Essential Facilities Doctrine: A
Case for India?
Jaivir Singh
Aashita Dawer
(Centre for the Study of Law
and Governance, JNU)
Essential Facilities Doctrine
Dominant/monopolistic firm’s refusal to grant
access to a facility it controls, which is
necessary for competition and infeasible to
replicate, can give rise to a legal
antitrust/antimonopoly liability.
Clearly it counters the proprietary right of
producers to design their platforms & exclude
others. Doctrine is defined (has meaning)
only over network goods.
Network Goods


Network Externalities - value to
the buyer of an extra unit of the
good increases as more units of
the good are sold. Apparently
upward sloping demand curve
Composite and complementary
nature of the goods makes the
compatibility across a network a
crucial constituent


Degree of compatibility is
decided strategically by firms,
tipping towards ‘winner takes
most’ outcomes. Follows
naturally from nature of network
goods, not necessarily on a/c of
anticompetitive behaviour.
In welfare terms compatibility
creates maximum CS &
equality. This is not achieved
by free entry – rather by
compatibility of the network
platform. Therefore an antitrust
doctrine that counters
proprietary rights.
Development of the Essential Facilities
Doctrine
Chequered History in US –
 Supreme Court: Terminal Railroad (1912),
Associated Press (1945), Otter Trail (1973). Seventh
Circuit Court MCI (1983)
 MCI (interconnect between AT&T and competitor)
puts out the test: For the doctrine to kick in it must be
shown that 1) a monopolist controls an essential
facility 2) the facility cannot be reasonably duplicated
3) the monopolist has denied access 4) it was
feasible for the monopolist to share the facility.
Development of the Essential Facilities
Doctrine (contd.)


Problems: a) Aspen Skiing (1985), b) Academic attack - Areeda
famously states that the Essential Facilities Doctrine is less a doctrine
than an epithet “indicating some acceptation to the right to keep one’s
creations to oneself, but not telling us what these acceptations are”, c)
Inspired by such speak, American Supreme Court ruling in Trinko
(2004) case stating that non-compliance with the Telecom Act was not
a valid basis for antitrust liability and that the defendant did not have a
general duty to deal with rivals with whom it had not dealt before. Dicta
but said that the Supreme Court does not recognize the doctrine.
To be noted though, In the final settlement worked out under the
supervision of the courts, Microsoft was required to licence
interoperability information to producers of non Microsoft servers – this
was clearly a reasoned move to encourage ‘open access’ with the
hope that it would encourage continuing innovation.
Development of the Essential Facilities
Doctrine (contd.)

Solution (Academic - Frischmann and Waller 2008-2009,
A.L.Jr.) Like IP law, it is a question of balance between the
‘open’ and exclusion. Traditional doctrinal test evaluates market
conditions of an upstream resource in the manufacture of a
commodity and asks whether competitive supply is possible.
Instead if ‘Essentiality’ were approached from the ‘demand’ side
the doctrine ends up gaining a lot more substance.
Circumstances favouring the open for infrastructure – precisely
because value of input from infrastructure into final goods is
cannot be measured. Social benefits derived from the
downstream uses of transport, electricity, basic research
(ideas), environmental ecosystems, and the internet is best
kept in a state of open access as is possible.
India and the Essential Facilities
Doctrine: Q how to think in relation to
the Indian jurisdiction.


Sufficient possibilities of being incorporated by the Competition Act.
Section 3(4)(d) of the Act ‘refusal to deal’ to be an anti-competitive
practice i.e. refusal to form agreement of sharing a facility necessary
for buying and selling of Section 4(c) asserts that denial of market
access to others by a dominant player would be an abuse of dominant
position held by him. Section 18 and 19, Commission can abolish
practices that have adverse effect on competition. Specifically, section
19(3) and 19(4) deal with determining factors that restrict emergence
of competition viz. creation of barriers to new entrants, driving existing
competitors out of market, etc. and ascertain the dominant position
through market share of the firm, size and importance of competitors,
etc. respectively.
Indian Regulatory Acts incorporate elements of the ‘Essential Facilities’
idea. TRAI, Electricity and Gas Regulations carry provisions with the
executive branch being empowered to decree sharing.
How to think of EF in the Indian
Context? (contd.)

Given this regulatory presence, question is
whether there is scope for hierarchy of
Competition Act over Regulatory law –
regulatory Law is typically specific but it
would be good to have a law that is general
enough to incorporate a variety of contexts,
including the unregulated world of
infrastructural inputs.