The Essential Facilities Concept

An essential facilities doctrine specifies when the owner(s) of an “essential” or “bottleneck” facility must provide access to that facility, at a reasonable price. For example, it might specify when a railroad must be made available on reasonable terms to a rival rail company or an electricity transmission grid to a rival electricity generator. Topics covered include the access regime, interoperability (that different systems, products, and services work together transparently), standards, the importance of market definition in defining an essential facility, single versus joint ownership of an essential facility, legitimate reasons to deny access and possible remedies. There is an important distinction among public, private but regulated, and private unregulated facilities because mandatory access can diminish private incentives to invest and to innovate. This document comprises proceedings in the original languages of a roundtable on the essential facilities concept which was held by Working Party No. 2 of the Committee on Competition Law and Policy in February 1996. It is published as a general distribution document under the responsibility of the Secretary General of the OECD to bring information on this topic to the attention of a wider audience. This is the fifth compilation published in a new OECD series named “Roundtables on Competition Policy”