Yesterday afternoon the Federal Trade Commission gave its blessing to Covisint, the B2B venture in the auto industry. For the last few months the FTC has scrutinized the proposed exchange for possible anti-trust violations of Section 7 of the Clayton Act while the Big 3 Automakers, Renault/Nissan, Commerce One and Oracle waited nervously.
Of course, Covisint officials are full of glee at this announcement. The completion of the FTC review represents a significant milestone in our efforts to establish a transformational business-to-business entity, said Alice Miles, Covisint Executive Planning Team. After a thorough investigation, the FTC understood that the parties forming Covisint have always intened to operate in full compliance with the anti-trust laws, she added.
Not Out of the Woods Yet
Covisint was the first of its kind to be reviewed by the feds. In its announcement, the FTC noted that because the exchange is in the early stages of development and has not yet adopted by-laws, operating rules, or terms for participant access, because it is not yet operational, and because its founders represent such a large share of the automobile market, the commission cannot say that that the venture will not cause competitive concerns down the road.
Additionally, Covisint still has to pass muster with the Bunderskartellamt (BKA), the German governments anti-trust regulatory body. Once that hurdle is cleared, the exchange can begin global operations.
The Lessons of June
FTC Chairman, Robert Pitofsky stated, As we learned at the FTCs workshop in June, B2B electronic marketplaces offer great promise as means through which significant cost savings can be achieved, business processes can be more efficiently organized, and competition may be enhanced. B2Bs have a great potential to benefit both businesses and consumers through increased productivity and lower prices. Of course, as is the case with any joint venture, whether in the traditional or new economy, B2Bs should be organized and implemented in ways that maintain competition. The anti-trust analysis of an individual B2B will be specific to its mission, its structure, its particular market circumstances, procedures and rules for organization and operation, and actual operations and market performance.
With the FTCs blessing, Covisint appears poised to become one of the largest B2B exchanges on the globe. Now if they can just get the suppliers to agree to come on board&
Source: FTC
