it is tarification and princing public policy. We are in unilateral rules. But it is indeed a "price" they feel to pay, they also heard a speech referring to competition in what the mechanism is presented as a "contract".

But then, does it take to admit that these "contracts for economic regulation" are not between two parties that are the state and the regulator of second degree that is the infrastructure manager but must be three, the State, the infrastructure manager and "stakeholders" that are mainly airlines?

This practical difficulty is much to the fact that the qualification of "contract" is difficult to justify in proceeding in which prevail unilateral mechanisms.

Feb. 12, 2015

Sectorial Analysis

There is no point in counting one by one the powers of a Regulator and add them to try to measure its power. We must measure what consideration the others have of the exercise of its powers it.

So it is with its advice power. Sometimes, in fact, its opinion is  worth as much as if it adopted the text itself, as those who read its comments are impressed. Sometimes, the Regulator may have taken a rational opinion, motivated and relevant, those to whom it is addressed don't care.

The result is often that the Regulator takes note of this weakness against which strictly within the framework of this opinion mechanism the regulatory body can do nothing,  but in a continuation of powers between the Ex Ante and the Ex post, because the area is an enclosed space, the diverse attitudes will be remembered, especially when the Regulator will be exercising its powers to resolve disputes or its power of sanctions. And there ...

Take the example of railway activities. The French Regulatory Authority of Railway Activities (Autorité de Régulation des Activités Ferroviaires - ARAF )) is a new regulator, in front of powerful actors, where the State has interests. The fact that these interests are legitimate don't remove the weight that such integrated public operator is facing the regulator. On 27 November 2014, ARAF expressed negative opinions about the main draft decrees. January 6, 2015, the Autorité de la Concurrence  (French Competition Authority) has also made a critical opinion, including in its discontent and the law of "Railway Reform" and the draft decrees.

February 11, 2015, 7 decrees implementing the February 10, 2015 have been published. Adverse opinion on three of them by the regulator (ARAF) were swept away. We can admit quite, both regarding the Competition Authority opinion, since we are in terms of regulation and not in the simple competition system, and about ARAF opinion because its opinion is only a consultative and executive power remains in line with the will of Parliament. It's almost as if the Regulator had not said  a word.

Thus, under the hierarchy of norms, in the letter and in spirit, the decrees are in line with the law they enforce. No blame.

But it is not excluded that the regulator of rail activities can remember of having been so little after, when it must be considered as a kind of judge in civil functions (dispute resolution) and in punitive functions  (sanctions) that almost the same will appear before the regulatory body.



Jan. 10, 2015

Sectorial Analysis

As soon as Regulation assumes independence of the operator who manages the essential infrastructure, ex ante conditions of such independence must be met.
Europe doesn't require legal autonomy of the essential infrastructure manager, probably because such autonomy, it would be both too ask the Policy, which may want more integrated organizations as soon as public transportation is a mix of public policies and that to public funds are used. But it would also be too little to ask the Policy because no matter the legal autonomy, the key is the real independence of the manager, that is under the control of the Regulator.
The Loi portant réforme ferroviaire (Railway Reform Act) of August 4, 2014 has made the integration of the company that manages the rail network, which the new name is SNCF Réseau (SNCF Network) in a public group, which also includes the SNCF, public transportation operator, in competition with new entrants in a newly opened sector to competition.
The Competition Authority in its opinion of 4 October 2013 had expressed reluctance towards the bill, to the influence that such corporate organization offers to the public operator, to the detriment of its competitors and the opening of the railway sector to competition.
The critical tone increases with the Opinion of 6 January 2015 relatif à des projets de décrets pris pour l'application de la loi portant réforme ferroviaire (on draft orders made for the purposes of Railwayl Reform Law).
The Competition Authority issues its opinion as a real essay on what should be the Regulation of the railway sector through the "governance" of the network manager. Indeed, the first part of the opinion relates to "the independent management of railway infrastructure" while the second focuses on the integration of railway network in the public group built par the law. The third part of this Opinion draws conclusions to measure whether we can consider that the Autorité de Régulation des Activités Ferroviaires (French Regulatory Authority of Railways Activities) shall have the capacity to ensure this independence by governance or not.
This review, in its construction itself, demonstrates the dialectic between Regulation and Governance (I), which is an observation and stresses the role of the regulator in the effectiveness of governance (II), which is more a question .

Jan. 6, 2015

Thesaurus : Soft Law

Full title : Avis n°15-A-01 du 6 janvier 2015 relatif à des projets de décrets pris pour l'application de la loi portant réforme ferroviaire (Opinion No. 15-A-01 of 6 January 2015 on draft orders made for the purposes of the law on rail reform)

Read the Opinion (in French)


Aug. 4, 2014

Thesaurus : Laws

Oct. 4, 2013

Thesaurus : 10. Independant Administrative Authorities

Updated: Sept. 19, 2012 (Initial publication: March 10, 2010)

Sectorial Analysis

The new Autorité de Régulation des Activités ferroviaires (ARAF- Railway Activities Regulatory Authority) has been implemented.




Das Gesetz vom 8. Dezember 2009 führt die rechtlichen Rahmenvorschriften der Eisenbahnregulierung ein. Die neue „Autorité de Régulation des Activités Ferroviaires“ (ARAF – Einsenbahnregulierungsbehörde) ist eingesetzt worden.


La ley del 8 de diciembre del 2009 organiza la regulación del transporte ferroviario y establece la nueva Autoridad de regulación.

La nueva “Autorité de Régulation des Activités ferroviaires” (la Autoridad de regulación de las actividades ferroviarias) ha sido implementada.


Updated: Sept. 19, 2012 (Initial publication: May 19, 2010)

Sectorial Analysis

Main information

PeruRail, the operator of Peru’s famous railway line, providing service between Cuzco and Machu Picchu, was sanctioned USD$800,000 on May 10, 2010 by the {‘Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual’} (INDECOPI- Peru’s national institute for the defense of competition and protection of intellectual property) for having restricted competitors’ market entry. An appeal is underway.

Updated: Sept. 19, 2012 (Initial publication: July 12, 2012)

Sectorial Analysis

Translated summaries



France and Italy had subsidized rail alpine highway, but the project was behind schedule. Thus, an prolongation of governments support was necessary. The European Commission admittedit in its decision of 11 June 2012, because States are committed the concession will be effective on June 30, 2013 and mostly because this mode of transport will be an alternative to transporting goods.



La France et l’Italie avaient subventionné l’autoroute ferroviaire alpine, mais le projet a pris du retard. Ainsi, une prolongation du soutien des gouvernements était nécessaire. La Commission européenne l'a admis dans sa décision du 11 Juin 2012, parce que les États se sont engagés et que la concession sera effective le 30 juin, 2013, surtout parce que ce mode de transport sera une alternative au transport routiers par camions des marchandises.

Updated: Dec. 23, 2011 (Initial publication: Dec. 23, 2011)

Thesaurus : Doctrine

International Handbook of Network Industries

Updated: Dec. 21, 2011 (Initial publication: Dec. 21, 2011)

Thesaurus : Doctrine

Transport, Competition and Competition policy