To B2B or not ??
U.S. regulators to probe B2B anti-trust issues
By Siobhan Kennedy
NEW YORK, May 4 (Reuters) - Online business-to-business exchanges will save companies money and boost efficiency, but they raise serious concerns about competition and antitrust laws, the Federal Trade Commission said on Friday.
The FTC, which conducted its first workshop on B2B exchanges last year, will hold its second meeting next week, to specifically address those anti-trust concerns, William Cohen, deputy director of policy planning for the FTC, told Reuters.
The commission will address such thorny issues as the potential for a small number of powerful blue chip companies to get together and use their collective purchasing muscle to drive down, or even fix, prices.
Already one high-profile exchange, Covisint in the automotive industry, has been investigated for exactly that reason. That probe has since been dropped.
``We want to drill down a little further and learn more about the operating rules that might be chosen to set up B2B exchanges that could have some bearing on antitrust laws,'' Cohen said.
When the FTC held its first meeting last year, it highlighted four areas where online exchanges could potentially run into antitrust problems, but it concluded that the market was still too small to issue any specific directives.
``In many instances, the plans were so preliminary that we weren't able to get to a level of detail where we felt comfortable,'' Cohen said. ``Now we want to learn how those issues have panned out and how the exchanges have gone about dealing with them,'' Cohen said.
FOUR AREAS STILL POTENTIAL PROBLEMS
Cohen said the same four areas -- information-sharing agreements, joint purchasing, exclusionary practices and exclusivity -- were still potential problem areas a year on.
He highlighted information exchange, where sensitive company data could end up being seen by competitors, as a particular concern.
``Rules need to be put in place to determine what type of information is being shared, how it's shared and by whom,'' Cohen said.
He also raised concern about other practices, such as exchanges presenting information on a Web site in such a way that it favors the exchange's owners and makes businesses more likely to buy from them.
B2B exchanges sprang to life last year with the bold promise of saving companies millions of dollars by enabling them to connect with suppliers to buy goods at discounted prices over the Web.
But a lack of demand from buyers and sellers, coupled with pressure from the slowing U.S economy, means that many exchanges either never took off, or have since gone out of business.
Of the 1,000 of so exchanges launched in the last 18 months, analyst firm International Data Corp. estimates that only about 100 are actually up and running and doing any business.
Last year, antitrust concerns were brought to the forefront when the FTC said it was looking into the possibility of unlawful price-setting or coordination among buyers and sellers in Covisint, the online automotive exchange set up by Ford Motor Co. (NYSE:F - news), General Motors Corp. (NYSE:GM - news) and DaimlerChrysler AG. , among others.
That case has since been dropped but it still serves to illustrate the key issues at stake, said FTC Commissioner Mozelle Thompson.
``We're curious to see what steps B2B exchanges have taken to shield themselves from those concerns,'' Mozelle said. ``Have some of these B2B structures changed? In which case we might have to look at them differently.''
Jim in Ct .. |
