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 It is often observed, even theorized, even advised and touted, that Compliance is a mechanism by which public authorities internalize political (eg environmental) concerns in big companies, which accept them, in Ex Ante, because they are rather in agreement with these "monumental goals" (eg saving the planet) and that this shared virtue is beneficial to their reputation. It is observed that this could be the most successful way in new configurations, such as digital.

But, and the Compliance Mechanism has often been brought closer to the contractual mechanism, this is only relevant if both parties are willing to do so. This is technically true, for example for the Deferred Prosecution, which requires explicit consent. This is true in a more general sense that the company wants to choose itself how to structure its organization to achieve the goals politically pursued by the State. Conversely, the compliance mechanisms work if the State is willing to admit the economic logic of the global private players and / or, if there are possible breaches, not to pursue its investigations and close the file it has opened, at a price more or less high.

But just say No.

As in contractual matters, the first freedom is negative and depends on the ability to say No.

The State can do it. But the company can do it too.

And Daimler just said No.

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Publicly, including through an article in the Wall Street Journal of June 28, 2019.

The company sets out in a warning to the market that it is the object of a requirement on the part of the German Motor Authority (Kraftfahrt-Bundesamt)  of an allegation of fraud, by the installation of a software, aimed at misleading instruments for measuring emissions of greenhouse gases on cars using diesel.

It is therefore an environmental compliance mechanism that would have been intentionally countered.

On this allegation, the Regulator both warns the company of what it considers to be a fact, ie compliance fraud, and attaches it to an immediate measure, namely the removal of the circulation of 42,000 vehicles sold or proposed by Daimler with such a device.

And the firm answers : "No".

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Which is probably only beginning, since a No ends the dialogue of Ex Ante to project in the Ex Post sanction procedures, calls 6 observations:

• 1. No doubt Daimler, a German car manufacturing company, has it in mind in this allegation of fraud calculating pollution of its diesel cars what happened to his competitor Volkswagen: namely a multi-billion dollar fine, for lack of compliance in a similar hypothesis (so-called dieselgate). The strategic choice that is then made depends on education through the experience of the company, which benefits as such from a previous case that has had a very significant cost. Thus educated, the question is to measure the risk taken to refuse any cooperation, when the company can anticipate that it will still result in such an amount ....

• 2. In addition, we find the difficulty of the distinction of Ex Ante and Ex Post. Indeed, saying No will involve for the company a cost of confrontation with the Regulator, then the peripheral jurisdictions or review courts. But in Germany, the Government itself, concerning a bank threatened with compliance proceedings and almost summoned by the US regulator to pay "of its own free will" a transactional fine, felt that this was not normal, because it must be the judges who punish, after a contradictory procedure with due process and after established facts. 

• 3.  However, this is only an allegation, of probable assertions, of what legally allows to continue, but which does not allow to condemn. The confusion between the burden of proof, which presupposes the obligation to prove the facts before being able to sanction, and the burden of the allegation, which only supposes to articulate plausibility before being able to prosecute, is very damaging, particularly if we are committed to the principles of Repressive Law, such as the presumption of innocence and the due process. This distinction between these two probationary charges is at the heart of the probatory system in the Compliance Law. Because Compliance Law always looks for more efficiency, tends to go from the first to the second, to give the Regulator more power, since businesses are so powerful ....

• 4. But the first question then arises: what is the nature no so much of the future measure to be feared, namely a sanction that could be taken later, against Daimler, if the breach is proven, or which will not be applied to the firm if the breach is not established; but what is the nature of the measure immediately taken, namely the return of 42,000 vehicles?

• This may seem like an Ex Ante measurement. Indeed, the Compliance assumes non-polluting cars. The Regulator may have indications that these cars are polluting and that the manufacturer has not made the necessary arrangements for them to be less polluting (Compliance) or even organized so that this failure is not detected ( Compliance fraud).

• This allegation suggests that there is a risk that thiese cars will polluting. They must immediately be removed from circulation for the quality of the environment. Here and now. The question of sanctions will arise after that, having its procedural apparatus of guarantees for the company that will be pursued. But see the situation on the side of the company: having to withdraw 42,000 vehicles from the market is a great damage and what is often called in Repressive Law a "security measure" taken while the evidence is not yet met could deserve a requalification in sanction. Jurisprudence is both abundant and nuanced on this issue of qualification.

• 5. So to withdraw these cars, it is for the company to admit that it is guilty, to increase itself the punishment. And if at this game, taken from the "cost-benefit", as much for the company immediately assert to the market that this requirement of Regulation is unfounded in Law, that the alleged facts are not exacts, and that all this the judges will decide. It is sure at all whether these statements by the company are true or false, but before a Tribunal no one thinks they are true prima facie, they are only allegations.
•  And before a Court, a Regulator appears to have to bear a burden of proof in so far as he has to defend the order he has issued, to prove the breach which he asserts exists, which justifies the exercise he made of his powers. The fact that he exercises his power for the general interest and impartially does not diminish this burden of proof.

• 6. By saying "No", Daimler wants to recover this classic Law, often set aside by Compliance Law, classic Law based on burden of proof, means of proof, and prohibition of punitive measures - except imminent and future imminente and very serious damages  - before 'behavior could be sanctioned following a sanction procedure.
• Admittedly, one would be tempted to make an analogy with the current situation of Boeing whose aircraft are grounded by the Regulator in that he considers that they do not meet the conditions of safety, which the aircraft manufacturer denies , Ex Ante measurement that resembles the retraction measure of the market that constitutes the recall request of cars here operated.
• But the analogy does not work on two points. Firstly, flight activity is a regulated activity that can only be exercised with the Ex Ante authorization of several Regulators, which is not the case for offering to sell cars or to drive with. This is where Regulatory Law and Compliance Law, which often come together, here stand out.Secundly, the very possibility that planes of which it is not excluded that they are not sure is enough, as a precaution, to prohibit their shift. Here (about the cars and the measure of the pollution by them), it is not the safety of the person that is at stake, and probably not even the overall goal of the environment, but the fraud with respect to the obligation to obey Compliance. Why force the withdrawal of 42,000 vehicles? If not to punish? In an exemplary way, to remind in advance and all that it costs not to obey the Compliance? And there, the company says: "I want a judge".

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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.

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.

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?

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.

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.

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.

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)

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

GERMAN

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.

SPANISH

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.

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.

Translated summaries

ENGLISH

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.

FRENCH

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.