Essential Facilities and Trinko: Should Antitrust and Regulation Be Combined?

"The Enduring Lessons of the Breakup of AT&T: A Twenty-Five Year Retrospective."' Conference held at the University of Pennsylvania Law School on April 18-19, 2008. The Supreme Court's 2004 decision in Trinko represented a radical change from prior doctrine ensuring that antitrust laws applied in regulated industries. The change resulted from a failure to appreciate that regulation and antitrust can be complements. Regulation can boost the value of antitrust by creating incentives to refuse to deal in order to reap monopoly profit otherwise proscribed by regulation.

Ironically, the essential facilities doctrine rejected by the Trinko court and the Trinko decision both imply that regulation and antitrust should be done by the same entity, either antitrust enforcement or a regulator. An effective essential facilities remedy entails price regulation, and the test of whether a facility is essential requires assessing whether cutting price would increase output. The clash between the pro-market culture of antitrust and the planning aspect of regulation suggests that combining both within the same institution is ill-advised, but the debate will go on.