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	Table of Contents
p. 31 of 62 BACK | NEXT Purpose and Structure of the Toolkit Overview of Practices Controlled by Competition Law Countries with Competition Law Systems Benefits of Competition Policy Practices Controlled by Competition Law Key Concepts and Tools Competition, Privatization, and Regulation OECD's Work in Utility Industries Work of the ICN Structural Separation in Regulated Industries Ex Ante Regulation and Competition When Competition Law Replaces Ex Ante Regulation Sector-Specific Regulator or Competition Authority? Essential Facilities Doctrine and Interconnection Problems Non-commercial Service Obligations Banking and Finance Emerging Economies Enforcement Mechanisms ADB Resources and Projects Other Resources Glossary and List of Abbreviations

Competition Law Toolkit : Competition, Privatization, and Regulation

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G. The Essential Facilities Doctrine and Interconnection Problems

A specific problem that arises in the case of the network industries is that effective competition will usually be possible only if market entrants are able to have access to infrastructure such as pipelines, electricity grids, or the local loop in telecommunications. Very often, there will be a regulatory system in place which imposes, on an ex ante basis, an obligation on a network operator to provide access to infrastructure of this kind. However, a market entrant may invoke competition law—and in particular the prohibition on abusive behavior—to demand access to an "essential facility," with a claim that refusal to grant such access is an abuse of a dominant position. The owner of the infrastructure in question might decide to grant access, but demand such a high price that the claimant considers the price amounts to a refusal to supply. Therefore it is necessary not only to decide when a facility is essential, so that access must be granted; but also determine the price that should be charged for that access. Each of these concepts is complex.

The Essential Facilities Doctrine

A huge amount has been written about the essential facilities doctrine in competition law. A helpful starting point is a 1996 Roundtable of the OECD on The Essential Facilities Concept [ PDF ]. It discussed three different essential facilities doctrines that apply within the area of the OECD: those of the US, the EU, and Australia.

Access Pricing

A helpful resource in relation to access pricing is the OECD report, The Regulation of Access Services (With A Focus on Telecommunications) (November 2003) [ PDF ]. It begins by noting that the terms on which market entrants should gain access to an incumbent's network is one of the most controversial issues in industrial policy. The report is in three parts: the first contains a survey of the theory of access pricing; the second attempts to bring together this theory with actual practice in the telecommunications industry; and the third looks at what is meant by "cost-based" prices, and examines the problem of allocating common costs that arise when multiple products can be produced more cheaply jointly than individually.

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