This competitions are discussed. It is concluded

This
essay elucidates the market structure of India, the monopoly situation in the
market before pre-liberalization and the effect of policies to market players
post liberalization. The discussion then focuses on the emergence of essential
facility doctrine in the purview of competition law in India, the origin of the
doctrine and its essentials. The applicability of this doctrine in various
market competitions are discussed. It is concluded that there is a possibility
of application and existence of the doctrine in the competition laws in various
sectors.

The political, economic
and social milieu of India is quite distinct from the western world and this is
relevant when such a doctrine is applied to the Indian context.1
The preamble of the constitution of India defines its economic structure as
Socialist, implying that any economic activity especially secondary will be
undertaken by government for the benefit of the masses. India chose a mixed
economy model – a model that was a mix of capitalist as well as socialist
economy. This left the market with sole players in different ventures of the
market. Pre-liberalisation, the players in the market being the sole provider
for the goods created a monopoly like circumstances in different industries.

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The enactment of LPG
Policies in 1991 led to introduction of the concept of competition in different
sectors of the market making consumers the king of the market and making the survival
of the players not so easy in the market. The race for the highest market share
hence the higher profit became inevitable. The player who was the sole price
maker in the market now had to compete with different players changing the
structure of that particular industry. It is obvious that the sole player who had
all the resources accumulated with him earlier, now has to share all the
facilities with new players. This process of competition is expected to result
in lower price, higher output and innovation. An organization in order to
survive in such market conditions would require some basic necessities for its
regular smooth functioning.

This competitive
process faces obstacles when a market player doesn’t have access to certain
facilities without which it cannot compete effectively.  These are known as ‘Essential
facilities’.  Essential Facility Doctrine
also referred to as Third Party Access or Open Access, requires
a monopolist party to allow access to the facility that it controls and that is
necessary for effective competition. Such liability on the monopolist firm is
against the right of a firm to carry out economic activities for its own
profit.

Cases related to the
doctrine arise when a natural monopolist firm in one market refuses to provide
access to the monopolized input to a competitor in the same/adjacent market.2Such
instances can also be regarded under refuse to deal cases. But refuse to deal
cases may arise when there is already a previous business transaction between
the two parties. Whereas in the case of essential facility doctrine, it may
arise even if there was no previous business transaction. The issues under
essential facility doctrine must be addressed for the sake of the effective
functioning of the market.

The issues over which
the cases revolve are whether to allow the shared use of resources and whether
the granting of such use will enable the party to compete profitably in the
market and which are those exceptional circumstances that may justify the
competition authority’s intervention, without undermining the objective
justifications by a dominant undertaking in refusing to allow such access.3To
determine the legal background for granting essential facilities, the following
questions need to be answered:

·      
Is the access to the essential facility
doctrine necessary to compete in the market with other competitors?

·      
Are the present resources sufficient to
provide access to the essential doctrine?

·      
Does the owner of the essential facility
prevent other competitors to compete in the market?

·      
Is the company demanding access ready to
pay a reasonable access fee? 

For the party who owns
such essential facilities, the duty to share the facility doesn’t turn into an
obligation if the answers to the above questions are not affirmative.

The doctrine has been
in practice for around 100 years now and originates from the American
anti-trust law. Its origin and development can be traced back to the enactment
of Sherman Act in the US. It can be said that there was no link of this act with
the essential facilities doctrine. The doctrine came up for consideration for
the first time in 1912 before the Supreme Court of US in the case of US v. Terminal Railroad Association of St.
Louis4.The
railroad terminals and the only bridge to the terminals were owned by certain
companies which connected Mississippi and Illinois. A new player, intending to
provide competition to the existing players, was denied access to both the
bridge as well as the railroad terminal. 
The existing players argued that the new player needed to build similar
facilities and incur the relevant cost to be able to complete.  The US Supreme Court held this as a case of

monopolization, and
directed the existing players to provide access to essential facilities –  namely, the bridge and the railroad terminal
– to enable the new player to compete effectively.5

The conditions to
invoke essential facility doctrine include denial to effectively compete due to
lack of access to the facility, the chances of providing access on reasonable
grounds ,the existence of technical feasibility to provide access. The
conditions and essentials required to invoke this doctrine were cited in a
famous US case of Hetch vs. Pro Football
Inc.6
when a rival football club was denied the right to access the only football
stadium in the city by the respondent. The Court held that it was not possible
to construct another stadium in a reasonable timeframe and denial of such
access would violate the Sherman Act.

From various precedents
of the court, it can be connoted that this doctrine is widely recognized in the
European Union. In the case of B
vs. Sealink7,the
issue was to grant permission for the access of seaport by a third party. The
court held that the owner of the seaport must play under fair rules while
granting access to essential facilities. In this case, the third party which
had smaller vessels needed permission for loading and unloading of its vessels
without being interfered by the larger vessels of the owner of the seaport.
The
third party took the matter to the competition agency, the timing of access to
the facility were determined and the essential facility doctrine was
successfully invoked.

Even though the
essential facilities doctrine has not yet been explicitly invoked in India in
the context of competition law, the doctrine is, by no means, a tabula rasa in
the Indian legal system.8Many
sectoral laws explicitly recognize this doctrine in India. Different sectors
have found the applicability of the doctrine affected by factors such as market
structure, technological advances, ownership structure and regulatory
experiences.

The doctrine has found
its applicability in the field of intellectual property rights. On the other
hand, the essential facilities doctrine can also be viewed as a broader concept
because it can be invoked to mandate the sharing of a large array of assets,
not just intellectual property.9
The
compulsory licensing provision has been used by the Indian patent regulator to
take corrective steps against the actions of patent holders that are
inconsistent with the

interest of the public at large. This is best
evidenced by the recent Natco Pharma Ltd.
v. Bayer Corporation10
case in which Bayer refused to provide Natco Pharma, a generic drug
manufacturer in India, access to its patented anti-

cancer drug Nexavar
which Bayer was selling in the market at an exorbitant price. Natco filed an
application to the Controller General of Patents and Designs for the grant of a
compulsory license. After reviewing the pertinent facts, the Controller General
granted Natco a compulsory license to sell the drug in the market at a comparatively
cheaper price. The Intellectual Property Appellate Board reaffirmed the decision
of the Controller General.

The idea of open access
has greater importance in the telecom sector because of the peculiar features
of the sector that necessitate collaborative efforts among different
undertakings in order to ensure that the fruits of innovation and progress
reach the last man in the line. As a result, Section 11(1) (b) (ii) along with
Section 11(1) (b) (iii) of the Telecom Regulatory Authority of India Act, 1997
impose an obligation on the TRAI to ensure interconnection and technical
compatibility between the services that are provided by various players in the
telecom sector. 11

In the
pre-liberalization era, the gas transmission grid in India did not extend
beyond the western, northern, central and north-eastern regions due to lack of
participation of private players. In addition, the Gas Authority of India
Limited owned 70% of the market share.12Therefore,
it was necessary to develop a framework to provide new entrants access to
essential facilities in order to solve the access problem. The PNGRB Act was
enacted that empowers the Petroleum and Natural Gas Board to declare any
pipeline for the transportation of petroleum, petroleum products or natural gas
a “common carrier” which allows multiple entities to access such pipelines on a
non-discriminatory basis.

As the competition law
regime in India is still in a nascent stage, the essential facilities doctrine
has not been explicitly invoked by the CCI in any case so far. A close
inspection of the Indian Competition Act, 2002 clearly shows that the
legislation is broad enough to bring the essential facilities doctrine within
its fold. More specifically, Section 4 (2) (c) unequivocally prohibits dominant
firms from engaging in any activity that results in the denial of market access
in any manner. In addition, Section 4 (2) (e) prevents an undertaking from
using its dominance in one market to establish a footing or to protect its
position in another market. Another provision into which the essential
facilities doctrine can be read is Section 3 (4) (d) of the Act which prohibits
the refusal to deal by dominant undertakings when it can create an appreciable
adverse effect on competition.13

After having analyzed
different sectors in the economy, the doctrine has its relevance in shade and
the act is wide enough to allow the application of the same. There exist
arguments against and for the doctrine. At the heart of any thriving
liberalized economy lies a robust and flexible competition law regime. If such
a regime is not suitably modified to meet contemporary challenges, monopolistic
structures would continue to go unchecked which would

have a large array of
corrosive effects on the health of the economy.14It
is a known fact that resources are scarce. The non- existence of the doctrine
may lead to accumulation of the resources with one entity which may discourage
investment in the market that drifts from the main focus of inviting more cash
flow in the economy. Also, Article 39(b) of the Indian Constitution makes the state
obliged to ensure that the ownership of the material resources of the community
be distributed equally. Therefore, the doctrine would and should find its
applicability in the context of Indian market.

1
Sundar Ramanathan, “The destiny of essential features
in India “(Lakshmikumaran and Sridharan Attorneys,2 June 2012) accessed
on 26 September 2017

2  
J. Singh, ‘Is there a Case for Essential Facilities Doctrine in India?’
CIRC Working Paper Series, 11, Working Paper No. 04, Cuts Institute for
Regulation and Competition, (2013).

3 Chiriþã, Anca Daniela. “Access
to Essential Facilities: A Comparative Competition Law Perspective of Shared
Use and Recent Margin Squeeze Cases”, Competition Survey: Studies, Researches
and Analysis, Vol. 1: 32-412011

4 US v.
Terminal Railroad Ass’n, 1912 224 U.S. 383

5 Amitabh
Kumar,’ The essential facilities doctrine’ The Financial Express New Delhi,
March 23, 2007

6 Hetch vs. Pro Football Inc.
(1978) 436 U.S. 956

7
B&I
vs. Sealink (1912) 5 CMLR 255

8 Rahul
Bajaj & Chiranjeevi Sharma, ‘THE ESSENTIAL FACILITIES DOCTRINE – A POTENT
TOOL FOR MITIGATING THE RIGOURS OF SOCIALLY PERNICIOUS BEHAVIOUR OF
MONOPOLISTS’ (2016)

9
Ibid 7

10 Natco Pharma Ltd vs Bayer
Corporation (2012) Controller of Patents

11
Ibid 8

12
Supra 2

13
Supra 9

14 K.
Vaishali, ‘Competition issues in the infrastructure sector- with special
reference to Indian electricity sector, Internship report for the Competition
Commission of India’, (2012), < http://cci.gov.in/images/media/ResearchReports/Competition% 20Issues%20in%20the%20Infrastructure%20Sector_With%20Special%20reference %20to%20the%20Indian%20Electricity%20Sector>, accessed on 26 September 2017