The essential facilities doctrine (sometimes also referred to as the essential facility doctrine) is a

legal doctrine A legal doctrine is a framework, set of rules, procedural steps, or test, often established through precedent in the common law, through which judgments can be determined in a given legal case. A doctrine comes about when a judge makes a ruling ...

which describes a particular type of claim of

monopolization In United States antitrust law, monopolization is illegal monopoly behavior. The main categories of prohibited behavior include exclusive dealing, price discrimination, refusing to supply an essential facility, product tying and predatory pricing ...

made under competition laws. In general, it refers to a type of

anti-competitive behavior Anti-competitive practices are business or government practices that prevent or reduce competition in a market. Antitrust laws differ among state and federal laws to ensure businesses do not engage in competitive practices that harm other, usuall ...

in which a firm with

market power In economics, market power refers to the ability of a firm to influence the price at which it sells a product or service by manipulating either the supply or demand of the product or service to increase economic profit. In other words, market powe ...

uses a "

bottleneck Bottleneck literally refers to the narrowed portion (neck) of a bottle near its opening, which limit the rate of outflow, and may describe any object of a similar shape. The literal neck of a bottle was originally used to play what is now known as ...

" in a market to deny competitors entry into the market. It is closely related to a claim for

refusal to deal Though in general, each business may decide with whom they wish to transact, there are some situations when a refusal to deal may be considered an unlawful anti-competitive practice, if it prevents or reduces competition in a market. The unlawful ...

. The doctrine has its origins in

United States law The law of the United States comprises many levels of codified and uncodified forms of law, of which the most important is the nation's Constitution, which prescribes the foundation of the federal government of the United States, as well a ...

, but it has been adopted (often with some modification) into the legal systems of

the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...

, Australia,

South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. It is bounded to the south by of coastline that stretch along the Atlantic Ocean, South Atlantic and Indian Oceans; to the ...

, and the

European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...

Overview

Under the essential facilities doctrine, a

monopolist A monopoly (from Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situation where a speci ...

found to own "a facility essential to other competitors" is required to provide reasonable use of that facility, unless some aspect of it precludes shared access. The basic elements of a

legal claim A cause of action or right of action, in law, is a set of facts sufficient to justify suing to obtain money or property, or to justify the enforcement of a legal right against another party. The term also refers to the legal theory upon which a p ...

under this doctrine under

United States antitrust law In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses to promote competition and prevent unjustified monopolies. The three main U.S. antitrust statutes are the Sherm ...

, which a

plaintiff A plaintiff ( Π in legal shorthand) is the party who initiates a lawsuit (also known as an ''action'') before a court. By doing so, the plaintiff seeks a legal remedy. If this search is successful, the court will issue judgment in favor of t ...

is required to show to establish liability, are: #control of the essential facility by a monopolist #a competitor’s inability to practically or reasonably duplicate the essential facility #the denial of the use of the facility to a competitor; and #the feasibility of providing the facility to competitors The

U.S. Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...

's ruling in '' Verizon v. Trinko'', 540 U.S. 398 (2004), in effect added a fifth element: absence of regulatory oversight from an agency (the

Federal Communications Commission The Federal Communications Commission (FCC) is an independent agency of the United States federal government that regulates communications by radio, television, wire, satellite, and cable across the United States. The FCC maintains jurisdicti ...

, in that case) with power to compel access. These elements are difficult for potential plaintiffs to establish for several reasons. It is quite difficult for a plaintiff to demonstrate that a particular facility is "essential" to entry into and/or competition within the

relevant market In competition law, a relevant market is a market in which a particular product or service is sold. It is the intersection of a relevant product market and a relevant geographic market. The European Commission defines a relevant market and its pro ...

. The plaintiff must demonstrate that the "facility" must be something so indispensable to entry or competition that it would be impossible for smaller firms to compete with the market leader. Likewise, the plaintiff must show that compelling the dominant firm to permit others to use the facility would not interfere with the ability of the dominant firm to serve its own customers.

Development

The first notable case to address the anti-competitive implications of an essential facility was the Supreme Court's judgment in '' United States v. Terminal Railroad Association'', 224 U.S. 383 (1912). A group of railroads controlling all railway bridges and switching yards into and out of

St. Louis St. Louis () is the second-largest city in Missouri, United States. It sits near the confluence of the Mississippi and the Missouri Rivers. In 2020, the city proper had a population of 301,578, while the bi-state metropolitan area, which e ...

prevented competing railway companies from offering transportation to and through that destination. The court held it to be an illegal restraint of trade.224 U.S. 383 (1912), at 409-10 Similar decisions include, * ''

Associated Press v. United States ''Associated Press v. United States'', 326 U.S. 1 (1945), was a Supreme Court of the United States, United States Supreme Court case on U.S. antitrust law. Facts The Associated Press (AP) had prohibited member newspapers from selling or providing ...

'', 326 U.S. 1 (1945), in which the Supreme Court found that the

Associated Press The Associated Press (AP) is an American non-profit news agency headquartered in New York City. Founded in 1846, it operates as a cooperative, unincorporated association. It produces news reports that are distributed to its members, U.S. ne ...

bylaws which limited membership and therefore access to copyrighted news services violated the Sherman Act. * In '' Lorain Journal Co. v. United States'', 342 U.S. 143, 146-49 (1951), ''

The Lorain Journal ''The Morning Journal'' is a daily newspaper based in Lorain, Ohio. Originally the ''Lorain Journal'', it was an afternoon paper which was historically more popular in an industrial town like Lorain, but switched to morning publication in the 19 ...

'' was the only local business doing news and advertisements in town. The case was that refusing to place an ad for the customers of a small radio station was a Sherman Act violation. In the end, the court accepted an offer to simply accept the advertisements. * '' Otter Tail Power Co. v. United States'', 410 U.S. 366, 377-79 (1973), in which the Supreme Court found that Otter Tail, an electrical utility which sold electricity at both directly to consumers and to municipalities who resold to consumers, violated the Sherman Act by refusing to supply electricity at wholesale, instead serving customers directly itself. * ''

Aspen Skiing Co. v. Aspen Highlands Skiing Corp. ''Aspen Skiing Co. v. Aspen Highlands Skiing Corp.'', 472 U.S. 585 (1985), was a United States Supreme Court case that decided whether a dominant firm's unilateral refusal to deal with a competitor could establish a monopolization claim under Sect ...

'', 472 U.S. 585 (1985), upholding the ''Lorain Journal'' decision in holding that Aspen Skiing violated § 2 of the Sherman Act by refusing to honor vouchers and

ski lift A ski lift is a mechanism for transporting skiers up a hill. Ski lifts are typically a paid service at ski resorts. The first ski lift was built in 1908 by German Robert Winterhalder in Schollach/Eisenbach, Hochschwarzwald. Types * Aerial ...

tickets after it had previously done so. * '' Hecht v. Pro Football'' where potential American Football League franchise did not show they needed Washington's RFK Stadium, the essential facilities doctrine was not met.

Application of the doctrine

There is controversy about what exactly constitutes an "essential facility". While the doctrine has most frequently been applied to

natural monopolies A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming adv ...

such as

utilities A public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and ...

and owners of transportation facilities, it has also been applied in situations involving

intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, cop ...

. For example, it is possible for a court to apply the doctrine in a case where one competitor refuses to sell materials protected by

copyright A copyright is a type of intellectual property that gives its owner the exclusive right to copy, distribute, adapt, display, and perform a creative work, usually for a limited time. The creative work may be in a literary, artistic, educatio ...

patent A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention."A ...

to potential competitors.

Notes

References

Sullivan, E. Thomas, and Hovenkamp, Herbert. ''Antitrust Law, Policy, and Procedure: Cases, Materials, and Problems, Fifth Edition''.

LexisNexis LexisNexis is a part of the RELX corporation that sells data analytics products and various databases that are accessed through online portals, including portals for computer-assisted legal research (CALR), newspaper search, and consumer info ...

Publishers, 2004. pp. 701–706.

External links

* Robert Pitofsky
''The Essential Facilities Doctrine Under United States Antitrust Law''
70 L.J. 443 (2002).
Brief explanation of the doctrine
from the

International Telecommunication Union The International Telecommunication Union is a specialized agency of the United Nations responsible for many matters related to information and communication technologies. It was established on 17 May 1865 as the International Telegraph Unio ...