Essential Facilities Doctrine

Imagine you are a firm with significant market power and you have a really important place or thing that everyone needs to use to do business. This could be something like a big warehouse, a crucial piece of technology, or even an important data system.

Now, if one company or a small group of companies controls that important thing and doesn’t let other businesses use it, it’s like they have too much power. This can be a problem because it might stop other companies from competing fairly.

So, the Essential Facilities Doctrine is like a rule that says, “Hey, if you have something extremely essential or important that everyone needs, you have to share it fairly with other businesses. You can’t just keep it all to yourself and block others from using it.”

This rule helps to make sure that big companies don’t use their power to unfairly dominate a market. It’s like saying, “You have to play nice and let others have a fair chance to compete, especially when it comes to really important stuff that everyone needs.

The essential facilities doctrine is a legal doctrine that aims at preventing firms with significant market power from abusing their dominance to the detriment of both competition and consumers.

According to the Essential Facilities Doctrine, certain facilities or resources are crucial for fostering effective competition within a particular market. It argues that entities controlling such essential facilities have a duty to provide reasonable access to other competitors, denying access to these facilities could be deemed anticompetitive behaviour and a violation of antitrust laws.

When determining the “essential” nature of facilities, it is imperative to objectively assess how significantly the monopolist’s refusal affects competition and competitors.

The doctrine initially emerged from United States law but has since been accepted, with alterations or adjustments, by the legal systems of other countries such as the United Kingdom, Australia, South Africa, and the European Union. 

In India, competition law is still relatively new. The essential facilities doctrine has not yet been applied by the Supreme Court of India, However, the Competition Commission of India (CCI) has reviewed cases where parties have asked for the doctrine to be applied.

The essence of the doctrine is also evidently appreciated within Indian legislation

The Competition Act of 2002 doesn’t use the term “essential facilities,” but it talks about the concept in Section 4(2)(c). This section prevents firms enjoying a dominant position in a market from unfairly blocking or refusing access to the competitors from entering the market.

 Additionally, Sections 18 and 19, require the Competition Commission to stop practices that have appreciable adverse effects on competition. Sections 19(3) and (4) lay down the factors that stop competition from growing.

Both the competition authority and the courts need to find a balance between the economic interests of the companies and the public’s interest in having a competitive market.