B2B Exchanges Attract Glare of US Trade Commission Examination

While admitting it is still too early to identify the antitrust implications of online B2B exchanges, the US Federal Trade Commission (FTC) has released a report examining anticompetitive concerns.

In a warning to market players the FTC report said anticompetitive concerns "are more likely to be magnified" where three conditions exist.

They are: a high aggregate market share for the participants in an industry-specific B2B exchange; a high level of restraints on processing supply-chain transactions outside the exchange; and limits on interoperability with other Internet-based marketplaces.

FTC chairman Robert Pitofsky said exchanges with high levels of industry ownership or substantial minimum-purchase requirements are "likely to draw a closer look".

Commenting on the Covisint auto-exchange developed by Ford Motor, General Motors and DaimlerChrysler AG, FTC members said it is too early to determine if the venture has future antitrust implications.

However, members admitted Covisint's founders "represent such a large share of the automobile market" there is potential for concern.

The report is the result of a two-day public workshop featuring 65 panellists to examine traditional antitrust questions in the context of new B2B technology.

While many of the efficiencies offered by e-marketplaces stem from collaboration, the report warns "competition may be affected by the extent to which information is shared".

This is critical in an exchange that permits its participant owners, such as those with seats on the B2B's board of directors, access to sensitive data about rivals, the report said.

The report identifies the need to scrutinise information-sharing agreements to ensure a market was not susceptible to collusion by misusing future pricing information or details about a rival's business.

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