Essential Facilities

63 Pages Posted: 31 Jan 2000  

J. Gregory Sidak

Criterion Economics, L.L.C.

Abbott B. Lipsky

Latham & Watkins - Washington, D.C. Office

Multiple version iconThere are 2 versions of this paper

Abstract

Since United States v. Terminal Railroad Association, the essential facilities doctrine has been applied to a wide variety of business contexts-from football stadiums to the New York Stock Exchange. However, courts have also declined to extend the doctrine to a wide variety of situations. Despite academic criticism, courts have never provided a coherent rationale for the limitations of the doctrine. The essential facilities doctrine can be seen as an equivalent to the economic concept of a natural monopoly, implying that the wisdom of judicial regulation in this area requires an assessment of the administrative complexity involved. Three conclusions follow: First, diversification restraints on the owners of essential facilities are inefficacious. Second, the doctrine should not be applied to intellectual property. Third, the doctrine is most likely to be useful when the monopoly facility is shared by numerous competitors, has excess capacity, and where the applicants seek access on the same terms as the incumbents. Finally, an examination of the government litigation against the Microsoft Corporation reveals that an injunctive remedy providing mandatory access to the Windows platform could run into two sorts of constitutional difficulties. First, a court would be forced to deal with a complex pricing problem to avoid a violation of the Takings Clause of the Fifth Amendment. Second, to the extent the Windows platform may be regarded as a forum for communication, mandatory access may lead to compelled speech, potentially violating the First Amendment.

JEL Classification: K00,K2,K21,K23,L1,L2,L4,L41,L43,L5,L9,L97

Suggested Citation

Sidak, J. Gregory and Lipsky, Abbott B., Essential Facilities. Stanford Law Review, Vol. 51, No. 5, pp. 1187-1249, May 1999. Available at SSRN: https://ssrn.com/abstract=205668 or http://dx.doi.org/10.2139/ssrn.205668

J. Gregory Sidak (Contact Author)

Criterion Economics, L.L.C. ( email )

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Abbott B. Lipsky

Latham & Watkins - Washington, D.C. Office ( email )

555 - 11th Street, N.W.
Suite 1000
Washington, DC 20004-1304
United States
202-637-2283 (Phone)
202-637-2201 (Fax)

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