Price-Fixing Worries Aired at U.S. B2B Seminar

The potential for price fixing in business-to-business (B2B) e-marketplaces was one of many thorny issues addressed Monday and Tuesday in Washington D.C. at a seminar sponsored by the U.S. Federal Trade Commission (FTC).

Lawyers, economists, researchers and business leaders attending the two-day public workshop, entitled “Emerging Issues for Competition Policy in the World of E-Commerce,” also tackled the need for rules governing information sharing among B2B competitors.

FTC deputy director of policy planning William Cohen told the E-Commerce Times that this year’s session is giving participants a better look at the workings of B2Bs than one held last summer, because a number of B2Bs — including automobile e-marketplace Covisint — have gone live in the intervening months.

Worldwide B2B e-commerce revenues reached US$433 billion in 2000, according to a study released in March by Gartner Group.

The topic of mergers drew a great deal of concern at the seminar, according to Cohen, because “a lot of consolidations are happening” and industry experts are predicting more.

Four other potential problem areas addressed in this year’s workshop include information-sharing agreements, joint purchasing, exclusionary practices and exclusivity.

Revisiting E-Marketplaces

When the FTC held its first workshop on B2B e-marketplaces last June, companies in a number of industries — including automotive, aerospace, retail and grocery — had announced their intentions to form industry-sponsored e-marketplaces.

After that meeting, the FTC concluded that even though B2B e-marketplaces could run afoul of U.S. antitrust laws, the market was 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 in published reports. “Now we want to learn how those issues have panned out and how the exchanges have gone about dealing with them.”

B2B Good for Business

Despite anti-competitive concerns, public comments submitted in advance of the seminar were generally pro-B2B, with the consensus being that if B2B e-marketplaces were carefully set up to avoid antitrust issues, then companies could realize tremendous benefits from e-marketplace participation.

“The advent of Internet-based electronic business-to-business exchanges has already revolutionized the way businesses interact in buyer/seller and other transactions,” said Pamela Jones Harbour, a partner in the antitrust division of the Kaye Scholer law firm.

In an analysis of Covisint submitted to the FTC, Harvard Law School student David Bailey wrote, “Covisint avoids duplication of resources and allows smaller firms to enter the electronic marketplace for auto inputs, by utilizing Covisint’s non-exclusive Internet infrastructure.”

Exercise Caution

While B2B marketplaces can help a company reduce costs while increasing efficiency and profitability, Harbour said that “rushing headlong into a B2B venture — whether as a founder or a participant — can lead to potentially serious antitrust consequences.”

Harbour added that “B2B exchanges should strive to seek maximum efficiencies without raising the specter of antitrust risk, a balance that is quite possible to achieve with some forethought and awareness of the existing antitrust risks.”

In addition to comments made during the seminar, Cohen said the FTC would be accepting written comments for two more weeks. After all the material is received, the FTC will evaluate it and decide whether or not to issue a written report.

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