Contractual Aspects of the Essential Facilities Doctrine

Abstract: During the last decade, the so-called essential facilities doctrine has been present in EC competition law. Under the doctrine, an undertaking that owns or controls an ''essential facility'' may be under a special responsibility to grant its competitors access to the facility. A refusal to provide access would, if the owner cannot present any objective justification for the refusal, constitute a breach of Article 82 EC. The doctrine, which has its origin in American antitrust law, can be viewed as an example of a refusal to deal, which is one of the chief forms of an abuse of a dominant position in breach of Article 82 EC. Much controversy surrounds the idea that a dominant undertaking must share its assets with its competitors. This principle must be treated with caution, because the law normally allows a company to retain, for its own exclusive use, all advantages that it has legitimately acquired. In the long term it is generally pro-competitive and in the interest of consumers to allow a company to retain for its own use facilities which it has developed for the purpose of its business. Mandatory access to essential facilities is, furthermore, a clear limitation of the right to property and the freedom of contract. Thus, dominant undertakings should only be required to share its assets if those are genuinely required in order to protect undistorted competition. The question whether a facility is ''essential'' is a complicated one, which requires careful considerations. The ECJ has taken a narrow view of what constitutes an essential facility, declaring in its 1998 Oscar Bronner judgement that a refusal to provide access is contrary to Article 82 only if it is likely to eliminate all competition, it cannot be objectively justified, and if the facility is indispensable to the company requiring access, inasmuch as there is no actual or potential substitute. When an owner of an essential facility is required to share its facility the conditions of the access must be settled. The owner is, for example, entitled to payment for providing access to its property and this is something that is to be contractually determined. Mandatory access involves many contractual implications. Besides the important access pricing issue, other conditions have to be settled. Moreover, the granting of access could affect the contractual relations with companies that are already using the facility in question. The ECJ and the Commission have generally not discussed the contractual aspects in cases concerning refusals to grant access to essential facilities. The Court and the Commission have repeatedly held that the owner of the facility is entitled to ''fair'' or ''reasonable'' remuneration. Thus, there exist a legal limitation of how much the facility owner could charge for the access. However, the Court and the Commission have not discussed the exact meaning of these concepts, let alone determined the specific access terms. This issue has been left to the parties to decide. This thesis deals with the contractual implications of an application of the essential facilities doctrine. First, it discusses the doctrine and its origin in American antitrust case law and in the EC case law concerning refusals to supply. Secondly, the contractual aspects is examined, covering the important issue of what constitutes reasonable terms, who should determine these terms, and how existing contractual rights and obligations concerning the facility could be affected. The case law of the Court and the Commission concerning these issues is discussed, alongside other sources such as national decisions and judgements and some less traditional sources such as access pricing models based on economic analysis.