The essential facilities doctrine is said to have originated in the judgment of the US Supreme Court in the Terminal Railroad case (1912). The US Supreme Court imposed a duty on an association of railroad companies to give competitors access to certain railroad bridges and terminal facilities they had acquired (Terminal Railroad, paragraphs 409-411). Without this from of shared access, competitors would not have been able to offer their own railroad service beyond the Mississippi River into and out of Saint Louis. This would have harmed the interests of consumers due to the lack of choice for competing services outside of the control of the owners of the railroad bridges and terminal facilities.
The competition intervention by the Supreme Court in Terminal Railroad later became known as the ‘essential facilities doctrine’. The essential facilities doctrine attacks a form of exclusionary conduct by which an undertaking controls the conditions of access to an asset forming a ‘bottleneck’ for rivals to compete. Since its inception in US antitrust law, the essential facilities doctrine has been applied in various jurisdictions around the world to assess the legality of refusals to deal under competition law. The finding of a violation of the competition rules in an essential facilities case results into the imposition of a duty to deal as a remedy to address the competitive harm. This is a far-reaching intervention, because it interferes with the generally recognized principles of freedom to contract and freedom of property. The imposition of a duty to deal under competition law is therefore seen as an exception to the rule and requires a careful balancing exercise carrying a high burden of proof.
In its Trinko judgment (2004), the US Supreme Court took a restrictive approach towards the essential facilities doctrine by referring to Areeda’s seminal article criticizing the doctrine (Trinko, paragraph 411). In particular, the Supreme Court stated that the circumstances in which antitrust liability was found for refusals to deal in its 1985 Aspen Skiing judgment are ‘at or near the outer boundary’ of liability under Section 2 of the Sherman Act (Trinko, paragraph 409). According to the Trinko judgment, the Aspen Skiing case constitutes a limited exception to the principle of freedom to contract, which only applies in situations where a monopolist terminates a voluntary and profitable prior course of dealing (Trinko, paragraph 409). Following Trinko, liability for refusals to deal can be established under US antitrust law if two cumulative conditions are met: (1) the monopolist entered into a pre-existing voluntary course of dealing; and (2) the monopolist is willing to sacrifice short-term profits by refusing to deal in order to achieve an anticompetitive end.
The EU Courts have developed four conditions for the application of the essential facilities doctrine under Article 102 TFEU in cases such as Magill (1995), Bronner (1998), IMS Health (2005) and Microsoft (2007). Abuse of dominance only exists in exceptional circumstances, namely if a refusal to deal by a dominant undertaking: (1) relates to an indispensable asset; (2) prevents the emergence of a new product (this condition is only mentioned in cases concerning access to intellectual property-protected assets); (3) excludes effective competition on a downstream market; and (4) has no objective justification.
The standards for applying these conditions vary across cases. On the one hand, the General Court explained in its Microsoft judgment regarding the indispensability of access to Microsoft’s interoperability information that competitors needed to be able to interoperate with the Windows operating system on an equal footing (Microsoft, paragraph 421). On the other hand, the Court of Justice argued in its Bronner judgment that access to Mediaprint’s nationwide newspaper home-delivery scheme would not be indispensable where alternatives were available to Bronner for distributing its daily newspapers, such as delivery by post and sales in shops, even though these alternatives would be less advantageous (Bronner, paragraph 43). Because the essential facilities doctrine balances the interest in protecting competition with the interest in protecting the incentives of the dominant firm to invest in innovation, the applicable standards may vary depending on the particular circumstances of the case. Calls have been made to lower the standards for applying the essential facilities doctrine in data-driven markets where data is generated as a by-product of providing a service and incentives to produce such data would not be affected by duties to share data.
There is discussion in EU competition law about the role of the requirement of indispensability. In its 2017 Google Shopping decision, the European Commission did not apply the indispensability requirement to hold Google’s self-preferencing in its general search results abusive. The Commission justified this choice by qualifying the conduct of Google as active behaviour to provide its own comparison shopping service a more favourable position, instead of a passive refusal by Google to give competing comparison shopping services access to a proportion of its general search results pages (Google Shopping, paragraph 650). In addition, the Commission considered that Google would not be required to transfer an asset or enter into agreements with competing comparison shopping services to cease its abusive conduct – as is typical for essential facilities cases (Google Shopping, paragraph 651).
In its Slovak Telekom judgment (2021), the Court of Justice stated that the indispensability of access to Slovak Telekom’s local loop did not have to be demonstrated because the case did not concern an outright refusal to deal but instead related to the conditions of access imposed by Slovak Telekom (Slovak Telekom, paragraph 50). The Court of Justice thereby applied its reasoning in the TeliaSonera judgment (2011) regarding the legal test of price squeezes to non-price based conduct of dominant undertakings. In TeliaSonera, the Court of Justice argued that the effectiveness of Article 102 TFEU would be unduly reduced if indispensability had to be established before any conduct of a dominant undertaking in relation to its terms of trade could be regarded as abusive (TeliaSonera, paragraph 58). According to the Court of Justice in Slovak Telekom, the reference in TeliaSonera does not solely concern price squeezes but also other business practices relating to the terms of trade of a dominant undertaking (Slovak Telekom, paragraph 53). In its Lithuanian Railways judgment (2020), the General Court similarly found that the indispensability requirement was not applicable because sector-specific regulation already imposed a duty to deal on Lithuanian Railways (a factor also considered in Slovak Telekom) (Lithuanian Railways, paragraph 91). As a result, the necessary balancing of economic incentives, which is normally conducted by applying the conditions of the essential facilities doctrine, had already been carried out by the legislator (Lithuanian Railways, paragraph 92).
