In the present context the term ‘regulation’ may be taken to refer to the control of corporate and commercial activities through a system of norms and rules which may be promulgated either by governmental agencies (including legislatures and courts) or by private actors, or by a combination of the two. The direct involvement of the State is not a necessary condition for the existence of regulation in this sense, since rules may be derived from the activities of industry associations, professional bodies or similarly independent entities.
There is often a close symbiosis between private law and regulatory law although there may be some value in distinguishing between them. While this is widely used in discussion and has some merit as an analytical device, it can also give rise to difficulties if it is applied in a non reflexive way. This is because, firstly, many rules of private law, such as those relating to implied contract terms, fiduciary obligations, and duties of disclosure, have a regulatory impact in the sense of controlling transactions. Secondly, private law rules may form the basis for self-regulation in the sense that contractual associations of commercial actors may produce codes governing the conduct of their trade or profession (or, at a further extreme, impose restrictions on trade which may or may not escape the reach of competition or monopoly or restrictive trade practices law).
It also follows that the term ‘deregulation’ needs to be used with care. In practice, it tends to be used when referring to the removal of statutory controls. Often, however, this process gives rise to the replacement of one form of regulation by another – the common law, or self-regulation, replacing statute – rather than to a diminution in regulation. The picture is complicated further if is assumed that ‘deregulation’ is necessarily a process leading to the restoration of market forces which had previously been constricted by regulatory controls. Rather, it is often the case that sustainable competition rests upon regulation of a prescriptive or interventionist kind. Thus in various contexts policies or practices aimed at promoting competition have employed regulatory techniques to this end. A good example of this is provided by the operation of the securities markets.
There needs, then, to be recognition of the varieties of regulation and self regulation, and some understanding of how they operate in relation to commercial activity in particular settings. Good policy analysis is not about choosing between the free market and government regulation. Nor is it simply about deciding what the law should proscribe. It is about understanding private regulation – by industry associations, by firms, by peers, and by individual consciences – and how it is interdependent with state regulation.