U.S. Government Embarks on B2B Learning Process

WASHINGTON (06/30/2000) - A two-day U.S. Federal Trade Commission (FTC) workshop that concluded Friday illustrated that the U.S. government is taking an open and cautious approach to regulatory issues raised by B2B (business-to-business) electronic exchanges.

The goal of the workshop was not to develop any recommendations, but to begin gathering facts and listen to businesses, lawyers, consumer advocates and educators about the government's competition policy in the world of B2B electronic marketplaces.

Susan DeSanti, director of policy planning at the FTC and moderator of the final panel discussion on the implications of B2B on competition policy, drew the workshop to a close saying, "The FTC is taking a deep breath and beginning a learning process about B2B."

FTC Chairman Robert Pitofsky opened the workshop Thursday, urging the builders of B2B exchanges to think through potential marketplace competition issues in their emerging industry. Potential antitrust issues loom over the buildup of the B2B e-marketplace, Pitofsky said.

Before Friday's final panel, FTC Commissioner Thomas Leary said the agency was beginning its examination of B2B using antitrust principles that have applied to U.S. commerce for decades.

"I think the issues in the B2B area are the same kinds of issues that we've dealt with in joint venture analysis as long as I've been practicing law," Leary said. The Sherman Antitrust Act -- the cornerstone of U.S. antitrust law -- and the law that established the FTC have survived and, over the years, come to be interpreted in a more nuanced and sophisticated way, he added.

"Those nuances have not been driven by technological change so much as increasing economic sophistication and an increasing appreciation of the way the system really works," Leary said.

Many of the panelists, including several antitrust lawyers, urged the FTC to approach B2B by applying the rules that everyone already knows. Most panelists agreed that B2B is not inherently anticompetitive, but they said it was important that the FTC play a role in shaping the future of B2B.

Panelists also gave examples of potential problems that will require FTC vigilance, including collusion that might be disguised as information sharing between companies, especially in situations where two or more companies own the exchange and profit from it. They also warned of noncompetitive situations, monopoly power and exclusive deals.

Harry First, antitrust bureau chief in the New York state attorney general's office, said the issues that will arise will be very "situation-specific," but enforcement officials will have the advantage of the efficiency and the openness of the Internet to help them keep watch.

"If you find competitors show up at Yankee Stadium and happen to sit next to each other, you might not think so much of it, but when they build Yankee Stadium and they build the sky box and only allow three of them in, at that point, as an enforcer you tend to become a little more concerned with what's going on," First said.

Among the many other panelists, Albert Foer, president of the American Antitrust Institute, said the workshop helped identify a lot of issues.

However, it will take a long time before regulators are able to prioritize the issues and decide which ones need to be resolved so that other things can happen and which issues can be left for the marketplace or litigation to work out, he added.

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