Harmonizing Essential Facilities

TL;DR: The essential facility doctrine has been criticised by the United States Supreme Court in dicta, in the report of the Antitrust Modernization Commission, and the more recent monopoly report by the Bush administration Justice Department as discussed by the authors.

Abstract: The United States and the rest of the world have taken markedly different views of the essential facilities doctrine in recent years. Although the essential facility doctrine has many defenders in the United States, it has been criticized by the Supreme Court in dicta, in the report of the Antitrust Modernization Commission, and the more recent monopoly report of the Bush administration Justice Department.The situation is quite different everywhere else. In Europe, the essential facilities doctrine, also called unilateral refusals to deal, has been applied over the past thirty years by the European Commission, the Court of First Instance, the European Court of Justice, and increasingly courts of the twenty-seven Member States. In addition, the European Commission’s recently-issued draft guidelines on the abuse of dominance endorse the doctrine and sensibly describe its application and limitations. The situation is similar in countries outside of the European Union. Most jurisdictions, both common law and civil law, apply some form of the essential facility doctrine to unjustifiable denials of access to infrastructure and other forms of facilities that are impossible to duplicate, but nonetheless essential for competition.Of course, just because everyone does something does not make it right. However, there is a growing international consensus that it is sometimes appropriate to require a regime of nondiscriminatory access to infrastructure and related facilities. The extent to which the international community is applying some version of the essential facilities doctrine in a thoughtful and consistent manner suggests that the United States is an outlier and should rethink its position. A revitalized essential facilities doctrine more in line with the international consensus would be beneficial domestically as well as internationally.In this essay, we look briefly at the law of the essential facilities doctrine in the United States and abroad in order to analyze which jurisdictions have applied these rules in a sensible and economically efficient manner, and which have used the doctrine in a more ad hoc and arbitrary fashion. Part One analyzes the situation in the United States. Part Two examines the law of essential facilities and unilateral refusals to deal in the European Union and its member states. Part Three looks at the rest of the world and the variety of approaches followed in diverse common and civil law jurisdictions that have examined this question. Part Four looks at the prospects for harmonization of these divergent approaches through the International Competition Network and the more constructive role that the United States must play if these efforts are to be successful. Part Five offers substantive suggestions to better harmonize U.S. law and practice with the developing consensus that antitrust law has an important role to play when dominant firms deny access to essential facilities in economically and socially harmful ways.