New economy challenges old laws

Increases in B2B exchanges in the "new economy" have created a number of legal challenges, especially in relation to the laws regarding competitive practices, according to law firm Baker & McKenzie. A spokesman for the firm said concerns about B2B centre on the speed and ease with which companies are able to communicate with each other as well as the tendency for long time "rivals" to act collaboratively.

In the US, B2B exchanges now account for about $US150 billion in annual sales and worldwide they are expected to handle sales of more than $US2000 billion by the year 2004. Although Australian data is harder to pin down, the corProcure B2B exchange that was formed last year is expected to carry out business worth around $US8 billion in 2001.

Baker & McKenzie believes the potential for competition law problems to arise will depend on how B2B exchanges are organised, the extent and type of information exchanged as well as whether the market involves joint selling or joint buying and if there are multiple B2B exchanges in the relevant market.

One of the key threshold issues that needs to be determined is whether the parties to these B2B exchanges can be rightly said to be competitors, the spokesman said. If the parties are competitive amongst each other, then prohibitions against price fixing and arrangements containing exclusionary provisions need to be considered carefully.

It is also important to remember that parties may be considered to be competitive with each other not only on the supply side but also on the demand side, the Baker & McKenzie spokesman explained. "That is, parties may be considered to be competitors for the acquisition of goods or services".

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