FRAMINGHAM (08/09/2000) - Trade-Ranger, a business-to-business (B2B) marketplace formed last April by 14 oil refiners and Mitsubishi Corp., has won government approvals, allowing it to start processing transactions next month.
Both the U.S. Federal Trade Commission and the European Union have raised antitrust concerns about online exchanges. Consequently, many of the planned B2B exchanges, including one for the automotive industry, found themselves subject to sometimes unexpected regulatory review, delaying their start.
This week, though, Trade-Ranger said it has passed muster with the FTC and EU, allowing it to open for business in earnest this September.
"We are the first to make it through the process," declared Peter Lamell, joint chief executive of Trade-Ranger who is also vice president of the Shell Oil Co.
Internet e-commerce division. He expects Trade-Ranger to go forward without further investigation.
Lamell notes that Trade-Ranger's legal staff "proactively" went to the FTC and the EU mergers task force about a month ago to submit paperwork and discuss any antitrust concerns.
According to Lamell, both FTC and EU officials expressed the need to have adequate security practices in place to protect sensitive data about purchases, and to ensure that sensitive data not be disclosed to buyers and sellers.
Though Trade-Ranger is owned by a veritable who's-who of the oil industry, the exchange will act as an independent and neutral operation, Lamell emphasized.
Trade-Ranger, originally called the Energy and Petrochemical Procurement Exchange, has 14 founding members. They include Royal Dutch/Shell Group, BP Amoco PLC, Conoco, Dow Chemical Co., Equilon Enterprises, Mitsubishi, Motiva Enterprises, Occidental Petroleum, Phillips Group Inc. Petroleum, Repsol YPF, Statoil, Tosco, TotalFinaElf and Unocal.
Together, they have made an investment of several million dollars in Trade-Ranger, though the exact figure isn't public, Lamell said.
Collectively, Trade-Ranger members spend about $125 billion for oil drilling and refining tools and services, plus office supplies.
The exchange selected the Commerce One Inc. MarketSite catalog and transaction software as the e-commerce technology platform.
Many of the announced trade exchanges say they plan to earn revenues by charging the seller a percentage of each sale. Though Trade-Ranger is still finalizing its business model in this regard, Lamell promised the petrochemical exchange isn't going to make it hard on sellers.
Now that it's gotten regulatory approvals, one of the biggest challenges for Trade-Ranger will be to build a critical mass of sellers. Business is done mainly through fax or phone today, though some of the oil giants, including Shell, have started to operate corporate Web sites for processing transactions.
Shell has no current plans to cease processing Web-based transactions through its own site, but does regard Trade-Ranger as a step forward.
"This has previously been done one-to-one with the seller, but Trade-Ranger will transform how the petrochemical industry buys and sells," Lamell insists.
"It will be almost like we had separate telephone lines to each other before, but now we have the equivalent of a telephone network. It will reduce the costs of doing business."
A central effort underway at Trade-Ranger is defining the technical specifications for e-catalog content, which sellers will have to update regularly to the Commerce One MarketSite platform.
In addition, it's expected that buyers will have so-called "buying tools" from Commerce One that will let authorized purchasers download specific catalog content and make purchases. Eventually, there may also be online auctions as well.
In all cases, "we're going to make sure that one buyer can't see the pricing of another buyer," Lamell said.