The New Gatekeepers: Private Firms as Public Enforcers

56 Pages Posted: 18 Dec 2019 Last revised: 4 May 2020

See all articles by Rory Van Loo

Rory Van Loo

Boston University - School of Law; Yale University - Yale Information Society Project

Date Written: December 4, 2019

Abstract

The world’s largest businesses must routinely police other businesses. By public mandate, Facebook monitors app developers’ privacy safeguards, Citibank audits call centers for deceptive sales practices, and Exxon reviews offshore oil platforms’ environmental standards. Scholars have devoted significant attention to how policy makers deploy other private sector enforcers, such as certification bodies, accountants, lawyers, and other periphery “gatekeepers.” However, the literature has yet to explore the emerging regulatory conscription of large firms at the center of the economy. This Article examines the rise of the enforcer-firm through case studies of the industries that are home to the most valuable companies, in technology, banking, oil, and pharmaceuticals. Over the past two decades, administrative agencies have used legal rules, guidance documents, and court orders to mandate that private firms in these and other industries perform the duties of a public regulator. More specifically, firms must write rules in their contracts that reserve the right to inspect third parties. When they find violations, they must pressure or punish the wrongdoer. This form of governance has important intellectual and policy implications. It imposes more of a public duty on the firm, alters corporate governance, and may even reshape business organizations. It also gives resource-strapped regulators promising tools. If designed poorly, however, the enforcer-firm will create an expansive area of unaccountable authority. Any comprehensive account of the firm or regulation must give a prominent role to the administrative state’s newest gatekeepers.

Keywords: platform liability, financial regulation, environmental regulation, energy regulation, big tech, health law, respondeat superior, third-party liability, corporate law, shareholders, antitrust, competition

Suggested Citation

Van Loo, Rory, The New Gatekeepers: Private Firms as Public Enforcers (December 4, 2019). 106 Virginia Law Review 467 (2020), Available at SSRN: https://ssrn.com/abstract=3498042

Rory Van Loo (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Yale University - Yale Information Society Project

127 Wall Street
New Haven, CT 06511
United States

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