Facility Legal Meaning

A critical facility is an asset or infrastructure that a third party needs access to offer its own product or service in a marketplace. Installation is essential if no reasonable alternative is available and duplication of the system is not possible due to legal, economic or technical obstacles. Various assets have been classified as critical assets: physical infrastructure such as bridges or ports, intellectual property rights and information assets. The refusal of access to an essential installation may constitute unlawful monopolisation (Article 2 of the Sherman Law) or an abuse of a dominant position (Article 102 TFEU) by the undertaking which controls it. In its judgment in Slovak Telekom, 2021, the Court held that it was not necessary to prove that access to Slovak Telekom`s local loop was indispensable, since it was not a total refusal of the operation, but the conditions of access imposed by Slovak Telekom (Slovak Telekom, paragraph 50). The Court thus applied its reasoning in TeliaSonera (2011) on the legal assessment of price suppression to the non-price-based conduct of dominant undertakings. In TeliaSonera, the Court held that the effectiveness of Article 102 TFEU would be unduly undermined if it were to be established that it was indispensable for conduct of a dominant undertaking to be regarded as abusive in the light of its commercial conditions (TeliaSonera, paragraph 58). According to the Court in Slovak Telekom, the reference for a preliminary ruling in TeliaSonera concerns not only price scissors but also other commercial practices relating to the working conditions of a dominant undertaking (Slovak Telekom, paragraph 53). In its judgment in Lithuanian Railways (2020), the General Court also held that the requirement of indispensability was not applicable, since the sectoral legislation already imposed a commercial obligation on Lithuanian railways (a factor also taken into account in Slovak Telekom) (Lithuanian Railways, paragraph 91).

Consequently, the necessary balancing of economic incentives, normally achieved by applying the conditions of the doctrine of essential entities, has already been carried out by the legislature (Lithuanian Railways, paragraph 92). A facility is an agreement between a company and a public or private lender that allows the company to borrow a certain amount of money for a short period of time for various purposes. The loan is of a fixed amount and does not require collateral. The borrower makes monthly or quarterly payments with interest until the debt is paid in full. For example, if a jewelry store is tight in December with declining sales, the owner can apply for a $2 million facility from a bank, which will be fully repaid by July when business resumes. The jeweler uses the funds to continue its activities and repays the loan in monthly installments on the agreed date. Revolving loans have a certain limit and no fixed monthly payments, but interest accumulates and is capitalized. Companies with low cash flow that need to finance their net working capital needs typically opt for a revolving credit facility that provides access to funds whenever the business needs capital.

A facility is a formal financial assistance program offered by a lending institution to help a business that needs working capital. Types of facilities include overdraft services, deferred payment plans, lines of credit, revolving loans, term loans, letters of credit and transitional loans. A facility is essentially another name for a loan taken out by a company. A factory is especially important for businesses that want to avoid things like layoffs of employees, slowing growth, or closing during seasonal sales cycles when revenues are low. The Supreme Court`s competition intervention in Terminal Railroad later became known as the “Essential Facilities Doctrine.” The essential entity doctrine addresses a form of exclusionary behaviour whereby an entity controls the conditions of access to an asset that constitutes a “bottleneck” for competitors. Since its introduction into U.S. antitrust law, the critical facilities doctrine has been applied in various jurisdictions around the world to assess the legality of denials under competition law. The finding of an infringement of the competition rules in the case of substantial entities leads to the imposition of a commercial obligation as compensation for competitive harm. This is a far-reaching interference because it interferes with generally accepted principles of freedom of contract and freedom of property. The imposition of a competition trading obligation is therefore considered an exception to the rule and requires careful balancing with a high burden of proof. Facilities or infrastructure necessary to reach customers and/or enable competitors to conduct business. Installation is essential when its reproduction is impossible or extremely difficult due to physical, geographical, legal or economic constraints.

Take, for example, a national electricity grid used by various electricity producers to reach end-users: as it would not be profitable for these generators to set up their own distribution network, they depend on access to existing infrastructure. The denial of access to a substantial entity may be considered an abuse of a dominant position by the controlling entity, in particular where it prevents competition in a downstream market. European Commission In its judgment of 16 June 2022, the Court of Justice interpreted Article 15(1) of Regulation (EU) No 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-European transport network as meaning that, where a landlocked country (…) In a judgment of 9 September 2021, the Court of Justice provided interesting clarifications on the relationship between the regulatory body and the railway infrastructure manager within the meaning of Directive 2012/34/EU of the European Parliament and of the Council of 21 November 2012 (…) This foreword assesses some of the economic issues raised by the CJEU ruling on Slovak Telecom. It analyses the distinction between essential facilities and other exclusionary practices and examines the implications for the debate between form and effect. In March 2021, the CJEU delivered its judgment (…) The standards for the application of these Terms vary from case to case. First, in Microsoft, concerning the indispensability of access to Microsoft`s interoperability information, the General Court held that competitors must be able to cooperate on an equal footing with the Windows operating system (Microsoft, paragraph 421). On the other hand, in Bronner, the Court held that access to Mediaprint`s national newspaper distribution system was not essential if Bronner had alternatives for the distribution of its daily newspapers, such as distribution by post and sale in stores, even if those alternatives were less advantageous (Bronner, cited above, paragraph 43). Since the essential entity doctrine balances the interest in protecting competition with the interest in protecting the dominant undertaking`s incentives to invest in innovation, the applicable standards may vary depending on the particular circumstances of the case.