In order to facilitate effective competition in some markets, it may be necessary to ensure businesses can access the services of certain infrastructure owned and operated by others. Such infrastructure - often referred to as `bottleneck facilities’ - includes electricity grids, telecommunication networks, rail tracks, gas pipelines, ports and airports.
Bottleneck facilities can be inefficient to duplicate and access to these facilities on reasonable terms and conditions may be vital for competition to occur in related markets. National Competition Policy (NCP) established the National Access Regime (Part IIIA of the Trade Practices Act 1974 and clause 6 of the Competition Principles Agreement) as a legal avenue for potential market entrants to access bottleneck facilities.
For example, effective competition in the electricity supply market may require that generators and distributors have access to the electricity transmission network. Where the owner of this facility is not competing in downstream or upstream markets, it will usually have little incentive to deny access, although, it may charge higher prices than if it was operating in a more competitive market. An access regime can be used to restrain prices in these circumstances.
Where the owner is competing in downstream or upstream markets, it has an incentive to restrict access to the facility and charge monopoly prices for that limited access. The prospect of such behaviour may be sufficient to deter entry to, or limit vigorous competition in, these markets. An access regime can address these issues.
The National Access Regime outlines three pathways for a third party to seek access to essential infrastructure if agreement cannot be reached through commercial negotiation:
