Access to Essential Facilities: Implementing Hilmer

The Hilmer reform process is getting to the difficult implementation stage. Simple solutions such as private negotiations, non-discrimination, and the exclusion of firms from downstream markets which are suggested in the Report all have significant weaknesses. The most preferred solution of privately negotiated outcomes with a fallback to arbitration seems likely to disperse many of the benefits of the reforms. This is especially true if public enterprises subject to considerable government control are privatised. A stronger regulatory hand is required despite the fact that we are unlikely to design a perfect regulatory solution. Auctions for markets or for the use of facilities are the most effective ways of revealing the information needed for regulation.