# Law professions, low regulation: assessing French notarial competition through (de)regulation indexes

Grégoire Massé

► To cite this version:

Grégoire Massé. Law professions, low regulation: assessing French notarial competition through (de)regulation indexes. 2024. halshs-04567496

HAL Id: halshs-04567496

https://shs.hal.science/halshs-04567496

Submitted on 3 May 2024

HAL is a multi-disciplinary open access
archive for the deposit and dissemination of sci-
entific research documents, whether they are pub-
lished or not. The documents may come from
teaching and research institutions in France or
abroad, or from public or private research centers.

L'archive ouverte pluridisciplinaire HAL, est
destinée au dépôt et à la diffusion de documents
scientifiques de niveau recherche, publiés ou non,
émanant des établissements d'enseignement et de
recherche français ou étrangers, des laboratoires
publics ou privés.

<figure><img src="image_1.png" /></figure>

Distributed under a Creative Commons Attribution 4.0 International License
# Law professions, low regulation: assessing notarial competition through (de)regulation indexes

Grégoire Massé

► To cite this version:

Grégoire Massé. Law professions, low regulation: assessing notarial competition through (de)regulation indexes. 2024. halshs-04567496v2

HAL Id: halshs-04567496

https://shs.hal.science/halshs-04567496v2

Submitted on 28 Jan 2025

HAL is a multi-disciplinary open access
archive for the deposit and dissemination of sci-
entific research documents, whether they are pub-
lished or not. The documents may come from
teaching and research institutions in France or
abroad, or from public or private research centers.

L'archive ouverte pluridisciplinaire HAL, est
destinée au dépôt et à la diffusion de documents
scientifiques de niveau recherche, publiés ou non,
émanant des établissements d'enseignement et de
recherche français ou étrangers, des laboratoires
publics ou privés.

<figure><img src="image_1.png" /></figure>

Distributed under a Creative Commons Attribution 4.0 International License
CES

Centre d'Économie de la Sorbonne
UMR 8174

Law professions, low regulation: assessing French
notarial competition through (de)regulation indexes

Grégroire MASSÉ

2024.04
CES

Centre d'Économie de la Sorbonne
UMR 8174

Law professions, low regulation: assessing notarial
competition through (de)regulation indexes

Grégoire MASSÉ

2024.04R

Version révisée
Law professions, low regulation: assessing
French notarial competition through
(de)regulation indexes

Grégoire MASSÉ*

ABSTRACT

This paper questions the difficulty of quantifying French notaries’ regulatory evolutions with existing regulatory indicators. Whereas the notary profession faced a major transformation with high competitive outcomes, regulatory indicators that initiated this process did not change. Does this mean that French notaries do not belong to the European deregulation process of professional services?

In this paper, we aim to consider the more general issue of assessing professional services' regulation and question both indexes' internal and external validity. We show that (1) regulatory indicators used to promote professional deregulation in Europe belong to a “flat world” paradigm, and that (2) they are inconsistent in assessing evolutions resulting from the European Open Method of Coordination.

We process in two steps. First, we identify an “index framework” which includes regulatory indicators from different indexes-based policies. As they have common structure and aims, their methodology relies on a full-comparability paradigm, with the idea that regulatory “best practices” from different countries and professions could be implemented in any professions or countries. Moreover, this comparability perspective echoes the Open Method of Coordination, namely a policy method used in the European context of regulatory convergence. However, when we consider their applicability in the French context, we note indexes’ inability to compare professional regulations: regulatory indicators only quantify a small part of professional rules, and cannot explain some dynamic evolutions. They belong to a “flat world” paradigm, with an underlying theoretical economic model restricting the regulatory scope.

We then try to define precisely this theoretical model in order to grasp its consequences on policymaking. If regulatory indicators do frame the economic assessment of regulation, we aim to make their model consistent in a general equilibrium perspective. We see that indicators' theoretical regulatory model is a contestability model of non-regulation, which cannot justify piecemeal deregulations. This theoretical model advocates for a total deregulation in professional services, whereas the Open Method of Coordination had only promoted piecemeal deregulation policies. Beyond this external inconsistency, our conclusion is that – paradoxically – the underlying theoretical model does not apprehend law, and can only advocate for a legal revolution instead of a regulatory evolution.

Therefore, we support a more law-grounded approach for regulatory quantification, and advocate for
new indexes in the quantification of Open Method of Coordination's effects.

**Keywords:** Regulation Indexes (Regulatory Indicators); Legal Services; Professional competition; Comparative law and economics.

**JEL codes:** J44, L51, D45, K23

<footnote>* Université Paris 1 Panthéon-Sorbonne, Centre d’Économie de la Sorbonne (UMR 8174, CNRS), Paris, France.
Contact: Gregoire.Masse@univ-paris1.fr.</footnote>

<footnote>The author thanks Camille Chaserant for her useful comments and suggestions, and Lucy Pfliger for proofreading.</footnote>
# Law professions, low regulation: assessing notarial competition through (de)regulation indexes

Grégoire MASSÉ*

## ABSTRACT

The French notary profession has been transformed over the last ten years, leading to increased competition. However, regulatory indicators that initiated this process did not change. In other words, indicators have promoted and directly inspired regulatory changes that they fail to quantify. This paper questions the reasons for this failure by revisiting the methodology behind the indicators of professional regulation.

It interrogates their double aim of quantifying regulation and giving insights for policymaking. Both lie in a representation of regulation on a competition *continuum*. Thus, the indicators can be interpreted equally as indicators of both regulation and deregulation. Challenging their positive dimension (regulation), we show that, in fact, they do not quantify professional regulation itself, but rather measure the distance from an ideal model in a “flat” world. Analysing their normative dimension (deregulation), we show that they often contradict the policies they are used to justify. These indicators can only promote complete deregulation or a one-size-fits-all model. Finally, we advocate for developing indicators more suitable for both economic analysis and policymaking, by adopting a more “legal markets-based” methodology for constructing indicators.

**Keywords:** Regulation indexes (Regulatory indicators); Legal services (notaries); Professional competition; Comparative Law and Economics; Optimal regulation.

**JEL Codes:**

## HIGHLIGHTS

* Notarial regulatory indicators belong to a “deregulation process” for legal services

* Indicators represent professional regulation on a pro-competition *continuum*

* The differences they quantify are not differences in regulation nor competition

* They quantify regulatory distance from efficient regulation

* Existing piecemeal deregulation policies do not fit indicators' recommendations

* Université Paris 1 Panthéon-Sorbonne, Centre d'Économie de la Sorbonne (UMR 8174, CNRS), Paris, France.
Contact: Gregoire.Masse@univ-paris1.fr.
TABLE OF CONTENTS

<table><tr><td>Abstract</td><td>1</td></tr><tr><td>Table of Contents</td><td>2</td></tr><tr><td>1 – Introduction: An unquantified regulatory evolution for French notaries</td><td>3</td></tr><tr><td>2 – A deregulation process… which leads to re-regulation: a new framework for competition in the French notary profession</td><td>5</td></tr><tr><td>2-1 – Promoting deregulation in European Notarial Services</td><td>5</td></tr><tr><td>2-1-1 – An “index framework”: an economic tool to assess regulation</td><td>5</td></tr><tr><td>2-1-2 – The “Best practices” methodology: promoting a hybrid model of professional competition</td><td>7</td></tr><tr><td>2-2 – The new regulatory framework in the French notary profession: a more competitive regulation?</td><td>8</td></tr><tr><td>2-2-1 – A competition-improving reform for an old corporatist profession</td><td>8</td></tr><tr><td>2-2-2 – Is “liberalisation through administration” competition improving? Paradoxical evidences from indexes</td><td>10</td></tr><tr><td>3 – From optimal regulation to non-regulation: contestability in legal services to justify total deregulation</td><td>12</td></tr><tr><td>3-1 – Minimising regulation, enhancing competition</td><td>12</td></tr><tr><td>3-1-1 – A method for modelling optimal entry and conduct regulations</td><td>12</td></tr><tr><td>3-1-2 – When did it go wrong? A model compatible with both perfect competition and monopoly</td><td>13</td></tr><tr><td>3-2 – A contestability-oriented model of optimal regulation… for no-regulation</td><td>17</td></tr><tr><td>3-2-1 – Which market for legal services? Optimal regulation for a contestability scheme</td><td>17</td></tr><tr><td>3-2-2 – A contradiction between the economic tool and the policy method</td><td>18</td></tr><tr><td>4 – Conclusion: Quantifying regulation or competition?</td><td>19</td></tr><tr><td>Bibliography</td><td>21</td></tr><tr><td>Annexes</td><td>25</td></tr></table>
# TABLE OF CONTENTS

<table><tr><td>Table of contents</td><td>2</td></tr><tr><td>1 – Introduction: Regulatory indicators at the core of legal services’ “deregulation process”</td><td>3</td></tr><tr><td>2 – Quantifying regulation: pro-competition continuity and best practices</td><td>5</td></tr><tr><td>2-1 – The “Best practices” methodology: comparing, separating and implementing professional rules</td><td>5</td></tr><tr><td>2-2 – Competition or the economic benchmark for regulation</td><td>7</td></tr><tr><td>3 – The regulatory quantification conundrum: which differences indicators do quantify?</td><td>10</td></tr><tr><td>3-1 – Under-estimating competition-oriented regulation: a case study of French notaries’ regulatory evolution</td><td>10</td></tr><tr><td>3-1-1 – A competition-improving reform for an old corporatist profession</td><td>10</td></tr><tr><td>3-1-2 – Is “liberalisation through administration” competition improving? Paradoxical evidences from indexes</td><td>13</td></tr><tr><td>3-2 – Over-estimating professional firms’ regulation: the empirical limits of the separability assumption</td><td>14</td></tr><tr><td>4 – Indicators quantifying distance from efficient professional regulation: A necessary race to the bottom?</td><td>16</td></tr><tr><td>4-1 – Methods for modelling optimal entry and conduct regulations</td><td>16</td></tr><tr><td>4-1-1 – A regulatory zero-model: taking the pro-competition continuum seriously</td><td>16</td></tr><tr><td>4-1-2 – An empirical hybrid model: aggregating existing international best practices</td><td>17</td></tr><tr><td>4-2 – Two models of optimal regulation… with necessary additional hypotheses</td><td>18</td></tr><tr><td>4-2-1 – First-best competition on the notarial market: R<sub>0</sub> and its additional hypotheses</td><td>19</td></tr><tr><td>4-2-2 – The R<sub>min</sub> model: a partial equilibrium without welfare-improving guarantees</td><td>20</td></tr><tr><td>4-3 – A “one-size-fits-all” model, between a race to the bottom and a legal revolution?</td><td>21</td></tr><tr><td>5 – Conclusion and Discussion: could we quantify regulation?</td><td>22</td></tr><tr><td>Acknowledgements</td><td>23</td></tr><tr><td>Bibliography</td><td>24</td></tr><tr><td>Annexes</td><td>30</td></tr><tr><td>Annex 1: OECD Questionnaire for notarial regulatory indicator (OECD, 2024)</td><td>30</td></tr><tr><td>Annex 2: IHS Questionnaire for notarial regulatory indicators (IHS, 2003)</td><td>32</td></tr><tr><td>Annex 3: Correlation matrix for PMR indicator of notarial regulation, 2024</td><td>34</td></tr><tr><td>Annex 4: PMR Notarial Regulation’s distribution in 2024</td><td>35</td></tr></table>
# Law professions, low regulation: assessing French notarial competition through (de)regulation indexes

## 1 – INTRODUCTION: AN UNQUANTIFIED REGULATORY EVOLUTION FOR FRENCH NOTARIES

In 2015, the ancient French notary profession faced a major regulatory evolution with high competition outcomes. Nine years later, the profession appears to be transformed. On the one hand, the number of professionals increased by almost 80 %, while the number of notary firms increased from a twenty-yearly 4600 to 6961 in 2023 (ADLC, 2023a). On the other hand, prices were lowered to a more competitive level, and some were even completely deregulated (particularly non-monopoly activities, as conveyancing). In these price-deregulated sectors, price-cartels behaviours faced strong sanctions (ADLC, 2019). At the same time, the advertising was liberalised, with the possibility to use new techniques of contacting, oriented towards the development of new entrants. In 2023, the professional ethics code was made more competition-oriented, and its enforcement through disciplinary procedures more transparent (ADLC, 2023b). The professional order struggles to resist against this quantitative competition path, and fails in counteracting this conclusion of a two-decades deregulation process for legal services. If these regulatory evolutions seem to have obvious competitive results, it is however not so clear when we consider regulation indexes used to justify the deregulation process. Indeed, the OECD's PMR regulatory indicators for French notaries are, since the 2018 revision, of 3,54 out of six<fnref n="1" />. If we calculate this index for French notaries without considering the mentioned regulatory evolutions (as if we were in 2014) ... it is still of 3,54 out of six. In other words, regulation changed, but not regulatory indicators.

This paper focuses on this impossibility to quantify French regulatory evolutions in legal services, and points out two major issues for indexes that inspired the regulatory evolution. First, they define a specific analytic framework for professional services, with implicit assumptions on professional competition and legal differences. They suppose that the optimal notarial – and more generally professional – regulation is a non-regulation model, and that we should interpret every professional rule on this flat paradigm. Second, as they refer to indicators-based policies, we question indicators' fitness to policymaking, and particularly to comparative methods in promoting competition. We see that regulatory indicators can only promote a full deregulation and a strong homogeneity of professional markets, and need legal systems' differences to be nullified. However, these indicators are used to promote piecemeal deregulations, and unfit with their own full-deregulation paradigm. They only propose both a limited assessment of regulation levels and misleading justifications of regulatory evolutions.

Regulatory indicators are not newcomers in economics and politics of professional services, and were the cause of French notaries' regulatory evolution. As a matter of fact, 2024 is the 20th anniversary of the European Commission's (EC henceforth) Communication on professional services (EC, 2004), initiating an important movement of professional deregulation across the European Union. This communication itself relied on regulatory indicators built by the Institute for Advanced Studies of Vienna (IHS after)<fnref n="2" />. European notaries were presented, for the most part, as over-regulated, and the EC invited member States to professional liberalisation – following the Dutch Notary Act example of 1999

<footnote n="1">¹ Indicators of Product Market Regulation - OECD</footnote>

<footnote n="2">² As we present in 2-1, the OECD regulatory indicators for professional services we mentioned are directly inspired from IHS' regulation indexes (IHS, 2003). As the OECD's indexes are the latest and most refined form of professional regulation indexes, this paper principally uses them.</footnote>
# 1 – INTRODUCTION: REGULATORY INDICATORS AT THE CORE OF LEGAL SERVICES’ “DEREGULATION PROCESS”

This paper questions the theoretical and empirical issues of current regulatory indicators for notaries. It focuses on their double-sided nature, both positive and normative, and draws conclusions about their use in economics and in policymaking.

Since the beginning of the century, professional services have been undergoing a “deregulation process”. This process relies on various scholar and academic works tackling professional regulation (Garoupa & Markovic, 2024). It has several impacts on professional services, particularly legal services. On one hand, this process implements a “service providers” paradigm for legal services<fnref n="1" /> (Terry, 2008b). It forms the basis for applying economic models to legal services. On the other hand, the deregulation process contributes and successes in initiating deregulation policies in legal professions<fnref n="2" />. In the European Union, it directly reflects the development of a single market for legal services. Within the Lisbon Strategy (2000), the European Commission (EC) decided to reuse the “Open Method of Coordination” (OMC; Terry, 2009) with the ambition of creating a single market regulation for professional services. The OMC proposes a three-stage scale-based process for policymaking (Regent, 2003): (i) defining common objectives for national policies and supranational guidelines through timetables and indicators of “best practices”, (ii) establishing a national coordination in order to convert these guidelines into action, (iii) assessing and benchmarking national performances. From this perspective, comparing regulations should inform policies aimed at making professional regulation more efficient. As a result, recommendations promote convergence of national legal markets towards common objectives. Hence, on a regular basis, the EC compares national regulations in professional services (EC, 2013; EC, 2016; EC, 2021), and pressures for assessing professional rules’ “proportionality”<fnref n="3" /> (EC, 2004; EC, 2018).

This deregulation process inspired and promoted a liberalization for French “Public and Ministerial Officers”<fnref n="4" /> in 2015, despite a professional corporatist resistance to reform (Jamin, 2012). The EC’s recommendations met a French anti-corporatist political tradition (Armand-Rueff, 1960; Marty, 2017). Meanwhile, national reports advocating for professional reform directly referenced the EC’s works (Attali, 2008; IGF, 2013). The old French notary profession faced a major regulatory evolution leading to increased competition. Nine years later, the profession seems transformed. The number of

<footnote n="1">¹ For example, this paradigm directly refers to European Commission's economic treatment of legal professions. At the beginning of the century, the Court of Justice of the European Union (CJEU) recognised in two cases (Wouters, 2002; Arduino, 2002) that liberal professionals were “undertakings” (under the meaning of the European treaties). Thus, antitrust legislation applied to them. It was followed by an enforcement of mutual recognition of qualifications for law professionals in the EU (through directives 77/249/CE and 2005/36/CE and case law, with the Morgenbesser (2003), Koller (2011), and C-50/08 (2011) cases).</footnote>

<footnote n="2">² This deregulation process coincides with a movement of globalisation, even if they do not overlap (Garoupa, 2014).</footnote>

<footnote n="3">³ This idea of regulation's "(dis)proportionality" echoes, in a more international context, different works of the OECD on professional regulation issues (see OECD, 2000; OECD, 2007). This is the idea that "*Rules must be objectively necessary to attain a clearly articulated and legitimate public interest objective and they must be the mechanism least restrictive of competition to achieve that objective*" (EC, 2004, p.4).</footnote>

<footnote>If we refer to the latest Directive on "Proportionality test before adoption of new regulation of professions" of the EU Parliament (Directive 2018/958), this concept means that every regulatory reform for professions (new regulation or modification of an existing one) fulfil four conditions:</footnote>

<footnote>- It is “applied in a non-discriminatory manner.”</footnote>

<footnote>- It needs to be justified by “public interest objectives” (the Directive gives a list of what might constitute these objectives §17).</footnote>

<footnote>- It is “suitable for securing the attainment of the objective which they pursue.”</footnote>

<footnote>- It does “not go beyond what is necessary in order to attain that objective.”</footnote>

<footnote n="4">⁴ This 2015 reform concerns all French “Officiers Publics et Ministériels”: with Notaries, it concerned Bailiffs, Auctioneers, Commercial court clerks and Lawyers at the Council of State and at the Court of Cassation. The notary profession represents a majority of these officers.</footnote>
(Noailly & Nahuis, 2010). These benchmarking and index constructions were inspired from prior regulatory indicators in different international contexts<fnref n="3" />, which participated to implement a “service providers” paradigm for legal services (Terry, 2008b). In this paradigm, the Court of Justice of the European Union (CJEU) recognised in two cases (*Wouters, 2002; Arduino, 2002*) that liberal professionals were “undertakings” (under the meaning of the European treaties) and that antitrust legislation applied to them. It followed an enforcement of mutual recognition of qualifications (through directives<fnref n="4" /> and case law<fnref n="5" />) for law professionals in the EU. In the context of the Lisbon Strategy (2000), the EC decided to reuse the “Open Method of Coordination” (OMC henceforth; Terry, 2009) with the ambition of creating a single market for professional services. Professional regulation’s comparison should inspire regulatory reforms towards more competition, and convergence of national markets towards common objectives. The European Commission thus regularly compares national regulations in professional services (EC, 2013; EC, 2016; EC, 2021), and pressures to assess professional rules’ “proportionality”<fnref n="6" /> (EC, 2004). All these injunctions, combined with empirical studies quantifying professional services’ over-regulation (IHS, 2003; Copenhagen Economics, 2005; ZERP, 2007; EC, 2013) inspired a liberalisation for French “Public and Ministerial Officers”<fnref n="7" /> in 2015, despite a professional corporatist struggling against reformation.

Eventually, the “deregulation process” in legal services results from the fusion of three distinct but parallel elements: (i) the European construction (with the ideal of a single market for professional services), (ii) the implementation of the OMC in a new context and (iii) the EC’s injunctions towards more competition-oriented regulations. The OMC, as a “soft law” program, launched several movements of regulation assessment and deregulations, but only represents a small part of European competition policy (Terry, 2009). Therefore, we can identify different phases of this deregulation process. First, the EC proposed the OMC as a method of coordination, and an analysis of legal professionals’ regulation relying on regulatory indicators. These indicators-based studies have pointed out a negative relationship between regulation and both productivity (IHS, 2003), and quality (ZERP, 2007). On the other hand, they also concluded to a positive relationship between regulation and prices (ZERP, 2007). When it comes to services, reducing legal barriers leads to a massive competition impact according to Copenhagen Economics, particularly in professional services (Copenhagen Economics, 2005). Second, European countries assessed their domestic regulations for different sectors and proposed deregulations according to the EC’s policy recommendations. In France, it led to several institutional reports (see part 2-2). Finally, there were regulatory reforms in different countries. As Garoupa (2014) points out, EC’s recommendations were put into practice by some countries

<footnote n="3">³ See part 2-1</footnote>

<footnote n="4">⁴ There were different Directives from the European Commission for mutual recognition of qualifications: 77/249/CE (lawyer's denomination and definition by providing services; mutual recognition) 98/5/CE (mutual recognition for lawyers' qualifications) 2005/36/CE (directive on mutual recognition of qualifications for services)</footnote>

<footnote n="5">⁵ CJEU's case law enforced a mutual recognition of qualifications for lawyers and non-discrimination for notaries in the EU: *Morgenbesser* (2003), *Koller* (2011), and *C-50/08* (2011).</footnote>

<footnote n="6">⁶ This idea of regulation's "(dis)proportionality" echoes, in a more international context, different works of the OECD on professional regulation issues (see OECD, 2000; OECD, 2007). This is the idea that *"Rules must be objectively necessary to attain a clearly articulated and legitimate public interest objective and they must be the mechanism least restrictive of competition to achieve that objective"* (EC, 2004, p.4).</footnote>

<footnote>If we refer to the latest Directive on "Proportionality test before adoption of new regulation of professions" of the EU Parliament (Directive 2018/958), this concept means that every regulatory reform for professions (new regulation or modification of an existing one) fulfil four conditions:</footnote>

<footnote>- It is “applied in a non-discriminatory manner.”</footnote>

<footnote>- It needs to be justified by “public interest objectives” (the Directive gives a list of what might constitute these objectives §17).</footnote>

<footnote>- It is “suitable for securing the attainment of the objective which they pursue.”</footnote>

<footnote>It does “not go beyond what is necessary in order to attain that objective.”</footnote>

<footnote n="7">⁷ This 2015 reform concerns all French “Officiers Publics et Ministériels”: with Notaries, it concerned Bailiffs, Auctioneers, Commercial court clerks and Lawyers at the Council of State and at the Court of Cassation. The notary profession represents a majority of these officers.</footnote>
professionals increased by almost 80 %. The number of notary firms, which had remained around 4,600 for 20 years, increased to 6,961 in 2023 (ADLC, 2023a). Regulated prices were lowered to a more competitive level, and some fees have been deregulated (particularly non-monopoly activities, as real-estate negotiation). In these price-deregulated sectors, real-estate negotiation price-cartels behaviours faced strong sanctions (ADLC, 2019). In the meantime, advertising was liberalised. Since 2019, notaries have been allowed to use new contact methods. In 2023, the professional ethics code was made more competition-oriented, and its enforcement through disciplinary procedures more transparent (ADLC, 2023b).

These regulatory changes have obvious competitive outcomes. However, this does not appear in the indicators for professional services. Indeed, in 2024, the OECD's "Product Market Regulation" (PMR) indicator for French notaries remains at 3.86 out of six<fnref n="5" />, exactly the same as in 2014⁶. In other words, regulation changed, but not the value of the indicators. The issue at stake is that these regulatory indicators directly influenced the French regulatory evolution. Indeed, they are part of a set of regulation indexes built by the EC within the context of the deregulation process. They play a major role in legal services' deregulation process.

Precisely, 2024 is the 20th anniversary of the EC's communication on professional services (EC, 2004). This communication is a breaking point in the history of professional deregulation in the EU (Terry, 2009). Moreover, 2024 is also the year of the fifth PMR indicators' revision from the OECD<fnref n="7" />. Both the EC's communication and PMR indexes for professional services consist in building the same regulatory indicators for several industries. Then, these indicators are used to describe the outcomes of regulation. Serving as a positive, analytic and synthetic tool, they allow strong conclusions to be drawn about the regulation of professional services. These indicators emphasize results about the regulation impact on competition, but also on productivity and growth (see for example IHS, 2003; Copenhagen Economics, 2006; Bambalaite, Van Rueden & Nicoletti, 2020) or quality of legal services (ZERP, 2007). Each of these results rely on indicator-based reports, which share a common methodology and index construction. Regulatory indicators continue to be used today for benchmarking French notarial regulation (see for example ADLC, 2022; Harnay, 2022). Nevertheless, indicators are not just positive tools. The EC's communication or OECD's indicators both rely on indicators constructed by the Institute for Advanced Studies of Vienna (IHS)<fnref n="8" /> in 2003 during the EC's "stocktaking exercise"<fnref n="9" /> (Terry, 2010). At this time, most of European notaries were deemed over-regulated. Through benchmarking, the EC, encouraged member States to liberalise professions – following the Dutch Notary Act example of 1999 (Noailly & Nahuis, 2010). Today's PMR indicators still reflect this perspective. Indeed, they are still used to give policy recommendations, promoting deregulation<fnref n="10" />. In other words, they effectively serve as a normative tool.

To sum up, this paper challenges existing regulatory indicators for notaries. Precisely, the French case study highlights a paradox: these indicators directly inspired and promoted regulatory changes that they fail to quantify. Why does a regulatory evolution driven by indicators remain unquantified by those same indicators? The paper addresses this question by analysing the methodology behind these indicators. It examines their twofold dimension: on one hand, they aim to describe and compare regulations; on the other hand, they offer guidance for deregulating professional services. Thus,

<footnote n="5">⁵ Indicators of Product Market Regulation - OECD. We consider the latest revision of these indicators (2024).</footnote>

<footnote n="6">⁶ Specifically, we recalculated French notaries' indicators for 2014, using the latest PMR version (2024). Indeed, PMR indicators were revised in 2018 and 2024. The online value for 2014 PMR comes from the 2013 revision, and is not comparable with the latest revision.</footnote>

<footnote n="7">⁷ See footnote 5.</footnote>

<footnote n="8">⁸ As we present in Box 1, the OECD regulatory indicators for professional services we mentioned are directly inspired from IHS' regulation indexes (IHS, 2003). As the OECD's indexes are the latest and most refined form of professional regulation indexes, this paper principally uses them.</footnote>

<footnote n="9">⁹ Comments and concluding remarks of Commissioner Monti at the Conference on Professional Regulation, European Commission, Brussels, 28 October 2003</footnote>

<footnote n="10">¹⁰ Product market regulation | OECD</footnote>
(particularly the Legal Services Act (2007) in the United Kingdom, for instance, which reformed barristers and solicitors following the Clementi Report) but some exceptions existed (see for instance Spanish or Portuguese lawyers).

This paper aims to analyse the fusion of the OMC and regulatory indicators, and the limits of assessing the “deregulation process” it initiated in French notarial services. More than questioning the competition effects of a particular reform on a particular profession, it proposes to interrogate the (un)fitness between the OMC and professional regulation indexes. The idea is not to highlight a necessary imperfection of regulation indexes, or to question their methodological choices nor to criticise the OMC. We explain why these indexes cannot assess regulatory evolutions in the OMC’s context, by considering both comparability issues for professional markets and the economic modelling of the competition within these markets. More precisely, we see that regulatory indicators rely on a “non-functional equivalence” (part 2) which assumes the existence of a “flat world” for legal services (Terry, 2008a). This flat world is made of contestability and hypotheses that could not fit the OMC’s ambitions (part 3): this combination explains why major transformations of a professional market cannot be quantified. If the OMC needs to be quantified, it must change its (de)regulation indexes. We therefore invite to consider that existing regulatory indicators are not consistent in assessing all kinds of deregulation, and – although we do not pretend to build new regulatory indicators – propose insights for regulatory quantification.

## 2 – A DEREGULATION PROCESS... WHICH LEADS TO REGULATION: A NEW FRAMEWORK FOR COMPETITION IN THE FRENCH NOTARY PROFESSION

Competition-enhancing reforms in the French notary profession appeared to be a mix of several contexts. From a European perspective of globalisation and deregulation of legal services’ markets, a comparative approach led to promote convergence towards competitive best practices. Regulation indexes were constructed to assess regulation, to compare competition levels and to conclude on reforms to make. From a French perspective, an anti-corporatist political tradition appropriated the EC’s stance, and proposed economic justifications towards regulatory reforms (Attali, 2008; IGF, 2013; Ferrand, 2014; Untermaier & Houillon, 2014).

### 2-1 – Promoting deregulation in European Notarial Services

#### 2-1-1 – An “index framework”: an economic tool to assess regulation

Professional regulation was under international scrutiny before EC’s Communication. It led to a deregulation process, which was inspired by institutional reports and conferences. The Global Agreement on Trade in Services (GATS) or the Organisation for Economic Co-operation and Development (OECD) created a new paradigm of legal services as “service providers” (Terry, 2008b; Terry, 2010). This paradigm, as said L. Terry (2008b), analyses professional services as “normal” services, and thus applies to those industrial economic schemes. *Wouters and Arduino* cases (2002) considered legal professionals as “undertakings within the meaning of Article 85 of the EC Treaty” (now Article 101 of the TFEU). In this context, Monti’s “stocktaking exercise” and EC’s Communication were a new step in this regulatory approach (Terry, 2009) as it inaugurated a deregulation path for the European Single Market. On the one hand, the European “Open Method of Coordination” let national governments free to decide how to reach this common objective of professional deregulation. On the other hand, the EC defined and quantified the question of professional services’ regulatory framework (what are the rules to test? What kind of tests should be applied?) and highlighted this issue for single market purposes<fnref n="8" />. In this perspective, economics appeared as a comparative law tool (Michaels, 2009)

<footnote n="8">⁸ The EC (2004) defined five types of professional rules under scrutiny, and invited the EU countries to assess individually their proportionality. These professional rules were (i) Fixed prices and (ii) Recommended prices, (iii) Advertising regulations, (iv) Entry requirements and reserved rights and (v) Regulations governing business</footnote>
the paper explores both the descriptive (positive) and prescriptive (normative) aspects of these
indicators. First, it presents the reasons why they incompletely quantify regulation, particularly for
French notaries. Second, it compares indicators' roles and consistency in deregulation policies'
justifications. These two issues lie in the assumption that there exists a pro-competition continuity in
quantifying regulation. However, we show that this assumption skews indexes' both positive and
normative realms.

This paper does not question the empirical effects of regulation, but aims to assess the regulatory quantification tools in themselves. It questions both the positive and the normative claims of regulatory indicators. We emphasize that these indicators rely on a set of assumptions that significantly influence the empirical results they produce. Consequently, we adopt a methodological and theoretical approach to explore the implications of regulatory quantification. We first present the construction and underlying assumptions of professional regulation indexes (Part 2). We show that the construction of these indexes is based on a pro-competition *continuum* and relies on several strong hypotheses. We argue, in the two following parts, that indicators take two distinct forms: regulation and deregulation indexes. First, regulation indexes for notarial service are only partially descriptive. They treat regulatory variations with different regulatory functions as if they are functionally equivalent. Rather than quantifying professional regulation itself, they measure the distance from an ideal model. As such, they are better understood as “regulatory distance indexes” in a “flat world” (Part 3). Second, when we consider regulatory indicators’ normative realm, we show that they function as deregulation indexes. Indeed, they promote two specific models of regulation that we define. Then we test their economic consistency. Our analysis shows that these indicators often contradict the policies they are used to justify (Part 4). Finally, we advocate for developing indicators more suitable for both economic analysis and policymaking. We propose a multifaceted approach to quantifying regulation. It consists in constructing new indicators, each focusing on a different regulatory outcome (capture, quality of service ...). This approach would adopt a more “legal markets-based” methodology for constructing indicators. Specifically, we suggest identifying notarial markets using a comparative law framework that accounts for legal functions.

2 – QUANTIFYING REGULATION: PRO-COMPETITION CONTINUITY AND BEST PRACTICES

Interrogating indicators' claims to be positive and normative necessitates an in-depth analysis of their methodology. In this section, we present the set of three explicit hypotheses regulatory indicators for professional services rely on (2-1). These three assumptions – comparability, separability and implementability of professional rules – belong to the “Best practices” methodology, with a double-sided purpose. They (i) pretend to illustrate and compare national regulations, and (ii) to give insights for further reforms. We show that this methodology entails an implicit fourth assumption, defining a *pro-competition* benchmark for regulation. Indeed, the separability assumption draws a continuity between zero and maximal regulation. A country’s position on this continuity is given by comparison (comparability assumption). Finally, countries can move on this continuity, with paths to (de)regulate (implementability assumption). This benchmarking of regulation is consistent with the literature about professional regulation (2-2).

2-1 – The “Best practices” methodology: comparing, separating and implementing professional rules

Regulatory indicators rely on three explicit assumptions. First, specific professional rules are comparable, both between countries and between professions: we call it the “comparability” assumption. Indicators compare and benchmark specific regulations, and so their authors explicitly assume their comparability. Second, professional rules are considered as separable (“separability” assumption). It means that one could distinguish quotas and economic needs’ tests from price regulation, graduation requirements…, and compare these specific rules between countries. This assumption directly comes from the nature of the indicators, which pretends to be synthetic of the regulatory framework through aggregation of independent rules. Finally, using the “Best Practices” methodology, professional rules
to promote and justify professional deregulation, and the DG competition offered a public contract to the Institute for Advanced Studies of Vienna to assess professional regulation economic outcomes (Terry, 2009). These discussions resulted in a report (IHS, 2003), which became the main empirical source of EC's Communication. The IHS report led to the creation of professional regulation indexes<fnref n="9" /> used as tools to compare national and professional regulations, and to assess their proportionality relatively to competition. With these indexes, IHS (2003), EC (2004), or ZERP (2007) later<fnref n="10" />, concluded that many professions were over-regulated, which can be explained by “private interest theories” or “regulatory capture” (Stigler, 1971; Posner, 1974).

The IHS indexes (and ZERP's reuse of these indexes) are not the latest attempt to quantify regulation; actually, index construction belongs to different contexts of professional markets' globalisation. Therefore, an “indicators framework” exists beyond the single IHS index, with a common basis and methodological common elements. For example, Nguyen-Hong's works on regulation's quantification in professional services' trade assessment (Nguyen Hong, 2000) directly inspired Paterson et al. (the authors of the IHS and the ZERP studies) in constructing Market Entry and Market Conduct indexes. The former wrote in GATS context, when the latter developed in OMC's context. Similarly, the IHS professional regulation index inspired the OECD “Product Market Regulation” index for Professional Services<fnref n="11" /> in 2003 (PMR Questionnaire, 2003; Conway, Janod & Nicoletti, 2005). Despite all these revisions, today's PMR index for professional services is a refinement of IHS'. Moreover, the 2018 revision has main variables in common with European Commission's index “PRO-SERV” index (EC, 2016) ... itself directly inspired from 2013 version of PMR (EC, 2016; Pelkmans, 2017). What we see defines an “index framework”, with some insights: a mutual inspiration and sharing of methods and variables, and a community of contexts (market openness, promotion of competition). Today, PMR indicators are still used as guidelines for better competition and efficiency:

*“The OECD PMR indicators are the most complete quantitative measures of barriers to competition currently available” (OECD, PMR Brochure 2020, p.5).*

They share a structure, based on a bipartition between “Entry” and “Conduct” regulation which follows a distinction made by the OECD (OECD, 2000), with the idea that entry rules are “structural” and conduct rules “behavioural”. Today, indicators’ use goes beyond institutions, particularly in academic works. Mlinaric, Oplotnik & Brezovnik (2018) use PMR regulatory indicators for regulatory comparison in Legal services; Mocetti, Rizzica & Roma (2021) build “OECD-type” indexes, based on PMR indicators (Vitale & ali., 2015), to make inter-professional comparisons in regulated occupations in Italy ...

Nevertheless, this mutual inspiration does not mean that these different indexes are perfectly comparable and substitutes. Particularly, PMR's 2018 revision changed some variables and introduced new ones, and sub-variables' weightings and scaling have major differences. For example, the IHS differently weights “Licensing” in the Market Entry Regulation Index (40 % of the index), “Regulation of Prices, and Fees” in the Market Conduct Regulation Index (25 %), while the OECD applies the same

<footnote>structures and multi-disciplinary practices. All these rules were quantified into the IHS study (IHS, 2003; See Annex 1 for the detail of sub-variables), and are still in OECD's PMR indicators.</footnote>

<footnote n="9">⁹ The indexes constructed in IHS (2003) are inspired of Nguyen-Hong works for the Australian Productivity Commission (Nguyen-Hong, 2000). His indexes were constructed in evaluating GATS and quantified regulation with a standard of services' trade liberalisation.</footnote>

<footnote n="10">¹⁰ IHS and ZERP reports share two authors (Iain Paterson, Marcel Fink)</footnote>

<footnote n="11">¹¹ “Product Market Regulation” (PMR) is OECD's regulation indicators system, with a regulatory quantification purpose. Particularly, there are sectoral indexes: Professional services (Legal services, Engineering, Architecture, Accounting) belong to a larger sector (“Regulation in Retail Distribution and Business Services”, RBSR), itself in “Non-Manufacturing Regulation” (NMR). For more details, see Nicoletti, Scarpetta & Boylaud (2000), Conway, Janod & Nicoletti (2005), Wölfl, Wanner, Kozluk & Nicoletti (2009), Koske, Wanner, Bitetti & Barbiero (2015) and Vitale, Bitetti, Wanner, Danitz & Moiso (2020).</footnote>

<footnote>There were several revisions of PMR indexes since their creation in 1998; Professional Services were introduced in 2003, and revised in 2008, 2013 and 2018.</footnote>
are implementable (“implementability” assumption). If a rule exists in a country A, but does not exist in a country B, then it is not necessary and should be removed.

This methodology is historically deeply rooted in the OMC context<fnref n="11" />. Regulatory indicators are a non-compulsory deregulation method for a “deregulation process”. Following the OMC principles (Regent, 2003), they provide information on the regulation’s nature. Thanks to “best practices”, they give insights for further reforms. The “best practices” idea relies on an equity method: all professional rules are independently equivalent in terms of competitive outcomes (separability), and are comparable based on this competitive standard (comparability). As professional rules constitute indexes’ sub-variables, there exist “best” countries in terms of regulation for each of these professional rules. For example, if we consider French notaries in 2003, they were one of the most regulated *notariats* after Germans and Italians (IHS, 2003). In the European context, the EC tackled notaries’ old and strong over-regulation, and invited Latin Notaries to converge towards more proportionality. Graph 1 shows that in Notarial services, Netherlands had the lowest regulation. Indeed, the Dutch Notary Act (1999) deregulated both entry and conducts in the profession. It ended entry quotas, facilitated installations, and deregulated prices (Van den Bergh & Montangie, 2006; Noailly & Nahuis, 2010). EC’s works thus often presented Dutch notaries as the prototype of the good path towards deregulation (particularly in ZERP, 2007).

<figure><img src="image_2.png" /><figcaption>**Graph 1: The IHS regulation index for Notarial services in 2003**</figcaption></figure>

*Sources:* Paterson, Fink, Ogus et al (Jan 2003) “Economic impact of regulation in the field of liberal professions in different Member States”, Institute for Advanced Studies (IHS), Vienna, study for the European Commission

IHS’s regulation indexes rely on a double purpose: to assess regulation’s proportionality (a professional rule necessary and sufficient to achieve a public interest objective) and to promote deregulation. This is the direct consequence of the implementability hypothesis. Indeed, indicators offer an empirical ground for regulatory evolution, by comparing countries’ professional regulations and inferring economic results:

“We are led by this study to the overall conclusion that the lower regulation strategies which work in one Member State might be made to work in another, without decreasing the quality of professional services, and for the ultimate benefit of the consumer.” (IHS, 2003, p. 6).

<footnote n="11">¹¹ This community of assumptions, methods, and policy recommendations echoes the Open Method of Coordination (Regent, 2003). However, as the OECD uses it in a broader context than the EC, we consider the methodology disentangled from its European context.</footnote>
weighting to all sub-variables (14.3 % for entry sub-variables and 12.5% for conduct ones). These
differences create important gaps in benchmarking countries' regulation. For example, for notaries,
France is one of the most regulated countries according to IHS indexes, while it is one of the most
"competitive-friendly" in OECD's indexes<fnref n="12" />.

2-1-2 – The “Best practices” methodology: promoting a hybrid model of professional competition

In OMC’s context, indexes appear to be a non-compulsory deregulation method: they provide
an information on regulation’s nature, and with “best practices” give insights for further reforms. The
“best practices” idea relies on an equity method: all professional rules are equivalent in terms of
competitive outcomes, and are comparable based on this competitive standard. As professional rules
constitute indexes’ sub-variables, and there exists “best” countries in terms of competition for each of
these professional rules. Therefore, national professional regulations should converge towards a hybrid
and optimal regulation, which is the addition of all these best practices; for example, if we consider
French notaries in 2003, they were one of the most regulated after Germans and Italians (IHS, 2003).
EC tackled notaries’ regulation, because of an old and strong over-regulation, and invited Latin Notaries
to converge towards more proportionality. Graph 1 shows that in Notarial services, Netherlands
proposed the lowest regulation (and so on, the most competition-oriented regulation). The Dutch Notary
Act (1999) deregulated both entry and conducts in the profession, by ending quotas, facilitating
installations, and deregulating prices (Van den Bergh & Montangie, 2007; Noailly & Nahuis, 2010).
This example is thus often presented as the prototype of the good path towards deregulation (particularly
in ZERP, 2007).

<figure><img src="image_2.png" /><figcaption>**Graph 1: The IHS regulation index for Notarial services in 2003**</figcaption></figure>

Sources: Paterson, Fink, Ogus et al (Jan 2003) "Economic impact of regulation in the field of liberal professions in different Member States", Institute for Advanced Studies (IHS), Vienna, study for the European Commission

As we can see, IHS's regulation indexes rely on a double purpose: to assess regulation's proportionality (a professional rule necessary and sufficient to achieve a public interest objective) and to promote regulatory convergence<fnref n="13" /> towards a hybrid model of regulation. Moreover, they offer an empirical

<footnote n="12">¹² This difference results from both the introduction of new variables (where French notaries have a more competition-friendly regulation than other countries) and the changing of weightings. On IHS' and OECD's common variables, French notaries' results overlap.</footnote>

<footnote n="13">¹³ This idea is compatible with a model of Tieboutian regulatory competition (Tiebout, 1956; Easterbrook, 1983), where countries compete in terms of professional services' regulation. Indexes might be</footnote>
This promotion of both competitive “best practices” and exchanges between countries’ professional regulations is at the core of OECD’s index construction along with the “International Best Practices” (IBP) method. It belongs to the same paradigm of separability and comparability of national laws. It makes the implicit assumption that professional rules are “functionally equivalent” between countries (Zweigert & Kötz, 1998). As Conway and Nicoletti (2006), two of PMR authors notice,

“It should be noted that in assessing regulations in both the retail distribution and the professional services sectors the implicit assumption is that barriers to entry or constraints on conduct that exist in one country but not in others are not needed to ensure service quality, protect workers or protect consumers and, hence, unnecessarily distort competition.”<fnref n="12" /> (Conway & Nicoletti, 2006, p.12).

The IBP method considers equivalent all professional regulations based on a competition standard, and assesses an “optimal” level through comparison. In other terms the lower the index, the more competition-friendly professional regulation is. Each sub-variables (which points a specific professional rule) should therefore be minimised towards the existing “best practice”. This minimisation would lead to a better competition. Optimality assessment, in this case, does not propose a theoretical model of regulation (Mlinaric, Oplotnik & Brezovnik, 2018), but an empirical ground for regulatory reform.

## 2-2 – Competition or the economic benchmark for regulation

As long as they’ve existed, regulatory indicators assume that professional regulation can be quantified using a specific economic benchmark. EC’s “stocktaking exercise” (EC, 2004) and IHS indicators (IHS, 2003) initiated the use of competition benchmarks (see Box 1). It consists in identifying (professional) regulation to an anticompetitive situation and defining a continuum from a minimal regulation / perfect competition situation to a maximal regulation / non-competition one. In other words, regulatory indicators consider regulation as a negative proxy for competition: the higher the regulation, the worst the competition<fnref n="13" />.

“The OECD Product Market Regulation (PMR) indicators assess the alignment of a country’s regulatory framework with international best practices. The economy-wide indicator measures the distortions to competition that can be induced by the regulatory barriers to entry and expansion faced by firms across the economy, as well as by the involvement of the state in the economy. Sector-specific indicators measure these distortions in particular sectors.” (OECD, 2024, p.4).

The OECD regulatory indicator for notarial services goes from zero (a fictionally unregulated profession) to six (the fictionally “most” regulated profession). It is composed of 14 sub-variables of equal weights (Cf. Annex 1). Following the OECD’s distinction between structural and behavioural regulation (OECD, 2000), it distinguishes entry and conduct regulation. With the “Best Practices” set of hypotheses on the nature of regulation, there is the idea that every professional rule might belong to this continuity.

**Box 1: A short history of the “index framework” for professional services**

Regulatory indicators’ history for professional services echoes the history of deregulation policies justifications for this industry. It coincides with economists’ involvement in professional regulation’s matter, which participated to develop the “service providers” paradigm for legal services (Terry, 2008; Terry, 2010).

We can identify a first attempt to quantify regulatory evolutions in order to assess the General Agreement on Trade in Services’ (GATS), with the creation of a liberalisation index in services<fnref n="14" />.

<footnote n="12">¹² This quote, with the precedent quote from the HIS report, is at the core of the implementability assumption.</footnote>

<footnote n="13">¹³ We shall note that some existing regulatory indicators for Lawyers and Physicians directly inspired from IHS (Garoupa, 2004) adopt and advocate for a public economics approach, and correlate regulation to market performance.</footnote>

<footnote n="14">¹⁴ Legal services were concerned by the GATS</footnote>
ground for deregulation, by comparing countries’ professional regulations and inferring economic
results:

"We are led by this study to the overall conclusion that the lower regulation strategies which work in one Member State might be made to work in another, without decreasing the quality of professional services, and for the ultimate benefit of the consumer." (IHS, 2003, p. 6).

This promotion of both competitive “best practices” and exchanges between countries’ professional regulations is at the core of OECD’s index construction along with the “International Best Practices” method. It belongs to the same paradigm of comparability of national laws, and makes the implicit assumption that professional rules are “functionally equivalent” between countries (Zweigert & Kötz, 1998). As Conway and Nicoletti (2006), two of PMR authors notice,

"It should be noted that in assessing regulations in both the retail distribution and the professional services sectors the implicit assumption is that barriers to entry or constraints on conduct that exist in one country but not in others are not needed to ensure service quality, protect workers or protect consumers and, hence, unnecessarily distort competition." (Conway & Nicoletti, 2006, p.12).

The International Best Practices method considers equivalent all professional regulations based on a
competition standard, and assesses an “optimal” level through comparison. In other terms the lower the
index is, the more competitive-friendly professional regulation is. Each sub-variables (which points a
specific professional rule) should therefore be minimised, and lead to a better competition. Optimality
assessment, in this case, does not propose a theoretical model of regulation (Mlinaric, Oplotnik &
Brezovnik, 2018), but an empirical ground for regulatory reform.

To sum up, regulatory indicators rely on three implicit assumptions. *First*, professional rules
can be considered as separable: we can distinguish quotas and economic needs tests from price
regulation, graduation requirements... *Second*, these rules are comparable, both between countries and
between professions. It should be noted that both in IHS and OECD reports, notaries’ regulatory
indicator questionnaire quasi overlaps with lawyers’, real estate agents’, accountants’, architects’ and
engineers’<fnref n="14" />. *Finally*, with the “Best Practices” methodology, professional rules are implementable: if a
rule exists in a country A but does not exist in a country B, then it is not necessary and has to be removed.
This community of assumptions, methods, and policy recommendations in this “index framework”
disentangles the essence of the Open Method of Coordination from its European context. Indeed, the
OMC, in professional services’ case, seems to belong to a larger policymaking context.

## 2-2 – The new regulatory framework in the French notary profession: a more competitive regulation?

The French notary profession’s reformation answered to the numerous European injunctions to enhance competition in professional services. In a sense, it pursues the “Open Method of Coordination”: the EU promotes competition in liberal professions, and France enhances this competition for legal services, with its own method. However, almost a decade later, did the regulatory environment effectively change?

### 2-2-1 – A competition-improving reform for an old corporatist profession

Notaries are “Public and Ministerial Officers”<fnref n="15" />: they are liberal professionals with a public
monopoly (Thuderoz, 1991). Notarial market’s specificity results from this historic monopoly on
authentication for certain deeds: in France, conveyancing or inheritance require a notarial deed. As
“Ministerial Officers”, notaries are under the Ministry of Justice’s supervision: until 2015, both national
professional order and Ministry of Justice defined new notary firms to enter the market and enforced
fixed prices. This “co-regulation” (in the sense of Chaserant & Harnay, 2010) was criticised as the
archetype of “regulatory capture” (Stigler, 1971; Posner, 1974). As Suleiman (1987a; 1987b) pointed,

<footnote n="14">¹⁴ Indicators of Product Market Regulation - OECD</footnote>

<footnote n="15">¹⁵ « Officiers Publics et Ministériels »</footnote>
Hoekman index (1996) associated liberalisation agreements with a specific value (from 0 to 1): the higher the value, the less restrictive to trade liberalisation the agreement. This scale inspired Nguyen-Hong (2000) to create a general index of professional regulation's "restrictiveness" to the international trade of services. It tried to evaluate the GATS' impact on regulation in services, including legal services. In both Hoekman's and Nguyen-Hong's works, indicators conceptualized professional rules as impediments to trade liberalization in services.

When the Commissioner Monti launched his “Stocktaking exercise” on professional regulation (Monti, 2003), the EC commanded a report to the Institute of Advanced Studies of Vienna (IHS). The IHS built a regulation index from Nguyen-Hong’s, but changed the benchmark. Regulation was no longer quantified through a “trade restrictiveness” perspective, but with a pro-competition one. The IHS index became the main empirical source of the EC’s Communication (2004) and directly inspired the ZERP study (2007). IHS and ZERP reports shared two of their authors, Iain Paterson and Marcel Fink. Similarly, the OECD used the IHS professional regulation index to build its “Product Market Regulation” index for Professional Services<fnref n="15" /> in 2003 (PMR Questionnaire, OECD, 2003; Conway, Janod & Nicoletti, 2005). Despite all these revisions, today’s PMR index for professional services is a refinement of IHS’ (See Annexes 1 & 2). Moreover, the 2018 and 2024 revisions have main variables in common with European Commission’s index “PRO-SERV” index (EC, 2016) … itself directly inspired from 2013 version of PMR (EC, 2016; Pelkmans, 2017). What we see defines an “index framework”, with some insights: a mutual inspiration and sharing of methods and variables, and a community of contexts (market openness, promotion of competition). Today, PMR indicators are still used as guidelines for better competition and efficiency:

*“The OECD PMR indicators are the most complete quantitative measures of barriers to competition currently available” (OECD, PMR Brochure 2020, p.5).*

The sub-variables' scaling, and its interpretation, are consistent with the existing literature on regulation in professional services. For example, the first variable of the "Entry – General" index (see Annex 1) is a score of professional exclusive or shared rights. If the profession is "protected" by a professional title, the OECD attributes a weight of 1. Then, the variable defines a set of notarial activities ("Drawing up legal documents", "Regulation of family matters" ...) and takes a weight of 1 for every specific activity which constitutes an exclusive right of the profession and of 0,5 when this activity is a shared exclusive right or when the monopoly only concerns a subset of the activity. When we sum these weights into a score of professional rights, the higher the score, the less competition there is. For example, French notaries have a score of 5 out of 6. They are protected by a professional title, share 4 exclusive rights to perform activities with other professionals, have an exclusive right on the subset of two activities, and an exclusive right in conveyancing. Thus, this variable quantifies (i) the existence of a professional title (licensing)<fnref n="16" /> and (ii) its extent. The underlying idea is simple: as the licensing limits the number of potential competitors from other legal professions, the more activities it concerns, the more it limits competition on legal markets (Hadfield, 2000; Kleiner, 2006; Hadfield, 2022). Therefore, a high index means that regulation is captured (Stigler, 1971; Posner, 1974). It is both anticompetitive and rent generating. We can note here that in PMR database, there does not exist any notariat without a

<footnote n="15">15 “Product Market Regulation” (PMR) is OECD’s regulation indicators system, with a regulatory quantification purpose. Particularly, there are sectoral indexes: Professional services (Legal services, Engineering, Architecture, Accounting) belong to a larger sector (“Regulation in Retail Distribution and Business Services”, RBSR), itself in “Non-Manufacturing Regulation” (NMR). For more details, see Nicoletti, Scarpetta & Boylaud (2000), Conway, Janod & Nicoletti (2005), Wölfl, Wanner, Kozluk & Nicoletti (2009), Koske, Wanner, Bitetti & Barbiero (2015) and Vitale, Bitetti, Wanner, Danitz & Moiso (2020).
There were several revisions of PMR indexes since their creation in 1998; Professional Services were introduced in 2003, and revised in 2008, 2013, 2018 and 2024.</footnote>

<footnote n="16">16 Kleiner defines licensing “as a process where entry into an occupation requires the permission of the government and the state requires some demonstration of a minimum of competency” (Kleiner, 2006, p.191).</footnote>
notaries behaved as a strong corporation, and the Ministry’s “co-regulation” turned into a powerful “self-regulation”. Some institutional reports tried to expose this capture<fnref n="16" />, but failed in reforming the profession. In this perspective, the European move towards professional deregulation echoed a long-term French anti-corporatist stance (Marty, 2017; Frison-Roche & Roda, 2022).

The notarial captured regulation was strong and organised: until 2015, the professional representatives<fnref n="17" /> settled the number of new notary firms (“Offices”) to be created. With the Ministry of Justice, notaries set up a binding tariff upon their main activities, and enforced the profession ethics through discipline – but in a Nuñez-type self-regulated organisation (Nuñez, 2007), they did not reveal any of the disciplinary sanctions. This led to corporatist-like practices, with a strong entry and conduct control and opacity of internal affairs for a unique and monopolistic profession (Shaked & Sutton, 1981). It resulted in a sluggish notary firms’ evolution on the middle or long term, and a weak growth of the number of professionals. Notary firms stagnated between 1995 and 2015, and the number of professionals increased by an average of 1.3% each year on this period (Table 1). This regulatory capture was reinforced by a “gendered capture” (Massé, 2023), professional self-regulation of entry leading to women’s exclusion from the profession. Main institutional reports presented regulated fees as over the competitive equilibrium (EC, 2004; ZERP, 2007; IGF, 2013) with high mark-ups, considered as a “rent”. Ethics code prohibited main forms of advertising. All these elements gathered conditions for a regulatory capture.

<table><caption>**Table 1: Growth and Average annual growth rates for notary firms and professionals (1995-2023)**</caption><thead><tr><th rowspan="2"></th><th colspan="2">Notary Firms</th><th colspan="2">Notaries</th></tr><tr><th>1995-2015</th><th>2015-2023</th><th>1995-2015</th><th>2015-2023</th></tr></thead><tbody><tr><th>Growth rate</th><td>-2 %</td><td>+52.6 %</td><td>+29.2 %</td><td>+78.5 %</td></tr><tr><th>Average Annual Growth Rate</th><td>-0.1 %</td><td>+5.4 %</td><td>+1.3 %</td><td>+7.5 %</td></tr></tbody></table>

*Sources: L'évolution des métiers de la justice - Sénat (senat.fr); Notarial profession's annual reports (2015 and 2023); author's calculations.*

Following some institutional reports directly inspired from EC's works and related studies (Attali, 2008; IGF, 2013; Ferrand, 2014; Untermaier & Houillon, 2014), the former French Ministry of Economics and Finances E. Macron launched a “liberalisation” of the notary profession<fnref n="18" />. It resulted in a new regulatory framework for notaries: the profession moved from a self-regulation to a “hetero-regulation” (Chaserant & Harnay, 2010). The French antitrust agency (Autorité de la Concurrence, ADLC henceforth) now proposes regulatory schemes for market entry and prices, and both Ministry of Justice and Ministry of Economics and Finances can approve or reject these schemes. The ADLC defines installation phases for new liberal professionals through specific communications, and installation maps for each of these phases<fnref n="19" />. To construct these maps, the ADLC calculates economic needs tests for geographical consistent markets (ADLC, 2016) and proposes a maximum number of installations for each. Graduate notaries can candidate in different geographic areas, and a lottery process usually selects future entrants in these areas. Until then, all ADLC notifications on entry were ratified and put into effect, which makes it the effective regulatory agency for notaries. The agency also communicates on tariffs and fees for notarial services (ADLC, 2019; ADLC, 2020), and proposes a fee convergence towards notary firms' average costs. Since the 2015 Law, notarial regulated fees were reduced for certain services.

<footnote n="16">¹⁶ See, for example, Armand & Rueff (1960), Attali (2008) or IGF (2013).</footnote>

<footnote n="17">¹⁷ The notary profession is hierarchized into a national professional order (the “Conseil Supérieur du Notariat”, CSN), regional chambers and more local representatives. Before 2015, settlement comities for new notary firms were composed for a at least a half of national representatives of the profession (see Massé, 2023).</footnote>

<footnote n="18">¹⁸ LOI n° 2015-990 du 6 août 2015 pour la croissance, l'activité et l'égalité des chances économiques (1) - Légifrance (legifrance.gouv.fr)</footnote>

<footnote n="19">¹⁹ In 2024, there were 4 installation phases, with 4 associated ADLC's communication and maps: 2016-2018; 2018-2020; 2021-2023; 2023-2025</footnote>
professional title. It echoes Leland’s conclusions about the necessity for professions to implement a
licensing on a “Lemons” market (Leland, 1979).

This scheme of degrees of anticompetitive environment coming from professional regulation
extends to all other “Entry” sub-variables. The existence of a limitation of the number of professionals,
through quotas or economic needs’ tests, necessarily reduces the number of professionals on the market
and creates an “artificial” entry barrier (Hadfield, 2000). Therefore, controlling the number of
professionals through regulation is associated to an anticompetitive situation and scored 6. A unique
pathway to obtain qualifications (especially if it is associated with many years of training<fnref n="17" />) and the
existence of a professional exam similarly decrease entry rates and competition in professions (Mocetti,
Rizzica & Roma, 2021). Then, it then should be considered as less competitive-friendly than multiple
pathways to obtain qualifications. Finally, a compulsory membership to professional organisation might
encourage corporatist-like practices and market closure. It constitutes a strong deterrence to competition,
and generates a rent-seeking behaviour.

Similarly, the “Conduct – Fees and charges” variables rely on the idea that a professional conduct regulation deters competition and comes from a rent-seeking behaviour. The “Fees and Prices” sub-variable benchmarks price regulation according to its impediments to a competitive prices’ adjustment. Recommended prices are considered as more competition-friendly than maxima prices, themselves more competition-friendly than minima prices. This scales impediments to price adjustment to marginal cost, which constitute impediments to competition. The advertising regulation’s quantification appears to be more challenging from an economic point of view. Indeed, the index considers this regulation as necessarily anticompetitive. This is consistent with a Stiglerian model perspective, where advertising is necessarily information-improving (Stigler, 1961). In this model, any regulation that constrains advertising is competition damaging. If it is also consistent with a “routine legal service”<fnref n="18" /> approach (Cox, Schroeter & Smith, 1985; Schroeter, Smith & Cox, 1987), it does not raise the issue of consumer information (Akerlof, 1970; Nelson, 1970; Nelson, 1974) nor the specificities of a “credence goods” industry (Darby & Karni, 1973). This might neglect the theoretical and empirical difficulty to draw strong conclusions over information and quality implications of advertising (Comanor & Wilson, 1979). The other variables try to ease shareholding in notary firms and inter-professional cooperation. To be more competition-friendly, regulation should enable legal firms to have any possible legal form. They might be incorporated in larger firms (non-necessarily legal), particularly through shareholding. In this context, and consistently with the entry framework, there shall be no rules over inter-professional cooperation. All these regulations offer the possibility to make scale and scope economies, but invite to interrogate specialisation costs’ loss (Chaserant & Harnay, 2010).

It is important to note here that indexes' construction only focuses on a single continuity, which
is competition. Indicators' authors specify that they try to capture de jure regulations, and do not
necessary deal with enforcement issues. It gives an empirical quantification to a theoretical position of
regulation on the competition continuum. Indeed, following the separability assumption, the aggregation
of independent professional rules creates a continuity from 0 to 6. As they define a continuity, we can
compare two professions' competition-friendly nature: this comes from the comparability assumption.
Finally, this continuum enables the policymaker to identify “best practices” for reforms, directly
assuming that professional rules are implementable.

*

To sum up, we can identify several reasons why these indicators are presented as “objective”
and “focused on market functioning” in their regulatory approach (Pelkmans, 2010, p.10). First, it is
mostly because they can reconcile two opposite literatures in professional regulation economics

<footnote n="17">¹⁷ The 2024 revision of PMR indicators does no longer quantify the regulation of the number of years of undergraduate and professional education is no longer quantified.</footnote>

<footnote n="18">¹⁸ Cox & al. (1985) define « routine legal services » as services provided by lawyers with (1) a “negligible” marginal productivity for legal skills, (2) a defined set of activities and (3) a weak importance of quality variables.</footnote>
It should be noted here that France innovates in terms of legal professions' regulation. Indeed, instead of creating a new regulatory agency or making several agencies compete (Szczygielski, 2022), the 2015 reform put the national antitrust agency in charge of this regulation. This might seem surprising, as ADLC's role is to sanction anticompetitive behaviours *ex-post* (cartels, abuses of dominance ...) and not to regulate markets *ex-ante*<fnref n="20" />. Such a model overlaps with a Laffont & Tirole (1993) regulatory scheme, and might constitute a "de-capture" of the profession. Indeed, there is a "two-tiered" regulatory structure, with ADLC as the "agency" and Ministries of Justice and Economy and Finances as the "Congress". In this agency model, the regulated industry (here, notaries) benefits from an "informational rent", and ADLC has resources to analyse professional competition issues, and an expertise to propose a regulatory scheme. With a transparency process (ADLC publishes all its communications about professional regulation), any bilateral contracting with the industry appears impossible. The old regulatory capture scheme seems to be vanished, and there can be no doubt on the new framework's competitive outcomes for notarial market. It led to what we might call a supply shock on the notarial market, by multiplying the number of notary firms by 1.53 since the reform, with the number of professionals increasing in average by 7.5 % each year between 2015 and 2023 (Table 1). Notaries are freer in establishing prices (they might practice a discount on some regulated fees, and certain fees for non-monopoly activities were fully deregulated<fnref n="21" />), and some regulated fees have been reduced. Since 2019, they are also freer in advertising, with the possibility to use "personal contacting"<fnref n="22" />. The ADLC pressured for advertising regulation to be softened, particularly for new notary firms. According to the agency, these rules restricted new firms' development and distorted the new competition it promoted. Finally, the ADLC is trying to make professionals' ethics code more competition-oriented, by communicating and proposing new rules, and to make ethics conformation and enforcement transparent and procedural (ADLC, 2023b).

As we can see, there are conditions for a competition-improving process: supply shock, lower prices, freer advertising and more transparency. Professionals and ADLC agree on the fact that this new framework changes the conditions of competition.

### 2-2-2 – Is “liberalisation through administration” competition improving? Paradoxical evidences from indexes

All this process appears to be a perfect example of what could be the OMC: (1) EC communicates on regulation in legal services, analyses the over-regulation and proposes paths towards more competition in this industry, (2) a reformation process takes place, and (3) in middle-long term, this results in more competition on the professional market. As they justified this policymaking, we expect regulatory indicators to follow this trend, and to give evidences of this regulatory evolution.

However, when we consider IHS' (which inspired the process) or OECD's (which are a refinement of IHS' indicator) professional regulation indicators, we cannot quantify these evolutions on competition ground. For example, the sub-variable "Quotas and Economic needs tests" of the IHS Market Entry Regulation Index (Annex 1) does not change, because it is a dummy variable (with "Yes" / "No" possibilities), as long as there are still economic needs tests. We find the same question in PMR's entry regulation index ("Is the number of professionals allowed to practice in your country limited by law or self-regulation by professional bodies (or a combination of the two)?", see table 2), which answer remains a "yes" in 2018. This is quite simple to understand: the index quantifies quotas' existence, but is blind to (1) who regulates or (2) how it regulates. Nevertheless, the competition impact is massive: the number of notary firms created between 1995 and 2015 approximates zero, while between the first installation phase (2016-2018) there were 944 new notary firms, and 724 for the second phase (2018-

<footnote n="20">²⁰ We should precise here that ADLC realises *ex-ante* market analyses in merger control cases.</footnote>

<footnote n="21">²¹ Particularly notarial activities as real-estate agents: there were regulated fees before 2015, and are now totally free.</footnote>

<footnote n="22">²² Décret n° 2019-257 du 29 mars 2019 relatif aux officiers publics ou ministériels - Légifrance (legifrance.gouv.fr). Personal contacting is an advertising technique, which consists in mailing former clients about the services provided by the notary firms, according to their profiles.</footnote>
(Chaserant & Harnay, 2010). This is different from other existing parallel indicators for Lawyers and Physicians (Garoupa, 2004), which undertake a public economics approach. Second, they appear to be transparent in their methodology, with a set of hypotheses about regulatory quantification. Finally, they suggest the possibility for economic tools to be both positive and normative.

# 3 – THE REGULATORY QUANTIFICATION CONUNDRUM: WHICH DIFFERENCES INDICATORS DO QUANTIFY?

Regulatory quantification appears to be a powerful tool for both economic and comparative law analysis (Michaels, 2009). Indeed, regulatory indicators give a synthetic and analytic approach for comparing specific regulations. They summarize legal information about a regulation, enable to make comparisons and to highlight regulatory differences.

In this part, we argue that index-based regulatory differences for notaries, in the meantime, are under and over-estimated. As we have seen, PMR indicators rely on three explicit assumptions. This part focuses on the comparability (3-1) and the separability (3-2) assumptions. It shows that they describe a “flat world”<fnref n="19" /> (Terry, 2009) regulation. It emphasizes that PMR indicators do not quantify regulatory and competitive differences, but focus on the existence of professional rules. This neglects an approach of who regulates, and how the profession is regulated. We illustrate this argument through a case study of the French notaries’ regulatory evolution. In this case study, both the French regulatory de-capture and the competition-enhancing policy remain unquantified. This shows that indexes do not necessarily variate with regulation. Then, we focus on the reasons of indexes’ variations. We underline that when they quantify differences, particularly in professional firms’ regulation, indicators exaggerates them. All of these limits significantly blur the competition *continuum*.

## 3-1 – Under-estimating competition-oriented regulation: a case study of French notaries’ regulatory evolution

This part aims to question indicators’ comparability assumption. In this perspective, we consider the example of an unquantified regulatory evolution. The French notaries’ case study details why regulation indexes do not quantify some evolutions in professional rules. More precisely, it emphasizes that regulation indexes are blind to who regulate the profession, and how the profession is regulated. Therefore, they are limited in quantifying regulatory (de-)capture and in assessing regulation’s competition-friendly nature. Hence, we argue that the pro-competition *continuum* only describes a “flat world” regulation. We first underline that the new regulatory scheme does not consist in lessening regulation, but in making it more competition-oriented (3-2-1). Then, we detail why regulation indexes, as they exist, could not be used to quantify this precise regulatory evolution (3-2-2).

### 3-1-1 – A competition-improving reform for an old corporatist profession

In France, notaries are “Public and Ministerial Officers”<fnref n="20" />: meaning liberal professionals with a public monopoly (Thuderoz, 1991). Notarial market’s specificity results from this historic monopoly of authenticating certain deeds: in France, conveyancing or inheritance require a notarial deed. As “Ministerial Officers”, notaries are under the Ministry of Justice’s supervision. Until 2015, both national professional order and Ministry of Justice defined new notary firms to enter the market and enforced fixed prices. This “co-regulation” (in the sense of Chaserant & Harnay, 2010) was criticised as the archetype of “regulatory capture” (Stigler, 1971; Posner, 1974). As Suleiman (1987a; 1987b) pointed, notaries behaved as a strong corporation, and the Ministry’s “co-regulation” turned into a powerful “self-regulation”. Some institutional reports tried to expose this capture<fnref n="21" />, but failed in reforming the

<footnote n="19">¹⁹ We here use the expression “The legal world is flat” in reference to Terry’s expression (Terry, 2008a), which is a direct reference to Friedman’s concept (Friedman, 2005). However, we use the concept with a slightly different meaning, namely that there exist no institutional coherence nor legal systems.</footnote>

<footnote n="20">²⁰ « Officiers Publics et Ministériels »</footnote>

<footnote n="21">²¹ See, for example, Armand & Rueff (1960), Attali (2008) or IGF (2013).</footnote>
2020)$^{23}$. The index quantifies as a functional equivalent two different – not to say opposite – regulations: one capture-intensive, and the other competition-enhancing.

We note the same issues for price regulation. As a matter of fact, the IHS or the OECD use the same price regulation scaling: the more it constitutes an impediment for adjusting prices to marginal cost's minimum, the less it is competition-friendly$^{24}$. This quantification is blind to prices' effective level, and assumes that a non-regulated price is necessarily closer to a competitive level than a regulated one. It also implies that all fixed prices are functionally equivalents in damaging competition. However, as suggests Laffont & Tirole's model of “two-tiered regulation” (Laffont & Tirole, 1993), a non-captured regulation agency can fix prices according to an estimate of what could be a competitive price, and this is what ADLC tries to enforce by lowering fixed prices. This difficulty to address prices' regulation is strengthened by comparing the index *between* professions. Indeed, when we observe French lawyers and notaries' index value for prices' regulations, an equal value (5 / 6, for “Binding minimum or fixed prices for some activities”) conceals two different impacts of regulation on competition. Regulated fees represent approximately 80-90 % of notarial sales, while they concern only four activities for French lawyers, in a small segment of their market$^{25}$.

The two examples of quotas and prices show France's specificity in liberalising notaries, with a "liberalisation *via* administration" (Blanc, 2015): the Macron Law transferred regulatory prerogatives from the professional order to a non-professional agency specialised in antitrust issues. ADLC's regulation itself undertakes this paradoxical governance, and calls it "*regulated freedom* of installation"$^{26}$. Advertising and ethics mutations, similarly, do not produce any variation in indexes, but for different reasons. In the case of advertising, the effect results from OECD's scaling: there is an alternative between three regulation levels

- “All forms of advertising are allowed” – the most “competition-friendly” regulation.

- “Some forms of marketing or advertising are prohibited”.

- “All forms of marketing or advertising are prohibited” – the less competition-friendly regulation.

Nevertheless, the French 2019 reform for notarial advertising did not impact the index value: some forms of marketing or advertising were “prohibited” before 2019, and some forms are still prohibited after. Then, the index framing creates a gap between regulatory possibilities, and cannot quantify any variation in advertising regulation. For ethics, it seems simpler to understand: no sub-variable concerns ethics issues.

*

Our observations show that there is a non-functional equivalence: on empirical ground, indexes quantify with same regulation outcomes different kinds of professional rules, with different functions or issues. They represent professional rules as identical in terms of competitive outcomes, for different legal services (lawyers and notaries), different legal systems (French notaries and Swedish notaries, for example) and different professions (notaries, architects, engineers...). They forget that a rule does not necessarily have the same function in different contexts (Zweigert & Kötz, 1998), and that there might

<footnote>$^{23}$ We calculate these results from ADLC (2016, 2018, 2021), but there might be a lag issued from the necessary time for a firm installation. For example, a notary firm created in the first installation phase context can be registered only in 2018 or 2019, and appears only for the second phase.</footnote>

<footnote>$^{24}$ In the index perspective, no price regulation is preferred to recommended prices, themselves preferred to maxima prices, themselves preferred to minima prices; see Table 2 and Annex 1.</footnote>

<footnote>$^{25}$ According to the Professional order (CSN, 2021), French notaries have regulated fees for property deeds and conveyancing authentication (more than 50 % of their sales), and most family transfer activities (more than 30 % of notarial sales: bequests, inheritance, wedding contracts...). In contrast, regulated fees only concern foreclosure, partitions, licitation and judicial sureties for lawyers. This only represents a tiny fraction of lawyers' activities, and a majority in the profession does not practice it.</footnote>

<footnote>$^{26}$ “Liberté d’installation régulée”, ADLC, 2016</footnote>
profession. In this perspective, the deregulation process in the EU echoed a long-term French anti-corporatist stance (Marty, 2017; Frison-Roche & Roda, 2022).

The notarial regulatory capture was strong and organised. Until 2015, the professional representatives<fnref n="22" /> settled the number of new notary firms (“Offices”) to be created. With the Ministry of Justice, notaries set up a binding tariff upon their main activities, and enforced the profession ethics through discipline. However, in a Nuñez-type self-regulated organisation (Nuñez, 2007), they did not reveal any of the disciplinary sanctions. This led to corporatist-like practices, with a strong entry and conduct control and opacity of internal affairs for a unique and monopolistic profession (Shaked & Sutton, 1981). It resulted in a sluggish notary firms’ evolution on the middle to long run, and a weak growth of the number of professionals. Notary firms stagnated between 1995 and 2015, and the number of professionals increased by an average of 1.3% each year on this period (Table 1). This regulatory capture was reinforced by a “gendered capture” (Massé, 2023), professional self-regulation of entry leading to women’s exclusion from the profession. Moreover, main institutional reports presented regulated fees as over the competitive equilibrium (EC, 2004; ZERP, 2007; IGF, 2013) with high mark-ups, considered as a “rent”. Ethics code prohibited main forms of advertising. All these elements gathered the conditions for a regulatory capture.

<table><caption>**Table 1: Growth and Average annual growth rates for notary firms and professionals (1995-2023)**</caption><thead><tr><th rowspan="2"></th><th colspan="2">Notary Firms</th><th colspan="2">Notaries</th></tr><tr><th>1995-2015</th><th>2015-2023</th><th>1995-2015</th><th>2015-2023</th></tr></thead><tbody><tr><th>Growth rate</th><td>-2 %</td><td>+52.6 %</td><td>+29.2 %</td><td>+78.5 %</td></tr><tr><th>Average Annual Growth Rate</th><td>-0.1 %</td><td>+5.4 %</td><td>+1.3 %</td><td>+7.5 %</td></tr></tbody></table>

Sources: L'évolution des métiers de la justice - Sénat (senat.fr); Notarial profession's annual reports (2015 and 2023); author's calculations.

The EC's indicators-based reports and policy recommendations directly inspired some institutional reports inviting notaries' deregulation (Attali, 2008; IGF, 2013; Ferrand, 2014; Untermaier & Houillon, 2014). With this baseline, the former French Ministry of Economy E. Macron launched a “modernisation” of the notary profession<fnref n="23" />. It resulted in a new regulatory framework for notaries: the profession moved from a self-regulation to a “hetero-regulation” (Chaserant & Harnay, 2010). The French antitrust agency (Autorité de la Concurrence, ADLC henceforth) now proposes regulatory schemes for market entry and prices. In regulating entry, the ADLC propose every two year an “installation map”<fnref n="24" />. To construct these maps, it calculates economic needs tests for geographical consistent markets (ADLC, 2016). Then, it distinguishes two types of areas: “green” and “red” areas. In red areas, any installation of a new notary firm is forbidden. In green areas (“Free establishment areas”, ADLC, 2016), new notary firms can install, within a maximum number of installations defined by the ADLC. When the ADLC makes its final proposal, both the Ministry of Justice and the Ministry of Economy can approve or reject the map. Until 2023, the two ministries ratified and put into effect ADLC proposals on entry, which makes it the effective regulatory agency for notaries<fnref n="25" />. At the end of the process, graduate notaries can candidate in green areas, and a lottery process usually selects future entrants. The ADLC also communicates on tariffs and fees for notarial services (ADLC, 2019; ADLC, 2020), and proposes a fee convergence towards notary firms' average costs.

<footnote n="22">²² The notary profession is hierarchized into a national professional order (the “Conseil Supérieur du Notariat”, CSN), regional chambers and more local representatives. Before 2015, settlement communities for new notary firms were composed for at least a half of national representatives of the profession (see Massé, 2023).</footnote>

<footnote n="23">²³ LOI n° 2015-990 du 6 août 2015 pour la croissance, l'activité et l'égalité des chances économiques (1) - Légifrance (legifrance.gouv.fr)</footnote>

<footnote n="24">²⁴ In 2024, there were four installation phases, with 4 associated ADLC's proposals and maps: 2016-2018; 2018-2020; 2021-2023; 2023-2025. All maps could be found at Notaires | Autorité de la concurrence.</footnote>

<footnote n="25">²⁵ In 2024, for the first time, the ministries lowered ADLC's recommendations.</footnote>
exist different models of professional competition. In other words, they consider that “The legal world is flat” (Terry, 2008a). Given this flatness, what kind of world these indicators promote? Is this world economically compatible with OMC’s policy recommendations?

# 3 – FROM OPTIMAL REGULATION TO NON-REGULATION: CONTESTABILITY IN LEGAL SERVICES TO JUSTIFY TOTAL DEREGULATION

As we have seen, the regulation index quantifies regulation’s (un)fitness to a model of competition, but cannot serve as a basis for comparison (between professions or between countries) if professional competition does not fit this model. This is what we call, according to Zweigert & Kötz comparative law approach, a “non-functional equivalence”. Regulatory indicators assume that professional rules fulfil a particular function, and in this perspective, French notaries’ reformation cannot be quantified by indexes because it belongs to another paradigm – while it fulfils a competition-friendly function. As they benchmark countries according to the degree of impediments to competition, regulatory indicators assume the existence of a continuum ranging from pure captured professional regulation to perfect professional competition. In this context, they propose a solution: a lower index is always preferable, and OECD’s hybrid regulatory model appears as the optimal level for regulation. We cannot understand this “one-size fits all” optimality out of a general equilibrium model, with first best optimum objectives.

## 3-1 – Minimising regulation, enhancing competition

### 3-1-1 – A method for modelling optimal entry and conduct regulations

We assume that OECD’s benchmark for regulatory comparison belongs to a particular paradigm of professional competition<fnref n="27" />. In order to understand it, our method consists in minimising all sub-indexes’ values. This method is consistent with an “OMC approach”: we propose to converge towards best “existing practices”. It represents a “hybrid” model, because it aggregates all these practices for each professional rule. For each rule, these best practices belong to different countries: we obtain an idealistic and theoretical professional regulation issuing from existing regulation. PMR Questionnaires are presented in Tables 2 and 3.

The theoretical “Entry” model consists in reducing all professional controls on entry and minimising all costs. First, several entry sub-variables’ promote quantitative potential competition, based on profession’s disappearance and competition’s intensification. This arises from a double-sided competition, with inter-professional competition (there are no exclusive rights nor title protection by law, and no compulsory professional order) and intra-professional competition (there are no quotas or economic needs tests nor territorial restrictions). In other words, we need to create the conditions for a free entry on a market for legal practitioners. This is consistent with PMR’s philosophy for other legal services: by promoting – with the same indexes – a deregulation over all legal professions, the OECD aims to create a unique legal services market, with “legal practitioners” (more than “professionals”) providing different degrees of specialised services. There are no barriers on this market: all service providers might authenticate property deeds, and there are no monopolies. There is a subtlety concerning the “Education” sub-variable (graduation, formation and compulsory practice). As a matter of fact, if we want it to be more competitive-friendly, we have two possibilities:

<footnote n="27">²⁷ We hereafter only consider PMR’s indexes, because they are the latest and most refined form of professional regulation indexes. Indeed, as we said in 1-1, IHS and OECD indexes belong to an “index framework” with a common structure (particularly “Entry” & “Structure” bipartition) and shared sub-variables. Both of them fail to assess French regulation’s evolution.</footnote>
It should be noted here that France innovates in terms of legal professions' regulation. Instead of creating a new regulatory agency or making several agencies compete (Szczygielski, 2022), the 2015 modernisation has appointed the national antitrust agency for this regulation. This might seem surprising, as the ADLC's role is to sanction anticompetitive behaviours *ex-post* (cartels, abuses of dominance ...) and not to regulate markets *ex-ante*<fnref n="26" />. However, despite this regulatory innovation, this new scheme could be interpreted as a "de-capture" of notarial regulation. Indeed, we could consider the Growth Law in an agency model. Precisely, we can explain the new agency relationship with a Laffont & Tirole (1991) regulatory scheme. There is a "two-tiered" regulatory structure, with ADLC as the "agency" and the Ministries of Justice and Economy as the "Congress". In this agency model, the notaries benefit from an "informational rent", and ADLC has resources to analyse professional competition issues. With its expertise in defining market and assessing competition, it proposes a regulatory scheme through installation maps. These maps and proposals are made public by the ADLC, which enters a transparency process. In other words, the Growth Law proceeds in introducing a new agent (the ADLC) in the regulatory relationship. It has several effects in making regulation more competition-oriented (Laffont & Tirole, 1991):

(i) The ADLC plays the role of an independent agency that accumulates an expertise on notarial markets and regulation. It reduces the "informational rent" of the notarial industry.

(ii) For notaries, any bilateral contracting with the ADLC appears difficult. It reduces the potential of regulatory capture.

Beyond this theoretical model, the Growth law presents competition-oriented outcomes. As we mentioned in introduction, it led to a supply shock on the notarial market. It multiplied the number of notary firms by 1.53 since 2015, with the number of professionals increasing in average by 7.5 % each year between 2015 and 2023 (Table 1). Notaries are freer in establishing prices, and can practice a discount on some regulated fees. Certain fees for non-monopoly activities were fully deregulated<fnref n="27" />. In average, since 2015, this scheme lowered in average notarial still regulated fees by 4.4 %<fnref n="28" />. The French notaries' new regulatory framework also corresponds with welfare-enhancing policies for Latin notaries (Verboeven & Yontcheva, 2024). Indeed, using data on Belgian notaries, Verboeven & Yontcheva detail regulatory changes' welfare effects in the industry. They conclude that combining a loosening in entry restrictions with a drop in prices has a redistributive effect<fnref n="29" />. It redistributes industry mark-ups to increase consumer surplus and demand. If we apply this result to ADLC's maps and proposals, not only it de-captures French notarial regulation, but it also increases welfare.

Since 2019, notaries are also freer in advertising, with the possibility to use "personal contacting"<fnref n="30" />. The ADLC pressured for advertising regulation to be softened, particularly for new notary firms. According to the agency, these rules restricted new firms' development and distorted the new competition it promoted. Finally, the ADLC is trying to make professionals' ethics code more competition-oriented, by communicating and proposing new rules, and to make ethics conformation and enforcement transparent and procedural (ADLC, 2023b).

<footnote n="26">²⁶ We should precise here that ADLC realises *ex-ante* market analyses in merger control cases.</footnote>

<footnote n="27">²⁷ Particularly notarial activities as real-estate agents: there were regulated fees before 2015, and are now totally free.</footnote>

<footnote n="28">²⁸ The Autorité starts inquiries ex officio to assess the reforms of the conditions of establishment and rates for the regulated legal professions | Autorité de la concurrence</footnote>

<footnote n="29">²⁹ By assumption of the two authors, quality is held constant (Verboeven & Yontcheva, 2024, p. 3661).</footnote>

<footnote n="30">³⁰ Décret n° 2019-257 du 29 mars 2019 relatif aux officiers publics ou ministériels - Légifrance (legifrance.gouv.fr). Personal contacting is an advertising technique, which consists in mailing former clients about the services provided by the notary firms, according to their profiles.</footnote>
- If there are no exclusive rights<sup>28</sup>, there could be an indefinite compulsory education and practice in terms of years.

- If there are exclusive rights, compulsory education, formation and practice shall not go beyond 3 cumulated years.

This sub-variable seems to be consistent with capture theory, and particularly the idea that a title with
monopoly protects more professionals than it enhances quality (Kleiner, 2006; Kleiner & Koumenta,
2022). This compulsory education and practice creates unnecessary entry barriers, with no empirical
guarantee that it is quality-improving (Winston & Karpilow, 2016). However, this raises the problem of
the market outcome: if a professional title does not provide exclusive or shared rights, could we still talk
about “professions”? PMR’s framework for lawyers and notaries define two possible markets: a market
with professionals, entitled and with monopolies over certain activities (there are “lawyers”, “notaries”,
“bailiffs” ...); a legal services market, with “legal practitioners” supplying legal services. In our
perspective of index’s minimisation, these problems are solved by the fact that there are no exclusive
rights nor professional title (we minimise Question “E” in table 2). To sum up, there could be an
indefinite compulsory education and practice, but it does not lead to any protected title or monopoly.

The idealistic “Conduct” model relies on agency freedom for all potential suppliers. Professional fees cannot be regulated: as we previously saw, the “Fee and Prices” sub-variable (Table 3) benchmarks price regulation according to its impediments to a competitive prices’ adjustment. Similarly, there should be no advertising regulation, regardless of its effects: in a Stiglerian model, advertising is necessarily information-improving (Stigler, 1961). If it is consistent with a “routine legal service”<sup>29</sup> approach (Cox, Schroeter & Smith, 1985), it does not raise the issue of consumer information (Akerlof, 1970; Nelson, 1970; Nelson, 1974) nor the particularities of a “credence goods” industry (Darby & Karni, 1973). This might neglect the theoretical and empirical difficulty to draw strong conclusions over information and quality implications of advertising (Comanor & Wilson, 1979). The other variables try to ease shareholding in notary firms and capital mobility: legal firms should have no specified form, and might be incorporated in larger firms (non-necessarily legal), particularly through shareholding. In this context, and consistently with the entry framework, there shall be no rules over inter-professional cooperation. All these regulations offer the possibility to make scale and scope economies, but invite to interrogate specialisation costs’ loss (Chaserant & Harnay, 2010).

This model of entry and conduct approximates Swedish public notaries' regulation, whose index
is near from zero<sup>30</sup> (precisely 0.07, because of the existence of a professional title protected by law).
This also explains why French notaries' evolution does not fit the model, and could not be considered
as a deregulation: it is a “liberalisation via administration” (Blanc, 2015) where quotas, economic needs
tests, and regulated prices still exist. Indexes are blind to “who” regulates and “how” it does, as long
there is less or no regulation. Advertising is quantified on a benchmark that cannot measure regulation’s
variations, but only quantifies its suppression. Finally, these indexes do not incorporate ethics as an
element of professional regulation, even if there exists models of self-regulation and ethics enforcement
(Domberger & Sherr, 1989; Nuñez, 2007; Chaserant & Harnay, 2015; Szczygielski, 2022).

3-1-2 – When did it go wrong? A model compatible with both perfect competition and monopoly

As we can see, this model is compatible with a perfectly competitive market. The index model’s
vision of notarial services’ market implies that it is not a professional market, but consists in a legal
services market for legal practitioners. The latter are law graduates with different specializations

<footnote n="28"><sup>28</sup> Here, it does not matter whether there is a protected professional title or not. However, it is interesting to note that PMR Entry index proposes a functional equivalence between 3 years of compulsory education and exclusive rights, and an indefinite duration for this education without exclusive rights.</footnote>

<footnote n="29"><sup>29</sup> Cox & al. (1982) define « routine legal services » as services provided by lawyers with (1) a “negligible” marginal productivity for legal skills, (2) a defined set of activities and (3) a weak importance of quality variables.</footnote>

<footnote n="30"><sup>30</sup> We precise here that Swedish notaries do not have the same legal activities than French notaries, or more generally than “Continental Law Notaries” (Gauthier & Grard, 2014).</footnote>
3-1-2 – Is “liberalisation through administration” competition improving? Paradoxical evidences from indexes

This process appears to be a perfect example of what Regent (2003) presents as the Open Method of Coordination. First, the EC communicates on regulation in legal services, analyses the over-regulation and proposes paths towards more competition in this industry. Second, a reformation process takes place following the policy recommendations. Third, on the middle-long run, this results in more competition on the professional market. As they justified this policymaking, we expect regulatory indicators to follow this trend, and to give evidences of this regulatory evolution. However, as we have seen, French notaries' regulatory evolutions remain unquantified by regulation indexes. We propose here to identify the sub-variables related to the evolution of notarial rules in France. This enables to draw conclusions about their quantification scope.

The sub-variable “Quotas and Economic needs tests” of the PMR regulation index (Annex 1) is directly related to the French notarial regulatory evolution. It asks whether there is a limitation in the number of notaries in the country<fnref n="31" /> (“Is the number of professionals allowed to practice in your country limited by law or self-regulation by professional bodies (or a combination of the two)?”, see Annex 1). In 2024, the answer is a “yes” for French notaries, because the number of notaries is limited. Indeed, the ADLC defines installation maps that set the number of new notaries to enter the market. Then, the stability of the index value is quite simple to understand. The variable quantifies quotas’ existence, but is blind to (1) who regulates or (2) how it is regulated. However, the competitive environment is very different in the profession before and after 2015. We saw that the Growth Law massively impacts competition: the number of notary firms created between 1995 and 2015 approximates zero, while during the first installation phase (2016-2018) there were 944 new notary firms, and 724 for the second phase (2018-2020)<fnref n="32" />. The index quantifies as functionally equivalent (Zweigert & Kötz, 1998) two different – not to say opposite – regulations: one capture-intensive, and the other competition enhancing.

We note the same issue for price regulation. We saw in (2-2) that PMR indicators used a specific scaling in quantifying price regulation<fnref n="33" />. As it focuses on the *existence* of a price regulation, it is blind to prices' effective level and to the nature of price regulation. Therefore, it implicitly assumes that a non-regulated price is necessarily closer to a competitive level than a regulated one. The scale also implies that all fixed prices are functionally equivalents in damaging competition. However, it does not consider who determines the regulated price level, nor how it is calculated. As suggested by Laffont & Tirole's model (Laffont & Tirole, 1991), a non-captured regulation agency can fix prices according to an estimate of what could be a competitive price. In the French example, the ADLC tries to make regulated prices converge towards mean costs. In other words, the situation differs from the pre-2015 period, when price regulation was unchanging since profession set it in the 1980's. Moreover, this difficulty to address prices' regulation is reinforced by the comparison of the index *between* professions. Indeed, French lawyers and notaries have a same index value for prices' regulations (5/6, for “Binding minimum or fixed prices for some activities”). However, it conceals two different impacts of regulation on competition. Indeed, regulated fees represent approximately 80-90% of notarial sales, while they concern only four activities for French lawyers, in a small segment of their market<fnref n="34" />. To sum up, the

<footnote n="31">³¹ The only variation with the IHS questionnaire is the introduction of a “1” value mode, for “yes, but only in some areas after an assessment of competition”, which concerns no notariats in the OECD database.</footnote>

<footnote n="32">³² We calculate these results from ADLC (2016, 2018, 2021), but there might be a lag issued from the necessary time for a firm installation. For example, a notary firm created in the first installation phase context can be registered only in 2018 or 2019, and appears only for the second phase.</footnote>

<footnote n="33">³³ This scaling directly refers to the IHS report (2003), and never changed since its introduction.</footnote>

<footnote n="34">³⁴ According to the Professional order (CSN, 2021), French notaries have regulated fees for property deeds and conveyancing authentication (more than 50 % of their sales), and most family transfer activities (more than 30 % of notarial sales: bequests, inheritance, wedding contracts...). In contrast, regulated fees only concern foreclosure, partitions, licitation and judicial sureties for lawyers. This only represents a tiny fraction of lawyers' activities, and a majority in the profession does not practice it.</footnote>
(depending on their investments in human capital), without professional examination, order, titles or
exclusive rights. They might supply authentication for property deeds (but have no monopoly), in any
type of firm (Law firms, as non-Law firms) and with any type of inter-professional cooperation. There
are no restrictions on suppliers' quantity: every law graduate can enter the market. Prices and advertising
are entirely free. In other words, there remain no impediments on practitioners' entry or conduct, and
let the possibility for a perfect competition.

However, this model is also potentially compatible with a monopolist law firm. Indeed, if we
consider one firm – not necessarily legal – implemented on all the territory (with annexes), there might
exist a single-firm market for legal services. This firm offers all legal services, with legal practitioners
specialised in different branches of Law, and makes economies of scope; it also realises economies of
scale, as an inter-industry firm. It heavily advertises, and therefore creates strong entry costs and barriers
for any potential entrant. With no price and fee regulation, it applies monopoly prices. Ironically, this
model can reproduce all the arguments that tackled regulation. If it does, there are two possibilities: it
either is the result of one firm's superiority (Demsetz, 1973), or it needs an antitrust action to make the
market more competitive-friendly. Even PMR's creators acknowledge this problem as an enforcement
issue and a formal approach of barriers to competition:

"One potential difficulty with measuring the impact of regulation on competition is accounting for the influence of enforcement. Stringent regulations may not bite on competition if not enforced, and even the most liberal regulatory settings may not promote competition if not implemented correctly [...] Moreover, as already mentioned, barriers to competition may not be fully captured by the indicators when they are mostly informal" (Conway et Nicoletti, 2006, p.7)

This does not evacuate the paradoxical situation of these indexes. As economic tools for both regulation
assessment and public policy, they propose a competition benchmark for regulation and deregulation.
However, given the French example, they do not necessarily quantify pro-competition policies, and
invite to follow a specific path for professional services' reformation... with uncertain outcomes. In this
context, our purpose is to make indexes' model economically consistent with competition issues, to see
if enforcement is the only element the indicators do not capture. This will lead to study what PMR
defines as optimal regulation for legal professionals.
index again quantifies as functionally equivalent regulations with different functions (before / after 2015) and competitive outcomes. It creates a non-“functional equivalence” (Zweigert & Kötz, 1998).

These examples underline France's specificity in liberalising notaries, with a "liberalisation *via administration*" (Blanc & ali., 2015). The Macron Law transferred regulatory prerogatives from the professional order to a non-professional agency specialised in antitrust issues. ADLC's regulation itself undertakes this paradoxical governance, and calls it "*regulated freedom of installation*"<fnref n="35" />. Advertising and ethics evolutions, similarly, do not produce any variation in indexes, but for different reasons. In the case of advertising, the effect results from OECD's scaling<fnref n="36" />. For ethics, it seems simpler to understand: no sub-variable concerns ethics issues.

To sum up, the French notaries' case study illustrates regulation indexes' inertia for some variables. This inertia invites to be cautious with countries' position and comparisons in terms of notarial regulation, but also in terms of competitive outcomes. Regulation indexes implicitly assume regulation's flatness for competition outcomes, and through it "the world's" flatness (Terry, 2009). This flatness does not consider a more competition-oriented regulation as enhancing competition. It directly questions the consistency of regulation indexes with the comparability assumption. However, if they rely on a flatness conception of regulation, regulation indexes still point out differences between countries in terms of notarial regulation. From the pro-competition *continuum* perspective, it means that they distinguish different competitive situations. Given that, we have to consider the reasons for notarial indexes' differences.

## 3-2 – Over-estimating professional firms’ regulation: the empirical limits of the separability assumption

This part focuses on regulation indexes' determinants for variating. More precisely, it highlights that some variables of the notarial regulation index are highly correlated, with two effects. First, it artificially inflates the global value of PMR indexes and leads to an upward distribution of the sample. On the other hand, it questions the separability assumption in itself. Indeed, we have seen in 2-1 that the IBP methodology consists of assuming professional rules' separability. In the same perspective, equal weights consider equivalent all independent professional rules in terms of anticompetitive outcomes.

As we can see in Annex 4, the mean PMR index for notarial regulation is of 4.68 out of 6, and the median of 5.21. It goes from 0.75 (Swedish notaries) to 5.79 (Slovak and Peruvian notaries). The average value of each sub-variable goes from 3.43 ("Professional exam" variable) to 5.31 ("Ownership rights for non-notaries" and "voting rights for non-notaries" variables). The 25 % most competition-friendly notarial regulations have a global index inferior to 4.14 (Italy), and the 25 % less competition-friendly notarial regulations have a global index superior to 5.43 (Spain). Therefore, we can observe an upward distribution of notaries' regulation, according to PMR indicators.

We can explain a part of this upward distribution and relative concentration of regulation indexes by the existence of a self-correlation between their sub-variables. Indeed, we can observe strong correlations in the correlation matrix for "Professional Firms" sub-variables (see Table 2). All "Conduct – Professional Firms" sub-variables (at the exception of the one about "Legal Form of business") are more than 60 % significantly correlated. Two pairs of variables are even 100 % and significantly correlated: (i) restrictions on ownership rights for non-notaries and restrictions on voting rights for non-notaries; (ii) restrictions on ownership rights for firms and restrictions on voting rights for firms. The average value for these two pairs of variables is of 5.6 and 5.8. In other words, PMR's value for notarial regulation is necessarily moved upward through index construction. First, the existence of a professional

<footnote n="35">³⁵ "Liberté d'installation régulée", ADLC, 2016</footnote>

<footnote n="36">³⁶ The sub-variable proposes an alternative between three regulation levels. The French 2019 reform for notarial advertising did not change the index value, as some forms of marketing or advertising were "prohibited" before 2019, and some forms are still prohibited after. Then, the index framing creates a gap between regulatory possibilities, and cannot quantify any variation in advertising regulation.</footnote>
<table><caption>**Table 2: PMR Questionnaire for the “Entry Regulation” index**</caption><tbody><tr><td colspan="2"><strong>Question A (Quotas / Regulation of the number of professionals):</strong> « Is the number of professionals allowed to practice in your country limited by law or self-regulation by professional bodies (or a combination of the two)? »</td></tr><tr><td>Yes: 6</td><td>No: 0</td></tr><tr><td colspan="2"><strong>Question B (Education):</strong> « Is an undergraduate university degree or a vocational course / any additional education / relevant compulsory practice required in order to legally practice the profession or to obtain the professional title when this is protected by the law (whether this is required by law or by self-regulation by professional bodies, or a combination of the two) and what is its duration?»</td></tr><tr><td colspan="2">Total n of years of undergraduate and additional education and of compulsory practice</td></tr><tr><td>- No exclusive rights or n ≤ 3: 0</td><td></td></tr><tr><td>- 3 &lt; n ≤ 4: 1</td><td></td></tr><tr><td>- 4 &lt; n ≤ 5: 2</td><td></td></tr><tr><td>- 5 &lt; n ≤ 6: 3</td><td></td></tr><tr><td>- 6 &lt; n ≤ 7: 4</td><td></td></tr><tr><td>- 7 &lt; n ≤ 8: 5</td><td></td></tr><tr><td>- n &gt; 8: 6</td><td></td></tr><tr><td colspan="2"><strong>Question C (Pathways):</strong> « How many pathways are there to obtain the qualifications to legally practice the profession? »</td></tr><tr><td>- 3 or more: 0</td><td></td></tr><tr><td>- 2 pathways: 3</td><td></td></tr><tr><td>- 1 pathway: 6</td><td></td></tr><tr><td colspan="2"><strong>Question D (Territorial competence):</strong> « Are there territorial restrictions to the ability of professionals to practice within your jurisdiction, imposed by law or self-regulation by professional bodies (or a combination of the two)? »</td></tr><tr><td>Yes: 6</td><td>No: 0</td></tr><tr><td colspan="2"><strong>Question E (Monopoly scope):</strong> « Do professional have exclusive or shared exclusive rights to provide certain activities? Is the professional title protected by the law?»</td></tr><tr><td colspan="2">Exclusive right = 1; shared right = 0,5</td></tr><tr><td>- No exclusive rights + no title protection by the law: 0</td><td></td></tr><tr><td>- No exclusive rights + title protection by the law: 1</td><td></td></tr><tr><td>- Score of rights ≤ 1: 2</td><td></td></tr><tr><td>- 1 &lt; Score of rights ≤ 2: 3</td><td></td></tr><tr><td>- 2 &lt; Score of rights ≤ 3: 4</td><td></td></tr><tr><td>- 3 &lt; Score of rights ≤ 4: 5</td><td></td></tr><tr><td>- Score of rights &gt; 4: 6</td><td></td></tr><tr><td colspan="2"><strong>Question F (Examinations):</strong> « Is there a requirement to pass one or more professional examinations in order to legally practice the profession or to obtain the professional title when this is protected by the law? If you have answered Yes to the question above, who administers this professional examination? »</td></tr><tr><td>- No exclusive rights or no examination: 0</td><td></td></tr><tr><td>- Exam + State or independent regulator: 2</td><td></td></tr><tr><td>- Exam + State and professional body / chamber: 4</td><td></td></tr><tr><td>- Exam + Professional body / chamber: 6</td><td></td></tr><tr><td colspan="2"><strong>Question G (Professional organization):</strong> « Is it compulsory to be a member of a professional organization for an individual in order to legally practice the profession or to obtain the professional title when this is protected by the law? »</td></tr><tr><td>Yes: 6</td><td>No: 0</td></tr></tbody></table>

Source: Sector PMR Indicators Schemata, Indicators of Product Market Regulation - OECD
rule for a sub-variable quasi-completely determines the coexistence of another professional rule. Second, these correlated variables have high values. Therefore, the equal weighting principle is not respected as long as there are strongly self-correlated variables artificially moving the index upward.

<table><caption>**Table 2: Correlation matrix for “Professional firms” variables (PMR database, 2024)**</caption><thead><tr><th></th><th>Legal form of business</th><th>Ownership rights for non-notaries</th><th>Ownership rights for firms</th><th>Voting rights for non-notaries</th><th>Restrictions on voting rights for firms</th><th>Restrictions on inter-professional cooperation</th></tr></thead><tbody><tr><td>Legal form of business</td><td>-</td><td>0,53***</td><td>0,66***</td><td>0,53***</td><td>0,66***</td><td>0,55***</td></tr><tr><td>Ownership rights for non-notaries</td><td>0,53***</td><td>-</td><td>0,76***</td><td>1***</td><td>0,76***</td><td>0,67***</td></tr><tr><td>Ownership rights for firms</td><td>0,66***</td><td>0,76***</td><td>-</td><td>0,76***</td><td>1***</td><td>0,86***</td></tr><tr><td>Voting rights for non-notaries</td><td>0,53***</td><td>1***</td><td>0,76***</td><td>-</td><td>0,76***</td><td>0,67***</td></tr><tr><td>Restrictions on voting rights for firms</td><td>0,66***</td><td>0,76***</td><td>1***</td><td>0,76***</td><td>-</td><td>0,86***</td></tr><tr><td>Restrictions on inter-professional cooperation</td><td>0,55***</td><td>0,67***</td><td>0,86***</td><td>0,67***</td><td>0,86***</td><td>-</td></tr></tbody></table>

Sources: Product market regulation | OECD, authors' calculations. ("***": p < 0,001)

We do not argue that all sub-variables shall be completely uncorrelated. Precisely, it seems consistent, from a theoretical point of view, that specific regulations might be correlated. For example, there is a 49 % positive and significant correlation between “Quotas and economic tests” regulation and “Fees and prices” regulation (see Annex 3). It might reflect the necessity, for regulators (the profession itself or the government), to associate these two regulations. If entry in the profession is regulated through quotas, price regulation might deter cartel-like behaviours, and then promote quality (Arruñada, 1996). Nevertheless, self-correlation is more problematic when it overcomes a certain threshold, and comes directly from the index construction. Precisely, the two mentioned pairs of completely correlated sub-variables are similarly constructed (the scaling is the same), and concern close dimensions of regulation (ownership rights and voting rights in notary firms). Therefore, the double 100 % significant correlation is not surprising. The issue is that it presents a strong weakness for regulatory indicators, because they implicitly emphasize a certain type of regulation, which is over-weighted. This scheme is reinforced by the fact that five out of the fourteen sub-variables are strongly correlated. Indeed, there is a heavy correlation between the two mentioned pairs of variables (76 % significantly correlated), and with the “Restrictions on Inter-professional cooperation” variable (86 % and 67 % significant correlations). Thus, five out of the six variables concerning “Conduct – Professional firms” issues bring too close information to be separated. Then, the implicit hypothesis that professional rules can be separated and equally weighted is misleading.

We can highlight two results from this limit of the separability assumption. On one hand, there could exist a discontinuity between the theoretical pro-competition *continuum* and the empirical one. It means that some theoretical distinctions in professional rules would have no correlate. When calculated in the global index, this discontinuity over-estimates the “quantity” of regulation. It explains the upward distribution of the regulation index for notarial services, where 5 / 14 variables bring a similar information. On the other hand, this limit of the separability assumption questions the consistency of the empirical pro-competition *continuum* in itself. Indeed, separability *creates* the continuity because it enables to aggregate professional rules that are assumed different. This difference represents the total regulation on a range from zero to six. However, if sub-variables are correlated, there are necessary discontinuities on the *continuum*.

*

We have seen that the scope of best practices assumptions is limited. Indeed, regulation indexes propose a double misestimating of regulation. First, the “quality” of regulation in terms of competitive
<table><caption>**Table 3 : PMR Questionnaire for the “Conduct Regulation” Index**</caption><thead><tr><th></th><th></th></tr></thead><tbody><tr><td>Question H (Fees and prices): "Are the fees or prices that a profession charges regulated by the government or self-regulated?"</td><td><ul><li>No : 0</li><li>Non-binding recommended prices for some activities : 1</li><li>Non-binding recommended prices for all activities : 2</li><li>Binding maximum prices for some activities : 3</li><li>Binding maximum prices for all activities : 4</li><li>Binding minimum or fixed prices for some activities : 5</li><li>Binding minimum or fixed prices for all activities : 6</li></ul></td></tr><tr><td>Question I (Advertising) : "Is there any regulation on advertising and marketing by the profession?"</td><td><ul><li>No, all forms of advertising and marketing are allowed : 0</li><li>Yes, but only some form of advertising and marketing are prohibited : 3</li><li>Yes, all forms of advertising and marketing are prohibited : 6</li></ul></td></tr><tr><td>Question K (Legal form) : Are there restrictions on the legal form of business that a professional firm can take?</td><td><ul><li>No restrictions on legal form : 0</li><li>Incorporation allowed (but not the trading of shares on stock market) : 1</li><li>Limited liability allowed (but no incorporation) : 3</li><li>No limited liability is allowed : 5</li><li>Only sole proprietorship/personnaly-owned entreprise is allowed : 6</li></ul></td></tr><tr><td>Question L (Inter-professional cooperation) : Is there an regulation on inter-professional cooperation?</td><td><ul><li>All forms of cooperation allowed : 0</li><li>There are some generic restrictions to avoid conflicts of interest : 2</li><li>There is an explicit ban on business cooperation with some professions : 4</li><li>There is an explicit ban on business cooperation with any other profession : 6</li></ul></td></tr><tr><td>Question M (Ownership-type interest – Non-professionals) : Can non-notaries / non-lawyers have an ownership-type interest in a notary / law firm?</td><td><ul><li>Yes, up to 100 % of the capital : 0</li><li>Yes, up to 74 % of the capital : 2</li><li>Yes, up to 49 % of the capital : 4</li><li>No : 6</li></ul></td></tr><tr><td>Question N (Ownership-type interest – Firms) : Are there restrictions on which firms can have an ownership-type interest in a notary / law firm (whether imposed by law or self-regulation by professional bodies, or a combination of the two)?</td><td><ul><li>Any firm can have an interest in a law firm that covers more than 49 % of the capital : 0</li><li>Any firm can have an interest in a law firm that covers up to 49 % of the capital : 2</li><li>Only law firms can have an interest in a law firm that covers more than 49 % of the capital : 3</li><li>Only law firms can have an interest in a law firm that covers up to 49 % of the capital : 4</li><li>No firms can have an interest in a law firm : 6</li></ul></td></tr><tr><td>Question O (Voting rights – Non-professionals) : Can non-notaries / non-lawyers have voting rights in a notary firm?</td><td><ul><li>Yes, up to 100 % of the voting rights : 0</li><li>Yes, up to 74 % of the voting rights : 2</li><li>Yes, up to 49 % of the voting rights : 4</li><li>No : 6</li></ul></td></tr><tr><td>Question P (Voting rights – Firms) : Are there restrictions on which firms can have voting rights in a notary / law firm (whether imposed by law or self-regulation by professional bodies, or a combination of the two)?</td><td><ul><li>Any firm can have more than 49 % of the voting rights in a law firm : 0</li><li>Any firm can have up to 49 % of the voting rights in a law firm : 2</li><li>Only law firms can have more than 49 % of the voting rights in a law firm : 3</li><li>Only law firms can have up to 49 % of the voting rights in a law firm : 4</li><li>No firms can have any voting rights in a law firm : 6</li></ul></td></tr></tbody></table>

Source: Sector PMR Indicators Schemata, *Indicators of Product Market Regulation - OECD*
outcomes is underestimated. Second, the “quantity” of regulation in terms of competitive outcomes is overestimated. This combination interrogates whether the pro-competition *continuum* is still meaningful in describing and assessing professional regulations. Indicators *do quantify* something, underline differences, but these are not solely regulatory differences. They could not only be positive tools for economic analysis. Therefore, we propose to put aside their positive realm and to consider that they do not reasonably quantify positive law. Mostly, we need to focus on indicators assisting policymaking to grasp the scope of their quantification. With all the limits on their ability to capture positive law, we argue that they quantify the distance between positive law and an ideal model of regulation. In other words, they give notarial regulation’s distance or (un)fitness to a model of competition. This argument would explain our two limits of best practices assumptions. First, if regulation indexes cannot serve as a basis for comparison, it means that effective professional competition does not fit this ideal model. Second, if they are meant to be reduced, self-correlated professional rules are no longer a problem.

# 4 – INDICATORS QUANTIFYING DISTANCE FROM EFFICIENT PROFESSIONAL REGULATION: A NECESSARY RACE TO THE BOTTOM?

Regulatory indicators benchmark countries based on the degree of impediments to competition. Then, in terms of competition, a lower index is always preferable. Therefore, indicators are appropriate in proposing insights for policymaking. Indeed, they can identify a hybrid regulatory model that aggregates all regulatory best practices in terms of regulation. As it combines all best practices, this model appears to be the optimal level for regulation. Indicators quantify the distance of notarial regulation from every country *vis-à-vis* this optimal level of regulation. In this part, we aim to define this underlying model through economic analysis, and to assess its economic consistency. We first propose a general method for defining this model. It consists of minimizing indicators’ values, and of considering the resulting regulatory framework (4-1). The outputs of this method need, for economic consistency, additional hypotheses which we try to define (4-2). Finally, we test their adequacy with normative uses of regulatory indicators (4-3).

## 4-1 – Methods for modelling optimal entry and conduct regulations

We assume that PMR’s benchmark for regulatory comparison belongs to a specific paradigm of professional competition. In order to understand it, our method consists of minimising all sub-indexes’ values. This is consistent with IBP’s principles or the OMC approach (Regent, 2003). Indeed, we make notarial regulation converge towards best practices, namely the minimal value of each sub-variable. We propose two lower limits in minimising sub-variables. The first one defines a “zero-model” ($R_0$), which consists of equalizing all sub-variables to “0” (4-1-1). The second one is an “International Best Practices model” ($R_{min}$ model), which aggregates all minimal existing professional rules (4-1-2).

### 4-1-1 – A regulatory zero-model: taking the pro-competition *continuum* seriously

The theoretical “*Entry*” *model* consists of reducing all professional controls on entry and minimising all costs. First, several entry sub-variables’ promote quantitative potential competition, based on profession’s disappearance and competition’s intensification. This arises from a triple-sided competition, with inter-professional competition (there are no exclusive rights nor title protection by law, and no compulsory professional order), intra-professional competition (there are no quotas or economic needs tests) and international competition (there are no barriers to entry for foreign notaries). In other words, $R_0$ creates the conditions for a free entry on the notarial market. This is consistent with PMR’s philosophy for other legal services. Indeed, the OECD promotes – with the same indexes by legal professions – a deregulation over all legal professions. It aims at homogenising professional regulations on national legal services markets.

To sum up, there are no barriers in this market: all legal professionals could authenticate property deeds, and there are no monopolies. This seems consistent with the capture theory. More specifically, it follows the idea that a title with monopoly acts as a protection of professionals more than
## 3-2 – A contestability-oriented model of optimal regulation... for no-regulation

By promoting competition through a particular deregulation on legal services markets, PMR indexes question the possibility of an optimal regulation in a general equilibrium context. Testing the economic consistency of this framework implies to question the kind of optimality these indexes achieve. Following Lipsey & Lancaster's (1956) "Second Best" theory, if we want PMR's regulation model to be optimal (and therefore to achieve a first best), we should add several assumptions to the minimised PMR.

### 3-2-1 – Which market for legal services? Optimal regulation for a contestability scheme

In order to assess the economic consistency of PMR's or OMC's professional regulation model, we take all minimised sub-variables and try to test their internal validity in a general equilibrium model. In this perspective, our aim is to minimise all supplementary assumptions we can make to reach a first best optimum, as regulatory indicators promote. As we said, this cannot be a model of perfect competition without additional hypotheses, because there are no guarantees that notarial market will not turn into a monopoly. This is a problem of effective atomicity: there are no restrictions on entry, but this is not a sufficient condition for suppliers to be price takers. If we need suppliers to be price takers, we must add several assumptions and behavioural constraints – without supplementary regulation.

The Open Method of Coordination in itself (and our minimisation method) lies in a first hypothesis for a first best achievement: as we minimised all sub-variables to consider an ideal model, we assumed that all “sources of divergence” (Lipsey, 2008) were removed. Therefore, our first assumption relies on the idea that regulation is the only “source of divergence”. Indeed, first best optimum attainment needs all distortions to competition to be “policy-created” (Lipsey & Lancaster, 1956; Lipsey, 2008) i.e. that without policy, there are necessary conditions for perfect competition. The idea is that Pareto-efficiency needs all “sources of divergence” to be nullified; otherwise, deregulation cannot be justified by first best attainment, and we need to find a second-best alternative (Lipsey & Lancaster, 1956). PMR indexes focus on regulation and conclude that the less regulated the market is, the more competitive and optimal it is. In other words, only regulation distorts competition. This seems to be coherent with indexes' nature: as we previously said, the contestability nature of regulation indicators leads to a “zero regulation” promotion. Indexes' model implies the absence of all other forms of distortion: asymmetric information, externalities ... Particularly, it excludes the idea that legal services might be “credence products” (Darby & Karni, 1973). To be consistent with indexes' sub-variables, we therefore assume that information problems are solved by advertising (Stigler, 1961; Nelson, 1970).

The second assumption we need to make follows from the first: if regulation (taken as a whole) is the only source of distortion, an optimal deregulation means the removal of all forms of regulation. Indeed, according to Lipsey & Lancaster's model (1956), first best attainment needs to remove simultaneously all regulations. They assert that there are no first-best rationales for “piecemeal policies”, that is to say for deregulation policies focusing on one particular professional rule. In terms of indexes, this hypothesis means that sub-indexes' values shall be minimised simultaneously; if there remains a non-zero sub-variable, there are no guarantees for more optimality – and no economic justification for a piecemeal deregulation in a general equilibrium context.

In this perspective, a contestability scheme can justify the model (Baumol, 1982; Baumol, Panzar & Willig, 1982) without additional constraints. A “perfectly contestable market” (Baumol, Panzar & Willig, 1982) means that there is a perfect freedom of entry (no entry costs, no quality costs...), no exit costs (no barriers), and two properties: (i) the potential entrant accesses to the same market demand of incumbent firms and (ii) (s)he decides to enter the market regarding incumbents' prices. According to Baumol (1982), market contestability relies on the entrant possibility to make a “hit-and-run”, i.e. to enter the market, make a positive profit, and leave. Following Baumol, this only possibility deters incumbents to price over marginal costs. In this perspective, we can interpret PMR's model as a
it enhances quality (Kleiner, 2006; Kleiner & Koumenta, 2022). Compulsory titles, combined with a unique pathway for graduation, create unnecessary entry barriers and queues, with no empirical quality-improving guarantee (Winston & Karpilow, 2016). However, this raises the problem of the market outcome. Indeed, if a professional title does not provide exclusive or shared rights, could one still talk about “professions”? In this perspective, PMR’s framework for lawyers and notaries define two possible markets. On one hand, a market with entitled professionals with monopolies over certain activities (there are “lawyers”, “notaries”, “bailiffs” ...). On the other hand, it would be a legal services market, with “legal practitioners” supplying all types of legal services. In R₀’s perspective, the absence of exclusive rights and professional titles entails an indefinite compulsory education and practice, which will not lead to any protected title or monopoly.

The idealistic “Conduct” model relies on agency freedom for all potential suppliers. Professional fees should not be regulated. Indeed, as we previously saw (2-2), the “Fee and Prices” sub-variable benchmarks price regulation according to its impediments to a competitive prices’ adjustment. Then, prices should be made entirely free. Similarly, there should be no advertising regulation, regardless of its effects (Comanor & Wilson, 1979). The other variables about professional firms try to ease shareholding in notary firms and capital mobility<fnref n="37" />. It means that legal firms should have no regulation. Professionals could be incorporated in non-legal firms, or their firms owned by larger firms. They could cooperate with any other legal profession, regardless of conflicts of interests.

R₀ is compatible with a perfectly competitive market. Its vision of notarial services' market implies that it is not a professional market, but a legal services market for legal practitioners. The latters are law graduates with different specialisations (depending on their investments in human capital), without professional examination, order, titles or exclusive rights. They might supply authentication for property deeds (but have no monopoly), in any type of firm (Law firms, as non-Law firms) and with any type of inter-professional cooperation. There are no restrictions on suppliers' quantity: every law graduate can enter the market. Prices and advertising are entirely free. More generally, there remain no impediments on practitioners' entry or conduct, and let the possibility for a perfect competition. However, R₀ is also potentially compatible with a monopolistic law firm. Indeed, if we consider one firm – not necessarily legal – implemented on all the territory (with annexes), there might exist a single-firm market for legal services. This firm offers all legal services, with legal practitioners specialised in different branches of Law. It makes economies of scope and economies of scale, as an inter-industry firm. It heavily advertises, and therefore creates strong entry costs and barriers for any potential entrant. With no price and fee regulation, it applies monopoly prices. Ironically, this model can raise all the objections that tackled regulation. If it does, there are two possibilities: it either is the result of one firm's superiority (Demsetz, 1973), or it needs an antitrust action to make the market more competitive-friendly.

### 4-1-2 – An empirical hybrid model: aggregating existing international best practices

A more coherent perspective with indicators' methodology would be to consider that notarial regulatory indicator does quantify distance from existing “International Best Practices”. In other terms, there exists, for every professional rule, the most “pro-competition” regulation. By aggregation, these regulations define a hybrid optimal model, R_min. Both the scaling (less regulation is equivalent to more competition) and the hypothesis that “best practices” could be implemented from a country to another support this. Empirically, if we take the minimum existing value of each sub-variable, we have a global PMR index of notarial regulation of 0.2. If we apply Cappiello & Ceccarelli’s (2024) methodology<fnref n="38" /> (we remove Costa Rica, USA and Sweden from the sample), and consider a more homogeneous sample

<footnote n="37">³⁷ Here, self-correlation between these sub-variables does not matter, because the Zero model aims to minimise all their values.</footnote>

<footnote n="38">³⁸ These two authors propose to consider the consistency of the sample's notariats with the definition of the profession. They propose to remove the countries where the professionals are not “notaries” but “public notaries” (Sweden, USA, Israël and Costa Rica). For 2024, it consists in removing the three less regulated countries (Sweden, USA and Costa Rica), to obtain a more homogeneous sample (in terms of definition and index value).</footnote>
contestability model. First, it relies on a potential entry scheme, with the purpose of minimising entry costs (with regulation considered as a cost). It promotes a quantitative contestability, with an entirely free entry to make the pool of potential entrants as large as possible; this leads to exert what we called a “double-sided competition”, both inter-professional (no professional order, no professional titles nor exclusive rights) and intra-professional (no quotas, no territorial restrictions). It also creates a qualitative contestability<fnref n="31" />: with multiple pathways, no professional exams for a graduation (which duration might be minimal or non-compulsory), the regulation framework enlarges the pool of potential entrants, by minimising non-monetary costs (particularly education ones). Moreover, all conduct requirements follow a pro-competition or pro-contestability scheme: there are no impediments to prices’ adjustment to marginal costs, advertising is information improving, and we can guarantee an optimal mobility for capital.

However, this could not achieve a *perfect* contestability model, particularly when we consider its dynamic. Indeed, we can identify several entry or exit costs that might limit contestability’s achievement<fnref n="32" />, by making the *hit-and-run* difficult. For example, if we follow the Stiglerian idea that advertising is information improving (Stigler, 1961), then law firms have to advertise on the market – at least to inform consumers about their existence and their services. This advertising cannot be costless, and gives the incumbents an advantage over potential entrants in different models (Comanor & Wilson, 1979). That is to say that in a dynamic perspective, there are no guarantees of stability on this market, despite its non-regulation. Thus, we have to make a final hypothesis. The last assumption follows Conway & Nicolleti’s (2006) quote on enforcement: we have to consider that competition’s necessary conditions are sufficient conditions, and that there is no enforcement problem for competition and contestability. Particularly, notary firms (or legal practitioners) will necessarily be price takers.

It illustrates why French experience of notarial reformation cannot be quantified. Regulatory indicators do not quantify regulation's fitness to competition, but advocate – through contestability – for non-regulation: in this model, there could not be a better regulation than “zero regulation”. The ADLC approach also relies on a partial equilibrium model, by trying to achieve effective atomicity through massive entry; ADLC identifies atomicity with a significant number of suppliers, necessary in a partial equilibrium modelling (Fama & Laffer, 1973). PMR model cannot be interpreted in this partial equilibrium perspective: it pretends to quantify regulation for all existing markets, and draw conclusions on the potential for all-industries deregulation. Moreover, some variables in professional services’ indexes imply other markets: inter-professional competition, ownership interest and capital for non-legal firms...

### 3-2-2 – A contradiction between the economic tool and the policy method

We can explain PMR model’s specificity by a trade-off between two purposes for regulation indexes: globalisation and competition. Indeed, as we previously said, indexes’ construction belongs to different contexts, particularly of market integration and liberalisation. The first index occurrence was during the GATS, with a scaling proposed by Hoekman (1996) to quantify, in the GATS, degrees of liberalisation of trade in services. This benchmark was applied by Nguyen-Hong (2000) to professional services, in order to assess their liberalisation in the GATS context. When IHS appropriated these indicators, it applied them to European’s context of OMC, to achieve the single market’s globalisation and competition. This trade-off between globalisation and competition necessarily advocates for non-regulation: all rules are competition damaging and barriers to globalisation. However, as it uses a unique tool to achieve different policy objectives, it fails in promoting competition – particularly because globalisation and competition in legal services do not necessarily overlap (Garoupa, 2014).

Indeed, we note that deregulation policies’ justifications made by the European Commission or the OECD are paradoxical: through OMC, European Commission invited to piecemeal deregulation,

<footnote n="31">³¹ This qualitative contestability dimension is particularly interesting from a quality questioning.</footnote>

<footnote n="32">³² Even Baumol (1982) acknowledges the purely theoretical dimension of “perfect contestability”. Our purpose is here to test the economic consistency of our model.</footnote>
from a legal point of view, this global index is of 1.23. However, as we mentioned earlier (3-1) PMR's indicators implicitly over-weight “Conduct – Professional firms” sub-variables. Then, we propose a tiered mean of the five heavily self-correlated sub-variables<fnref n="39" />. This method synthetises the five self-correlated variables and lessens their weight. Moreover, it quasi-completely maintains the ranking of answers. With this method, we obtain a global R<sub>min</sub> model for notarial regulation of 0,74 (without non-notarial countries; Cappiello & Ceccarelli, 2024).

For most professional rules, PMR indicators for notaries compute the distance from the zero-regulation model. For some exceptions, it appears to be the distance from non-zero existing minimal regulation. Particularly, non-zero variables for the restricted sample are the score of exclusive rights<fnref n="40" /> (2 / 6), the foreign index (0.75), the “Conduct – Legal form of business” variable (1) and the reconstructed index for professional firms’ regulation (3.67). It implies that empirical “safeguards” remain from a zero regulated profession model. These correspond for entry to a minimal licensing (a professional title with a weak monopoly on only one activity or two shared monopolies on two activities), with a supplementary condition on foreign professionals. In terms of conduct, it relies on the possibility of notaries’ incorporation only in professional firms. As they are common to all notary professions around the world, these elements might be considered as both the “essential” regulation and the optimal existing regulations. It brings one or two supplementary elements to the zero-model: the licensing and the restrictions on notary firms’ shareholdings.

If it combines what is taken as “best practices”, R<sub>min</sub> (i) does not exist in itself and (ii) has similar limits than those of the zero-model. Particularly, it still does not propose guarantees of effective price-taking behaviour on the notarial market (see 4-2-2). Even PMR’s creators acknowledge this problem as an enforcement issue and a formal approach of barriers to competition:

> *“One potential difficulty with measuring the impact of regulation on competition is accounting for the influence of enforcement. Stringent regulations may not bite on competition if not enforced, and even the most liberal regulatory settings may not promote competition if not implemented correctly [...] Moreover, as already mentioned, barriers to competition may not be fully captured by the indicators when they are mostly informal”* (Conway et Nicoletti, 2006, p.7)

However, this does not evacuate the paradoxical situation of these indexes. As economic tools for both regulation assessment and public policy, they propose a competition benchmark for regulation and deregulation. However, given the French example, they do not necessarily quantify pro-competition policies. Mostly, they invite to follow a specific path for professional services’ reformation… with uncertain outcomes. In this context, our purpose is to make indexes’ model economically consistent with competition issues, to see if enforcement is the only element they do not capture. This will lead to study what PMR defines as optimal regulation for legal professionals.

## 4-2 – Two models of optimal regulation… with necessary additional hypotheses

By promoting competition through a specific type of deregulation on legal services markets, PMR indexes question the possibility of an optimal regulation for notarial services. Testing the economic consistency of this framework implies to question the kind of optimality these indexes achieve. Following Lipsey & Lancaster’s (1956) “Second Best” theory, if we want PMR’s regulation model to be optimal, we should add several assumptions to our two models of minimised PMR. In order to assess the economic consistency of PMR’s professional regulation model, we take our two models

<footnote n="39">³⁹ This is the mean value of (i) regulation of non-notaries’ rights vis-à-vis notary firms; (ii) regulation of firms’ rights; (iii) inter-professional cooperation’s regulation.</footnote>

<footnote n="40">⁴⁰ It only corresponds to the Belgian notarial model. According to the OECD’s database, Belgian notaries have a monopoly to perform a subset of two activities: transferring real estate and business incorporation (Product market regulation | OECD).</footnote>
and pointed specific professional rules to be removed (EC, 2004). When the OECD uses PMR indexes for comparison (and says which notaries or lawyers are the most “competition-friendly”), it promotes regulatory convergence but not entire deregulation. In other words, regulatory indicators cannot justify another method of coordination than pure deregulation. The OMC or the OECD cannot base their recommendations on regulatory indicators, because they do not belong to the same context: the coordination method does not fit the economic tool. First, the OMC and OEDC’s recommendations promote piecemeal deregulations, while indicators can only justify a total deregulation. Moreover, indicators do not promote any kind of competition, but a contestability scheme – which OMC nor OECD never promoted as an ideal market for legal services. The OMC relied on a “proportionality” model of competition, which never explicitly advocated for a total deregulation. To sum up, regulatory indicators will not quantify a coordination towards international best practices whereas they were empirical arguments to promote this coordination.

Furthermore, the different assumptions to make indicators economically consistent lie in a specific approach of legal services, which echoes the “service providers” paradigm (Terry, 2008b). More than making professional rules functionally equivalents in different contexts, it assumes a full equivalence between the profession and the market: making the professional rules contestable is making its market contestable. In other words, if we want regulatory indicators to converge towards perfect contestability, it means that both markets and professions should overlap between countries. In professional case, this is not problematic: indicators’ theoretical market would not be a market for professionals, but a market for legal practitioners. However, as competition’s necessary conditions are sufficient conditions, we need all services supplied by legal practitioners to be homogeneous. In this perspective, in all European countries (not to say, in OECD’s perspective, all over the world), the scope of supplied legal services should overlap. This asks whether such services as authentication, which is Continental Law specific (Gauthier & Grard, 2014) will still be supplied – whereas most of European countries use this legal instrument (CNEU, 2008). It leads to two possibilities

(i) There are still authentication services, but no longer notaries – a situation difficult to conceive, as authentic deeds have no functional equivalents (Gauthier & Grard, 2014) and constitute a key element of Continental Law.

(ii) There is a removal of authentication services to make domestic legal markets homogeneous and comparable.

In both cases, this implies to reconsider all Continental Law’s architecture – and to follow the conclusions of the *Legal Origins Theory* (Glaeser & Shleifer, 2002; La Porta & al.). Therefore, the Open Method of Coordination through regulatory indicators is contradictory: it does not promote convergence towards a hybrid model, but proposes to create an uncertain market for undefined suppliers. The OMC never proposed to remove the authentication (CNEU, 2008) nor to redesign the structure of legal systems itself. In other words, indexes’ recommendations could not fit OMC’s recommendations.

Thus, we better understand why French notaries’ new regulation framework cannot be taken as a competition-oriented reform in PMR’s sense: it is a piecemeal policy towards more competition in the regulation framework, but it does not make the market more contestable. As indexes promote piecemeal policies, piecemeal deregulation following indexes do not reach a first-best optimality, and appears as an antinomy. Indeed, professional rules’ quantification belongs to this first-best paradigm, but invite to follow different second best paths. Only a total deregulation – with hypotheses – might achieve a first best optimality.

# 4 – CONCLUSION: QUANTIFYING REGULATION OR COMPETITION?

Our analysis led to the conclusion of a deregulation process motivated by regulation indexes… that cannot evaluate competition-improving policies. Empirical limits, lack of applicability or realism are not the only results this paper draws. Given its tools, indexes’ project for legal services relies on two
$(R_0 \text{ and } R_{\min})$ and try to test their internal validity in a general equilibrium model. In this perspective, we aim to minimise all supplementary assumptions we can make.

### 4-2-1 – First-best competition on the notarial market: $R_0$ and its additional hypotheses

$R_0$ lies in a first hypothesis for a first best achievement. Indeed, as we minimised all sub-variables to consider an ideal model, we assumed that all “sources of divergence” (Lipsey, 2008) were removed. Therefore, our first assumption relies on the idea that regulation is the only “source of divergence”. First best optimum attainment implies all distortions of competition to be “policy-created” (Lipsey & Lancaster, 1956; Lipsey, 2008) i.e. that without policy, there are necessary conditions for perfect competition. Pareto-efficiency needs all “sources of divergence” to be nullified. Otherwise, deregulation cannot be justified by first best attainment, and we need to find a second-best alternative (Lipsey & Lancaster, 1956). PMR indicators focus on regulation and conclude that the less regulated the market is, the more competitive and optimal it is. In other words, only regulation distorts competition. This seems to be coherent with indexes’ nature, namely to promote “zero regulation”. Indexes’ model implies the absence of all other forms of distortion: asymmetric information, externalities ... Particularly, it excludes the idea that legal services might be “credence products” (Darby & Karni, 1973). To be consistent with indexes’ sub-variables, we therefore assume that information problems are solved by advertising (Stigler, 1961; Nelson, 1970).

The second assumption we need to make follows the first. If regulation (taken as a whole) is the only source of distortion, an optimal deregulation means the removal of all forms of regulation. Indeed, according to Lipsey & Lancaster’s model (1956), first best attainment needs to remove simultaneously all regulations. They assert that there are no first-best rationales for “piecemeal policies”, that is to say for deregulation policies focusing on one particular professional rule. In terms of indexes, this hypothesis means that sub-indexes’ values shall be minimised simultaneously. If there remains a non-zero sub-variable, there are no guarantees for more optimality – and no economic justification for a piecemeal deregulation in a general equilibrium context. With these two assumptions, we have necessary conditions for Pareto efficiency. However, we still miss sufficient conditions.

In this perspective, a contestability scheme offers sufficient conditions (Baumol, 1982; Baumol, Panzar & Willig, 1982) without additional constraints. A “perfectly contestable market” (Baumol, Panzar & Willig, 1982) involves a perfect freedom of entry (no entry costs, no quality costs...), no exit costs (no barriers), and two properties. First, the potential entrant accesses to the same market demand of incumbent firms. Second, (s)he decides to enter the market regarding incumbents’ prices. According to Baumol (1982), market contestability relies on the entrant possibility to make a “hit-and-run”, i.e. to enter the market, make a positive profit, and leave. Following Baumol, this only possibility deters incumbents to price over marginal costs. In this perspective, we can interpret $R_0$ as a contestability model. First, it relies on a potential entry scheme, with the purpose of minimising entry costs (with regulation considered as a cost). It promotes a quantitative contestability, with an entirely free entry to make the pool of potential entrants as large as possible. This leads to exert what we called a “double-sided competition”, both inter-professional (no professional order, no professional titles nor exclusive rights) and intra-professional (no quotas, no restrictions for foreign professions). It also creates a qualitative contestability<fnref n="41" />: with multiple pathways for a graduation, the regulation framework enlarges the pool of potential entrants, by minimising non-monetary costs (particularly education ones). Moreover, all conduct requirements follow a pro-competition or pro-contestability scheme. In other words, there are no impediments to prices’ adjustment to marginal costs, advertising is information improving, and we can guarantee an optimal mobility for capital.

However, this could not achieve a *perfect* contestability model, particularly when we consider its dynamic. Indeed, we can identify several entry or exit costs that might limit contestability’s

<footnote n="41">⁴¹ This qualitative contestability dimension is particularly interesting from a quality questioning.</footnote>
misleading paradigms. First, a full-comparability paradigm (when indexes differ from zero), which postulates a functional equivalence between all national professional rules, and a potential implementation of these rules in different national contexts. It assumes that “the legal world is flat” (Terry, 2008a) and that a single model of competition in professional services should exist. However, professional rules -- as they are quantified -- are non-functionally equivalents, because of a second paradigm. It consists of benchmarking regulation according to a perfect contestability approach. Such an approach tries to assess contestability in a hypothetical market for legal practitioners. Nevertheless, it invites to “piecemeal” policymaking with first best optimality arguments. Paradoxically, in the OMC context, it quantifies regulation on a first-best type standard to promote piecemeal policies… that cannot achieve a first-best optimality (Lipsey & Lancaster, 1956). The regulatory indicator as an economic tool cannot be the basis of piecemeal policy recommendations, as they do not share common principles. Moreover, these few elements invite us to conclude over what regulatory indicators effectively “say” and quantify. Regulatory indicators seem to be strong in promoting policies (Michaels, 2009). With a non-functional equivalence and a particular paradigm of competition relying on different assumptions, they only imperfectly measure a small part of regulation. In other words, in regulatory matter, we do not know how to quantify where we are, where we go nor how to move from a point A to a point B.

Given these different issues, we advocate for reconsidering both regulatory approach and competition comparability between regulated professions in different countries. In OMC's perspective, new regulatory indicators must be created to quantify different kinds of regulatory evolutions, and effectively compare national laws. Comparative law studies about legal professions show that both the number of professions and their competition depend on the nature of the legal systems (Gauthier & Grard, 2014; Gauthier, 2014; Gauthier, 2015). The French example in itself shows that there is a variety of professional competitions resulting from regulatory frameworks. Therefore, legal services' markets are different between legal systems, and their world could not be considered as “flat” (Terry, 2008a). As “Law matters” (Michaels, 2009), these legal differences cannot be reduced to a parametric and monolithic approach of regulation, but invite to incorporate legal diversity into economic modelling.
achievement<fnref n="42" />, by making the *hit-and-run* difficult. For example, if we follow the Stiglerian idea that advertising is information improving (Stigler, 1961), then law firms have to advertise on the market – at least to inform consumers about their existence and their services. This advertising cannot be costless, and gives the incumbents an advantage over potential entrants in different models (Comanor & Wilson, 1979). That is to say that in a dynamic perspective, there are no guarantees of stability on this market, despite its non-regulation. Thus, as the contestability behavioural assumption partially solves the effective atomicity issue, we do not completely deal with the enforcement problem. Then, we should make the final hypothesis that competition's necessary conditions are sufficient conditions. Particularly, we have to assume that legal practitioners will necessarily be price takers.

### 4-2-2 – The $R_{min}$ model: a partial equilibrium without welfare-improving guarantees

First, $R_{min}$ cannot reach both first-best and second-best optimality. On one hand, it necessarily contains at least two “sources of divergence” (professional rules) and it could not achieve Paretian optimality (Lipsey & Lancaster, 1956; Lipsey, 2008). On the other hand, the IBP methodology itself is inconsistent with the Second Best theorem. As it entails to identify the closest situation (in terms of position on the competition-regulation *continuum*) to Pareto optimality, and to remove all other perfect competition's distortions, $R_{min}$ is made of “piecemeal policies” (Lipsey & Lancaster, 1956). It does not propose any second best solution, which would consist in defining an additional “source of divergence” and to maximise the welfare function under this constraint (Lipsey & Lancaster, 1956; Lipsey, 2008). $R_{min}$ could not justify deregulation for professional services, neither give strong economic insights about deregulation's outcomes; it cannot deal with optimality.

Moreover, it is striking to notice that the two remaining regulations (licensing and restrictions on shareholding) are the most criticized types of regulations in the economic literature (see for example Kleiner, 2006; Hadfield, 2022; Kleiner & Soltas, 2023). If we follow the IBP intuitions, non-zero professional rules the model presents shall be considered as the minimal conditions for maximizing competition. These necessary professional rules are purposely implemented (if not, why would they be necessary?), which might mean that they try to deal with market failures. Then, the question is to identify (i) which kind of market failures professional rules try to deal with and (ii) if these rules achieve their purpose. These professional rules are generally associated with quality, and more precisely credence goods issues (Garoupa, 2004; Van den Bergh & Montangie, 2006; Chaserant & Harnay, 2010). Particularly, licensing and professional monopolies try to deal with adverse selection (Akerlof, 1970) by ensuring a minimum level of quality. Restrictions on the legal form of notary firms ensure that the notary is the firm's “residual claimant”, and then is held responsible of the consequences of his / her decisions (Fama & Jensen, 1983). Therefore, in order to estimate whether the IBP model is better than all other existing models, we have to answer two questions. First, does this professional regulation ensure a better competition than the formers? Second, are these professional rules necessary and sufficient to deal with quality issues?

Concerning the competition issue, the situation is by assumption considered as more competition-friendly than all existing notary professions. From a more theoretical point of view, we have some theoretical guarantees that the IBP model would lead to an equilibrium (see for example Leland, 1979; Shapiro, 1986). However, the scope of welfare effects is quite large, and depends of the minimal quality standard defined by the professional title (Leland, 1979). Moreover, professional monopolies of different scopes might create price-discriminating behaviours (Domberger & Sherr, 1989; Stephen, Love, Paterson & Gillanders, 1993), and an unregulated professional monopoly threatens consumers. Concerning the quality issue, we first might consider that licensing, through a minimal quality guarantee, avoids the adverse selection problem and then deals with *ex-ante* quality issues. Professional firms' regulation can also ensure a minimal quality for notaries. However, there are no guarantees over the charging behaviour of notaries. Indeed, in a credence goods industry, firms are subject to an opportunistic behaviour, which consists to overcharge uninformed consumers (Darby &

<footnote n="42">⁴² Even Baumol (1982) acknowledges the purely theoretical dimension of “perfect contestability”. Our purpose is here to test the economic consistency of our model</footnote>
BIBLIOGRAPHY

Armand L. et Rueff J. (1960), « Rapport sur les obstacles à l'expansion économique », présenté par le comité institué par le décret n°59-1284 du 13 novembre 1959.

Attali J. (dir.), « Rapport de la Commission pour la libération de la croissance française : 300 décisions pour changer la France » (2008), http://www.vie-publique.fr/rapport/29532-rapport-de-la-commission-pour-la-liberation-de-la-croissance-francaise.

Autorité de la Concurrence (ADLC, 2016), « Avis n° 16-A-13 du 9 juin 2016 relatif à la liberté d'installation des notaires et à une proposition de carte des zones d'implantation, assortie de recommandations sur le rythme de création de nouveaux offices notariaux ».

Autorité de la Concurrence (ADLC, 2018), « Avis n° 18-A-08 du 31 juillet 2018 relatif à la liberté d'installation des notaires et à une proposition de carte révisée des zones d'implantation, assortie de recommandations sur le rythme de création de nouveaux offices notariaux ».

Autorité de la Concurrence (ADLC, 2021), « Avis n° 21-A-04 du 28 avril 2021 relatif à la liberté d'installation des notaires et à une proposition de carte révisée des zones d'implantation, assortie de recommandations sur le rythme de création de nouveaux offices notariaux ».

Autorité de la Concurrence (ADLC, 2023a), « Avis n° 23-A-10 du 7 juillet 2023 relatif à la liberté d'installation des notaires et à une proposition de carte révisée des zones d'implantation, assortie de recommandations sur le rythme de création de nouveaux offices notariaux ».

Autorité de la Concurrence (ADLC, 2023b), « Avis n° 23-A-19 du 1er décembre 2023 concernant deux projets de décrets relatifs respectivement au code de déontologie des commissaires de justice et à celui des notaires ».

Akerlof G.A., « The Market for “Lemons”: Quality Uncertainty and the Market Mechanism », *The Quarterly Journal of Economics* 84, n° 3 (1970): 488-500.

Baumol W.J., « Contestable Markets: An Uprising in the Theory of Industry Structure », *The American Economic Review* 72, n° 1 (1982): 1-15.

Baumol W.J., Panzar J.C., Willig R.D., *Contestable markets and the theory of industry structure*, Rev. ed. (Harcourt Brace Jovanovich, 1988).

Chaserant C., Harnay S., « Déréglementer la profession d'avocat en France ? », *Revue internationale de droit économique*, n° 2 (2010): 147-83.

Chaserant C., Harnay S., « Self-Regulation of the Legal Profession and Quality in the Market for Legal Services: An Economic Analysis of Lawyers' Reputation », *European Journal of Law and Economics* 39, n° 2 (2015): 431-49.

Comanor W.S., Wilson T.A., « The Effect of Advertising on Competition: A Survey », *Journal of Economic Literature* 17, n° 2 (1979): 453-76.

Conseil des Notariats de l'Union Européenne (CNUE, 2008), « Étude comparative sur les actes authentiques », commandée par la Commission des affaires juridiques du Parlement européen, PE 408.329

Conway P., Janod V., Nicoletti G., « Product Market Regulation in OECD Countries: 1998 to 2003 » (Paris: OECD, 2005)

Conway P., Nicoletti G., “Product Market Regulation in the Non-Manufacturing Sectors of OECD Countries: Measurement and Highlights”, OECD Papers 6, no 13 (2006): 1-63.
Karni, 1973). Here, even if notaries' monopoly is weak (at most one exclusive right to perform an activity or two shared exclusive rights), the credence goods' nature of the service might create an asymmetric information notaries can abuse. To sum up, we cannot answer with certainty to our two questions. There are neither guarantees of a more competitive situation than guarantees of a quality-improving deregulation.

From a more empirical point of view, we cannot find any notary profession in the world with this specific $R_{min}^{43}$. Belgian notaries have the closest regulatory system to these two minimal conditions of licensing and firms' regulation (they fulfil all minimal conditions, excepted the Foreign index). However, Belgian notaries have a 4.07 index, namely the 5th less regulated notary profession in the OECD database, namely they are "more" distant from the IBP model than French or Dutch notaries are. In other words, the only notaries that perform "optimal" regulation on precise rules are more regulated on other professional rules... Therefore, the IBP model leaves us with more uncertainty about its outcomes than it gives strong insights for further reforms.

### 4-3 – A “one-size-fits-all” model, between a race to the bottom and a legal revolution?

With this theoretical interlude, we can now draw conclusions about policy recommendations' fitness for regulatory indicators. In this part, we only consider $R_{min}$, because it more corresponds to indicators' use in policymaking. As normative tools, they assisted policymakers in implementing deregulation policies for legal services. We now aim to question whether their use was economically consistent. First, $R_{min}$ is compatible with a model of Tieboutian regulatory competition (Tiebout, 1956; Easterbrook, 1983). In this model, countries compete in terms of professional services' regulation. Indexes are the normative tool that centralizes and coordinates regulatory competition, and at the end regulatory convergence. As we have seen, the methodology in itself only promotes one kind of outcome for this regulatory competition, which is a “race to the bottom”. In this race, competition-friendly countries are less-regulated countries, with no consideration of other variables nor institutional coherence.

When we compare $R_{min}$ to all indicators-based policies of the deregulation process, the relevance of this monolithic kind of analysis is even more doubtful. For example, when we compare French notaries' regulatory evolution to Dutch notaries' deregulation<sup>44</sup>, we can observe two competition-oriented policies with different methods. As we mentioned earlier, the French regulatory evolution is a "liberalisation via administration" (Blanc, 2015). The Dutch case is generally presented as a "deregulation" (Van den Bergh & Montangie, 2006), a "liberalisation" (Shinnick, Bruinsma & Parker, 2003) or a "partial deregulation" (Noailly & Nahuis, 2010). In both cases, the regulatory change concerns both entry and pricing. Indeed, it eased entry in the profession, and lowered prices of notarial services (for some Dutch notarial activities, the Dutch Notary Act of 1999 led to a rise in prices<sup>45</sup>). However, (i) none of these regulatory reforms does fit any of the two models we presented, and (ii) with similar outcomes (competition-enhancing policies), the quantification of these two reforms through indicators is different. Contrary to the Growth Law in France, the Dutch Notary Act initiated a move of notarial regulation on indicators' *continuum*. They *do quantify* this regulatory evolution. In other words, it defines a *priori* "good" and "bad" ways to deregulate without any economic strong justification, just as we saw earlier.

The economic approach of notarial services through regulatory indicators directly echoes the "service providers" paradigm (Terry, 2008b). More than making professional rules functionally equivalents in different contexts, they assume a full equivalence between the profession and the market.

<footnote n="43"><sup>43</sup> Following Ceccarelli & Cappiello (2024) we do not consider non-notarial countries such as USA, Costa Rica or Sweden (see 4-1-2).</footnote>

<footnote n="44"><sup>44</sup> We can observe a great similarity between Dutch and French notaries, which comes from a historical proximity (Cappon, 2011).</footnote>

<footnote n="45"><sup>45</sup> Van Den Bergh & Montangie, 2006; Verboeven & Yontcheva, 2024.</footnote>
Copenhagen Economics, “Economic assessment of the barriers to the internal market for services: final report” (2005)

Cox S.R., Schroeter J.R., Smith S.L., « Attorney Advertising and the Quality of Routine Legal Services », *Review of Industrial Organization* 2, n° 4 (1985): 340-54.

Darby M.R., Karni E., « Free Competition and the Optimal Amount of Fraud », *The Journal of Law & Economics* 16, n° 1 (1973): 67-88.

Demsetz H., « Industry Structure, Market Rivalry, and Public Policy », *The Journal of Law & Economics* 16, n° 1 (1973): 1-9.

Domberger S., Sherr A., « The Impact of Competition on Pricing and Quality of Legal Services », *International Review of Law & Economics* 9, n° 1 (1989): 41.

Easterbrook F.H., « Antitrust and the Economics of Federalism », *The Journal of Law & Economics* 26, n° 1 (1983): 23-50.

European Commission (2004), « Report on Competition in Professional Services », https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A52004DC0083

European Commission (2013), “Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee”, com_com(2013)0676_en.pdf (europa.eu)

European Commission (2016) « Communication from the commission to the European Parliament, the Council, the European economic and social Committee and the Committee of the regions on Reform Recommendations for Regulation in Professional Services », https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2016:820:FIN

European Commission (2021), « Communication From The Commission To The European Parliament, The Council, The European Economic And Social Committee And The Committee Of The Regions On Taking Stock of and Updating the Reform Recommendations for Regulation in Professional Services of 2017 », https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2021:385:FIN.

Fama E.F., Laffer A.B., « The Number of Firms and Competition », *The American Economic Review* 62, n° 4 (1972): 670-74.

Ferrand R. (2014), *Professions réglementées. Pour une nouvelle jeunesse*, Rapport remis au ministère de l'économie, de l'industrie et du Numérique, La Documentation Française.

Frison-Roche M.-A., Roda J.-C., *Droit de la concurrence*, 2nd Edition, Précis Dalloz, 2022.

Garoupa N., « Globalization and deregulation of legal services », *International Review of Law and Economics*, Unlocking the Law: Building on the Work of Professor Larry E. Ribstein, 38 (2014): 77-86.

Gauthier C. et Grard L., « Mission de recherche Droit et Justice - Les professions juridiques et judiciaires en Europe » (Groupement d'Intérêt Public Mission Droit et Justice, 2014), http://www.gip-recherche-justice.fr/publication/les-professions-juridiques-et-judiciaires-en-europe/.

Gauthier C., « Les professions juridiques et judiciaires françaises dans le paysage européen : quelle spécificité ? », *Les Cahiers de la Justice* 4, n° 4 (2014): 645-58.

Gauthier C., « Les professions juridiques et judiciaires dans le paysage européen - Une spécificité fonctionnelle relative (2e partie) », *Les Cahiers de la Justice* 1, n° 1 (2015): 87-97.

Glaeser E.L., Shleifer A., « Legal Origins », *The Quarterly Journal of Economics* 117, n° 4 (2002): 1193-1229.
Professional regulation is market regulation, and professional competition is market competition. R<sub>min</sub>, in this perspective, promotes a “one-size-fits-all” model of notarial market and deregulation. All legal professions in all countries should follow the same model, converge towards the same market and supply the same notarial services. This asks whether such legal services as authentication, which is Continental Law specific (Gauthier & Grard, 2014) will still be supplied – whereas most of European countries use this legal instrument (CNEU, 2008). With R<sub>min</sub>, there is still a professional title for notaries, but an undetermined weak monopoly, that only concerns a narrow range of authentication activities. If this monopoly is the same for all Civil Law countries, it assumes that (i) all Civil Law notarial markets are comparable and (ii) that there are unnecessary authentication activities. By the contrary, if this monopoly is specific to each country, one should define which activities are concerned for every country and why they may differ. However, why would these markets be still comparable?

In both cases, indicators' models entail a reconsideration of all Continental Law's architecture, and particularly the importance of authentication services for Civil Law countries. Reconsidering professional regulation does not only concern professional issue, but legal characteristics and outcomes. In other words, regulatory indicators, apart from the point of view of its market consequences, never consider authentication. Through a full-comparability (and, consequently, a full implementability) hypothesis, indicators emphasise and focus on market homogeneity rather than institutional coherence. Indicators can only propose to create an uncertain market for undefined suppliers, and cannot serve as a basis for piecemeal policies' recommendations. In other words, they offer a paradox. Whether policymakers comply with indicators' recommendations, but do not undertake their legal consequences. For example, in the European context, the OMC promotes a legal single market through deregulation. However, it never proposes to remove the authentication (CNEU, 2008) nor to redesign the structure of legal systems. Whether we try to consolidate the comparative law methodology in order to highlight operational best practices. Hence, professional regulatory indicators, as they exist, need to be rebuilt. Finally, the confusion between the profession and the market is misleading for economic analysis in itself. As it avoids the possibility to think in terms of “Legal Markets” (Hadfield, 2022), it questions whether we can compare national professions, historically grounded in legal systems, instead of comparing markets.

The *Legal Origins Theory*'s conclusions (Glaeser & Shleifer, 2002; Djankov, Glaeser, La Porta, Lopes-de-Silanes & Shleifer, 2003) already raised these methodological issues (see Michaels, 2009). Michaels' conclusions were not to abandon indicators, but to acknowledge their strength for policymaking and to consolidate their use of comparative law. In the case of professional regulation indexes, the use of regulatory indicators is contradictory not only from the comparative law point of view, but also from the economic point of view.

# 5 – CONCLUSION AND DISCUSSION: COULD WE QUANTIFY REGULATION?

We have seen that regulatory indicators are both positive and normative. These two aims lie in the pro-competition continuity assumption, namely that we can quantify regulation on a competition benchmark. However, indicators methodology itself distorts this continuity.

Following indexes' recommendations for policymaking, we show that they consistently lead to two kinds of regulatory models for notaries. First, with the global pro-competition continuity hypothesis, they define a “zero-model” which consists in simultaneously minimising all professional rules. It relies on three strong hypotheses concerning the nature of the service, the nature of policymaking and the nature of the market. This model promotes a completely unregulated notary profession. On the other hand, with the implementability hypothesis, indicators promote a weakly regulated monopoly. This “International Best Practices” model is a hybrid of all existing minimised regulations. However, it faces a large uncertainty about pricing behaviour of notaries. This uncertainty cannot offer guarantees of a positive welfare effect. Then, we focus on the second model's consequences in terms of legal markets and legal outcomes. More precisely, it gives uniform recommendations for deregulating the notary
Hoekman, B., « Chap. 4: Assessing the General Agreement on Trade in Services », Martin W. et Winters L. A., *The Uruguay Round and the developing countries* (Cambridge University Press, 1996).

Inspection Générale des Finances (IGF, 2013), *Rapport sur les Professions Réglementées*. Inspection Générale des Finances.

Kleiner M.M., « A License for Protection », *Regulation* 29, n° 3 (2006): 17-21.

Kleiner M.M., Koumenta M. (Editors), *Grease or Grit? International Case Studies of Occupational Licensing and Its Effects on Efficiency and Quality*, Upjohn Press, 2022.

Koske I., Wanner I., Bitetti R., and Barbiero O. (2015), “The 2013 update of the OECD product market regulation indicators: policy insights for OECD and non-OECD countries”, *OECD Economics Department Working Papers*, No. 1200.

Laffont J.-J., Tirole J., « The Politics of Government Decision-Making: A Theory of Regulatory Capture », *The Quarterly Journal of Economics* 106, n° 4 (1991): 1089-1127.

La Porta R., Lopez-de-Silanes F., Shleifer A., « The Economic Consequences of Legal Origins », *Journal of Economic Literature* 46, n° 2 (2008): 285-332.

Lipsey R. G., Lancaster K., « The General Theory of Second Best », *The Review of Economic Studies* 24, n° 1 (1956): 11-32.

Lipsey R. G., « Reflections on the General Theory of Second Best at Its Golden Jubilee », in *Applied Welfare Economics*, éd. par Richard E. Just, Darrell L. Hueth, et Andrew Schmitz (Elgar Reference Collection. International Library of Critical Writings in Economics, vol. 220. Cheltenham, U.K. and Northampton, Mass.: Elgar, 2008), 744-59.

Marty F., « Le prix des services juridiques entre défaillance de la réglementation et défaillance de marché ? », *Revue internationale de droit économique* t. XXXI, n° 4 (2017): 61-82.

Massé G., « Un marché neutre au genre ? Analyse et prospective des barrières au sein du notariat français », *Revue d'économie industrielle* 183, n° 3 (2023): 37-71.

Michaels R., « Comparative Law by Numbers? Legal Origins Thesis, Doing Business Reports, and the Silence of Traditional Comparative Law », *The American Journal of Comparative Law* 57, n° 4 (2009): 765-95.

Mocetti S., Rizzica L., Roma G., « Regulated occupations in Italy: Extent and labour market effects », *International Review of Law and Economics* 66 (2021): 105987.

Nguyen-Hong, D., « Restrictions on Trade in Professional Services », SSRN Electronic Journal, 2001.

Nicoletti G., Scarpetta S., et Boylaud O., « Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation » (Paris: OECD, 2000).

Noailly J., Nahuis R., « Entry and competition in the Dutch notary profession », *International Review of Law & Economics* 30, n° 2 (2010): 178-85.

OECD, “The OECD regulatory indicators questionnaire: regulatory structures and policies in OECD countries”, SG/RR (98)2/FINAL, 1998

OECD (Committee on Competition Law and Policy), « Competition in professional services », Policy Roundtables, 2000

OECD, Quantifying the Benefits of Liberalising Trade in Services (Paris: Organisation for Economic Co-operation and Development, 2003)
profession, and considers all notarial markets homogeneous. This fictionally entails a complete revision of Civil Law's institutional architecture. This (i) has contradictory insights for policymaking, and (ii) goes far beyond the scope of notarial regulation. If indicators are normative tools, they cannot justify current piecemeal deregulations in legal services. However, we could not neglect this normative realm, as indicators had, and continue to have, a strong influence on policy justifications (Michaels, 2009). Hence, we advocate for making explicit what indicators can say and what they cannot.

This approach for regulatory quantification supposes to explain what indicators describe of professional regulation. The paper shows that existing regulation indexes difficultly respect their own assumptions and methodologies. This makes them unhelpful in quantifying certain regulatory evolutions. Indeed, the French notaries' case study draws conclusions about the reasons of this unquantification. Precisely, it highlights that regulatory indicators are blind to who regulate professional services, and how they are regulated. They simply test the existence of given professional rules in different countries. Moreover, we emphasize that indicators' method artificially separates professional rules, and implicitly over-weights the importance of some variables. These elements contribute to make regulation indexes indicators for a "flat world" regulation (Terry, 2009), namely indicators considering professional rules functionally equivalent and independent. In contradiction with comparative law principles, it gives a misleading picture of the regulatory environment. This makes the comparison difficult, and impedes deregulation policies' assessment. Nevertheless, regulatory indicators cannot be blind to policies they promote, for several reasons. First, they have to be instruments assessing countries' compliance with policy recommendations. For example, the OMC for professional services implies European countries to have tools that assess their regulatory evolutions (Regent, 2003). Second, their weakness creates an argument for inertia in professional regulation. Indeed, why should we make regulation evolve if it does not have consequences on indicators that justify these policies?

The absence of effective continuity between regulation and competition shall guide policymaking. Instead of focusing on a monolithic vision of deregulation, competition policies should improve and multiply regulation indexes. We think that regulatory quantification for legal professions cannot be limited to a unique pro-competition *continuum*, but shall be multifaceted. In this perspective, the French case study shows that quantifying the competition outcomes of a regulatory evolution makes a multifaceted approach necessary. The policymaking scope is not limited to a re-regulation / deregulation alternative, but might consist in making regulation more competition-oriented. This supposes to multiply indexes, in order to quantify different regulatory outcomes: capture, market performance (Garoupa, 2004), quality (ZERP, 2007), ... Moreover, we propose to analyse "Legal Markets" (Hadfield, 2022) from a more institutionally grounded perspective. Before emphasizing "efficient" regulations (Shleifer, 2010), regulatory indicators shall represent how professions fulfil legal functions in different legal systems (Gauthier & Grard, 2014; Gauthier, 2014). It would consist in building regulatory indicators for legal functions. Therefore, notarial regulation would be assessed not only for its consequences on the authentication function, but also for the advice one (Gauthier & Grard, 2014). Indicators would prioritize legal markets' analysis over professional monopolies, with at least three positive consequences. First, it will disentangle legal professions from legal markets in economic analysis. Second, it will lead to methodologically stronger time and international comparisons. Finally, it will give to competition policymakers a larger range of tools in defining competition policies.

## ACKNOWLEDGEMENTS

The author thanks Camille Chaserant for her useful comments and suggestions, and Lucy Pfliger for proofreading. An older version of this paper was presented at the 41st European Association of Law and Economics Conference. The author thanks the organizing committee and all the participants of the Conference for their remarks and advices. Finally, we thank the seminars of the Centre d'Économie de la Sorbonne where this paper was presented.
OECD, “The OECD regulatory indicators questionnaire regulatory structures and policies in OECD countries”, ECO/CPE/WP1 (2003)11, 2003

OECD, “The OECD regulatory indicators questionnaire 2007/2008 regulatory structures and policies in OECD countries”, ECO/CPE/WP1 (2007)18, 2007

OECD, “The OECD regulatory indicators questionnaire 2013”, ECO/CPE/WP1 (2012)28, 2013

OECD, “Questionnaire for the OECD 2018 product market regulation indicators”, 2018

Paterson I., Fink M., Ogus A. et al. (IHS, 2003) “Economic impact of regulation in the field of liberal professions in different Member States”, Institute for Advanced Studies (IHS), Vienna, study for the European Commission.

Pelkmans J.K. (2017), “The new Restrictiveness Indicator for Professional Services: an assessment”, European Parliament, Policy Department A: Economic and Scientific Policy, IP/A/IMCO/2017-02

Posner R.A., « Theories of Economic Regulation », *The Bell Journal of Economics and Management Science* 5, no 2 (1974): 335-58.

Riem F., « Concurrence effective ou concurrence efficace ? L’ordre concurrentiel en trompe-l’œil », *Revue internationale de droit économique* t. XXII, 1, n° 1 (2008): 67-91.

Schmid C.U., Sebastian S., Lee G.S., Fink M., & Paterson I., (ZERP, 2007), “Conveyancing service market”. Bremen University & Zentrum für Europäische Rechtspolitik (ZERP)

Schroeter J.R., Smith S.L., Cox S.R., « Advertising and Competition in Routine Legal Service Markets: An Empirical Investigation », *Journal of Industrial Economics* 36, n° 1 (1987): 49-60.

Stigler G.J., “The Theory of Economic Regulation”, *The Bell Journal of Economics and Management Science* 2, no 1 (1971): 3-21.

Stigler G.J., « The Economics of Information », *Journal of Political Economy* 69, n° 3 (1961): 213-25.

Suleiman E.N., « State Structures and Clientelism: The French State versus the “Notaires” », *British Journal of Political Science* 17, n° 3 (1987a): 257-79.

Suleiman E.N., *Private Power and Centralization in France: The Notaires and the State*, Princeton: Princeton University Press (1987b)

Szczygielski K., « A model of competitive self-regulation », *International Review of Law and Economics* 70 (2022): 106045.

Terry L.S., « The Legal World Is Flat: Globalization and Its Effect on Lawyers Practicing in Non-Global Law Firms », *Northwestern Journal of International Law & Business* 28, n° 3 (2008a): 527-60.

Terry L.S., « The Future Regulation of the Legal Profession: The Impact of Treating the Legal Profession as Service Providers », *Journal of the Professional Lawyer* 2008, n° 1 (2008b): 189-212.

Terry L.S., “The European Commission Project Regarding Competition in Professional Services”, *Northwestern Journal of International Law & Business* 29, no 1 (2009): 1117.

Terry L.S., « From GATS to APEC: The Impact of Trade Agreements on Legal Services », *Akron Law Review* 43, n° 3 (2010): 875-984.

Tiebout C.M., « A Pure Theory of Local Expenditures », *Journal of Political Economy* 64, n° 5 (1956): 416-24.

Untermaier C. et Houillon P. (2014), *Rapport d'information sur les professions réglementées*, Assemblée nationale, Commission des Lois.