Old Lessons Die Hard: Why the Essential Facilities Doctrine Provides Courts the Ability to Effectuate Competitive Balance in High Technology Markets

By Ortiz, Armando A. | The Journal of High Technology Law, January 2013 | Go to article overview

Old Lessons Die Hard: Why the Essential Facilities Doctrine Provides Courts the Ability to Effectuate Competitive Balance in High Technology Markets


Ortiz, Armando A., The Journal of High Technology Law


Cite as 13 J. High. Tech. L. 170 (2012)

Introduction

The rapid rise in technological, scientific, and electronic markets leave the state of United States antitrust laws in a perplexing position: can the one hundred plus years of antitrust jurisprudence, an area of law that began in the era of Standard Oil, be used to regulate these unseen economies? On one side of the debate, there are those who contend that antitrust law should not, and frankly cannot, effectively regulate the development of modern technological economies. Likewise, there are also those who contend that antitrust law is needed now more than ever to protect society from the dangers of monopolies.

This note aims to look past these exaggerated fears and argues that antitrust regulation, should be, and in fact, can be, applied to modern technological and scientific fields where innovation is key. Specifically, the focus of this note will be that the essential facilities doctrine, a doctrine deemed largely dormant by the U.S. Supreme Court's recent treatment of it, is a practical solution that can assist antitrust regulation in this new age.

Parts I.A and I.B summarize monopolization jurisprudence pursuant to [section] 2 of the 1890 Sherman Act. Part I.C summarizes the development of the essential facilities doctrine in antitrust law and its recent treatment by courts as to New Economies. Part II.A defines "New Economies" and provides an overview of the characteristics that differentiate them from traditional economies. Part II.B provides an overview of the ongoing debate as to whether antitrust can and should be applied to New Economies. Part III.A argues why the essential facilities doctrine should be a tool that courts should use to regulate New Economies as needed. Part III.B provides a proposed elemental test to assist courts in determining the applicability of the essential facilities doctrine to a particular plaintiff's antitrust claim.

I. History

A. Antitrust Statutory Provisions

Congress passed the 1890 Sherman Act upon a platform of populist concern to combat the effects of a non-regulated industrial revolution that effectively bottled up the national economy. (1) Two separate, yet intertwined, provisions constitute the Act. (2) While initially interpreted to condemn all restraints of trade, (3) [section] 1 condemns only those restraints deemed unreasonable. (4) Additionally, [section] 2 makes monopolization or attempts to monopolize distinct illegal acts. (5) Congress also passed other statutory provisions after the Sherman Act, such as the Clayton Act (6) and the Robinson-Patman Act. (7)

B. Monopolization Jurisprudence

The statutory language of [section] 1 and [section] 2 of the Sherman Act left much for the early courts to determine. (8) As briefly mentioned supra, [section] 1 condemns unreasonable restraints of trade. (9) Section 2 makes two distinct acts illegal: 1) monopolization and 2) any attempt to monopolize, either unilaterally or through a conspiracy. (10) Much like with [section] 1, the early courts struggled to determine the meaning of [section] 2 and its relationship to [section] 1.11 In modern monopolization analysis, a firm violates [section] 2 if it possesses monopoly power in the relevant market, and it willfully acquired or maintains this power through exclusionary acts. (12) While this two-step analysis seems simple, the Court struggled to develop this test due to the need of balancing a firm's right to compete and reap profits from healthy competition, along with the need of protecting the economy from monopoly power. (13)

The Court first addressed a [section] 2 monopolization issue in Standard Oil v. United States, (14) a seminal case in which the U.S. government sought to break apart John Rockefeller's Standard Oil Trust. (15) At the time of this case, the Standard Oil trust engulfed the American economy. (16) The Court in Standard Oil determined that [section] 2 should be treated as a "compliment" to [section] 1, thereby applying the rule of reason test developed for [section] 1 analysis. …

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