It's a very good point and I'm in no way saying that the fear of going to jail is going to stop all illegal practices, but if that disincentive isn't going to stop it, can we really expect a state underpinned regulator to be a bigger disincentive? I just can't see it.
Absolutely true, but if a newspaper is exposed as committing illegal acts that the public find grotesque (like the Milly Dowler scandal) their marketshare will decrease, as will their revenue from advertising - it's a huge disincentive for wrongdoing, because you're not talking about a £1m fine imposed by a regulator, you're talking about losing a multi-million pound business overnight.