During the past decade, the labor market in France

During the past decade, the labor market in France has not been operating according to free market principles, but instead stifling functioning through its various government regulations restricting the hiring and firing of workers.

a. principles, but instead stifling functioning through its various government regulations restricting the hiring and firing of workers
b. principles, instead it has been functioning in a stifled manner as a result of various government regulations that restrict the hiring and firing of workers
c. principles, rather functioning despite being stifled as a result of government regulations that variously restrict worker hiring and firing
d. principles; the hiring and firing of workers is restricted there by various government regulations, its functioning being stifled
e. principles; instead, its functioning has been stifled by various government regulations restricting the hiring and firing of workers

OA is E but is there anything wrong in B apart from the use of , instead of ;

Also, I thought rather is preferred over instead on the GMAT. But here the answer choice with 'rather' is totally incorrect.

Thanks