Opinion ID: 184605
Heading Depth: 2
Heading Rank: 3

Heading: The Essential Facilities Claim: Count XI

Text: 36 C&W owned microwave facilities described by CBS as unique in the Eastern Caribbean (p 42) and published the only telephone directory in the British Virgin Islands. (p 41) C&W also owned a 27% stake in CCC's radio station and was planning a joint venture with CCC to provide paging services. CBS alleged that C & W denied CBS access to its microwave facilities and directory, and that both such facilities were essential for it to compete with CCC's Radio GEM. 37 [331 U.S.App.D.C. 234] A monopolist has no general duty to share his essential facility, although there are certain circumstances in which he must do so. See Philip E. Areeda & Herbert Hovenkamp, Antitrust Law 815-864 (1992 Supp.) (proposing narrow interpretation of essential facilities doctrine). In the special circumstances where there may be such an obligation, the elements of an antitrust claim for denial of access to an essential facility are (1) a monopolist who competes with the plaintiff controls an essential facility, (2) the plaintiff cannot duplicate that facility, (3) the monopolist denied the plaintiffs use of the facility, and (4) the monopolist could feasibly have granted the plaintiff use of the facility. See MCI Communications Corp. v. AT&T, 708 F.2d 1081, 1132-33 (7th Cir.1983); Philip Areeda, Essential Facilities: An Epithet in Need of Limiting Principles, 58 Antitrust L.J. 841, 853 n.21 (1989) (noting that MCI Communications ... is probably correct [in holding that] a monopolist must, when feasible, make its essential facility available to a competitor who is unable to duplicate it). Because the appellees have not argued to the contrary, we assume that the essential facilities doctrine is applicable to their circumstances. 38 The district court held that CBS had failed adequately to allege an essential facilities claim for two reasons: first, CBS did not allege that it competed with C&W, and second, CBS did not allege any specific instance in which C&W had denied CBS access to a particular facility. We uphold the district court on the former ground and therefore do not reach the latter. 39 CCC does not dispute that it competed with CBS, but because--as the district court held and we affirm--the court does not have personal jurisdiction over CCC, see Part II.D below, the allegations against that company cannot support the essential facilities claim. As for C&W, the district court held that its 27% ownership interest in CCC did not make C&W itself a competitor of CBS. CBS argues that whether the parties are in fact competitors should not have been resolved on a motion to dismiss the complaint, which alleged that C&W acted for the benefit of CCC in denying plaintiffs access to their microwave and long-distance facilities. According to CBS, C&W's equity interest in CCC and its corresponding financial stake in the exclusive provision of broadcasting services by CCC .... raise a factual issue as to whether C&W and plaintiffs [are] competitors. C&W counters that CBS alleges no facts even hinting that C&W might itself be a competitor of CBS except for C&W's 27% investment in CCC, and that as a matter of law such an investment alone cannot vicariously make C&W a competitor of CBS's. 40 As the district court recognized, one company's minority ownership interest in another company is not sufficient by itself to make the owner a competitor, for purposes of the antitrust laws, of the subsidiary's rivals. To be a competitor at the level of the subsidiary, the parent must have substantial control over the affairs and policies of the subsidiary. See, e.g., Kennecott Copper Corp. v. Curtiss-Wright Corp., 584 F.2d 1195, 1205 (2d Cir.1978) (finding no violation of § 8 of Clayton Act where interlocked parent corporations had competing subsidiaries, but reserving issue whether statute would cover parent corporation that closely controls and dictates the policies of its subsidiary); Phoenix Canada Oil Co. Ltd. v. Texaco, Inc., 658 F.Supp. 1061, 1084-85 (D.Del.1987) (holding that parent is liable for acts of subsidiary under agency theory only if parent dominates subsidiary; parent of wholly-owned subsidiary that had seats on board, took part in financing, and approved major policy decisions was not liable because parent did not have day-to-day control); J.E. Rhoads & Sons, Inc. v. Ammeraal, Inc., 1988 WL 32012 (Del.Super.1988) (citing cases holding day-to-day control required before court will pierce corporate veil or find parent liable); Outokumpu Engineering Enterprises, Inc. v. Kvaerner Enviropower, Inc., 685 A.2d 724, 729 n. 21 (Del.Super.1996) (noting test for parent's liability for act of subsidiary is whether parent had exclusive domination and control to the point that the subsidiary no longer has legal or independent significance of its own); cf. Tiger Trash v. Browning-Ferris Indus., Inc., 560 F.2d 818 (7th Cir.1977) (holding that in order to prevent parent from carrying out anticompetitive activity through subsidiary, test for venue is [331 U.S.App.D.C. 235] whether parent's control over subsidiary caused parent to transact business in state within venue provision of Clayton Act); Phone Directories Co. v. Contel Corp., 786 F.Supp. 930 (D.Utah 1992) (test for venue under Clayton Act is whether parent had sufficient control to influence and control acts of subsidiary of type that might violate antitrust laws); cf. also United States v. USX Corp., 68 F.3d 811, 823 n. 23 (3d Cir.1995) (citing cases holding, variously, that parent is liable under CERCLA for actions of a subsidiary or controlled company when parent has actual and pervasive control or, at least, authority to control subsidiary's decisions leading to CERCLA violation.) 41 CBS does not allege that C&W had such control. The complaint states only that C&W and CCC were involved in a joint project; they had engaged in discussions and negotiations regarding their planned relationship; and a C&W representative was a member of CCC's Board of Directors. (p 44) Only the last point indicates that C&W had any influence in the affairs of CCC, and even it does not suggest the type of day-to-day control we think necessary to identify an investor so closely with the company in which it has invested as to make it a competitor of that company's rivals. 42 In sum, CBS does not allege that C&W had substantial control over CCC. Therefore, Count XI of the complaint fails to state a claim against C&W for denial of access to an essential facility. 43