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Notice

Public Workshop: Competition Policy in the World of B2B Electronic Marketplaces

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Information about this document as published in the Federal Register.

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AGENCY:

Federal Trade Commission.

ACTION:

Notice Announcing Workshop.

SUMMARY:

The Federal Trade Commission (“FTC” or “Commission”) will hold a public workshop on June 29, 2000, to examine issues of competition policy that arise in connection with business-to-business (“B2B”) electronic marketplaces.

DATES:

The workshop will be held on June 29, 2000, and written presentations may be submitted by that date.

ADDRESSES:

The workshop will be held in Room 432 of the Federal Trade Commission Headquarters Building, 600 Pennsylvania Avenue, N.W., Washington, D.C. Any interested person may submit a written presentation that will be considered part of the public record of the workshop. Written presentations should be submitted in both hard copy and electronic form. Six hard copies of each submission should be addressed to Donald S. Clark, Office of the Secretary, Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Submissions should be captioned “Comments regarding B2B Electronic Marketplaces.” Electronic submissions Start Printed Page 30121may be sent by electronic mail to b2bmarketplaces@ftc.gov. Alternatively, electronic submissions may be filed on a 31/2 inch computer disk with a label on the disk stating the name of the submitter and the name and version of the word processing program used to create the document.

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FOR FURTHER INFORMATION CONTACT:

To obtain information about the workshop, please contact Gail Levine, Assistant Director for Policy Planning, Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580, telephone (202) 326-3193, e-mail glevine@ftc.gov.

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SUPPLEMENTARY INFORMATION:

Overview

B2B electronic marketplaces are software systems that allow buyers and sellers of similar goods to carry out procurement activities using common, industry-wide computer systems. Recent weeks have brought numerous announcements of plans to develop B2B electronic marketplaces that link competitors with suppliers willing to meet their purchasing needs. One possible model allows firms to place purchase orders using a joint, industry-wide computer system, with competitors potentially able to aggregate their orders.

B2B electronic marketplaces may create significant efficiencies. For example, the marketplaces could reduce transaction costs; generate volume-related scale economies by combining orders from multiple purchasers; improve inventory management; and facilitate bidding by a broad spectrum of potential suppliers. At the same time, the arrangements may raise certain antitrust issues. Forethought in planning may enable B2B electronic marketplaces to achieve their efficiencies without impairing competition.

The FTC plans to convene a workshop on June 29, 2000, that will bring together designers, owners, and operators of B2B electronic marketplaces, and the buyers and sellers who use or wish to use them, in a session designed to accumulate facts about new B2B exchanges and their likely effects on competition. The goal is to enhance understanding of how B2B electronic marketplaces function and the means by which they may generate efficiencies, and to identify any antitrust issues that they raise. A transcript of the discussions will be publicly available. Interested parties are invited to attend or to submit written presentations.

Specific Questions To Be Addressed

The workshop will seek input from designers, owners, and operators of B2B electronic marketplaces; buyers and sellers who use or wish to use them; and antitrust practitioners and others familiar with the competition issues that B2B electronic marketplaces may raise. It will address the following questions, among others:

What Are the Existing and Likely Models for B2B Marketplaces? How Do They Work? What Can They Do?

1. What are the business reasons driving the creation of B2B electronic marketplaces? What new efficiencies can such marketplaces create?

2. What industries have established B2B electronic marketplaces? How are they faring? What characteristics affect the suitability of any given industry for establishing a B2B electronic marketplace? Are B2B electronic marketplaces being established outside the United States?

3. How are prices determined in B2B electronic marketplaces? Through auctions? Other methods? Do methods of determining price vary when products are customized? How are quantities and other competitive terms determined?

4. Who owns such marketplaces—designers, operators, buyers, sellers, and/or others? What are possible ownership structures? What mechanisms are envisioned for their financing? How is membership determined and by whom?

5. How are B2B electronic marketplace rules established? Who establishes the rules? What types of rules are generally necessary? What factors affect which rules are necessary?

6. How and by whom are B2B electronic marketplaces governed and operated? What are alternative models?

7. How are the owners and operators of B2B electronic marketplaces compensated, and for what services are they compensated? Who determines the compensation?

8. What are likely scenarios for how B2B electronic marketplaces will compete with each other? Does it depend on the industry involved? Do buyers or sellers participate in more than one B2B electronic marketplace in a particular industry? Are there situations in which network effects may dictate that a single B2B electronic marketplace dominate a particular industry? Why are some B2B electronic marketplaces consolidating now?

9. In a B2B electronic marketplace, what can participants discover about each other's actions? Who can see transaction or bid prices or quantities? Who receives information about available capacity?

10. Is there advertising in B2B electronic marketplaces? If so, what type of information is conveyed? Who determines what advertising may be placed?

11. Does the design or operation of B2B marketplaces raise issues relating to intellectual property rights?

Buyer Perspectives

1. What business reasons prompt buyers to be interested in purchasing through B2B electronic marketplaces? For example, what savings do buyers anticipate from the use of such marketplaces? How were purchases made before the availability of such marketplaces? Are buyers based outside the United States participating in such marketplaces?

2. What are the sources of the expected savings? Are savings expected to come from reductions in transaction costs? From volume-related scale economies? From inventory reductions? From the ability to do business more readily with distant sellers? From the ability to compare prices more easily? From other sources?

3. What factors affect the desirability of purchasing through a B2B electronic marketplace and the extent of likely electronic marketplace usage? Does it matter whether the product at issue is homogeneous or differentiated?

4. Does it make a difference to buyers who owns or operates the B2B electronic marketplace? If so, why? How do buyers decide in which marketplaces to participate? What factors affect participation decisions?

5. Are there any factors other than price and other competitive terms that will affect buying decisions in B2B electronic marketplaces? For example, how important is a seller's reputation in such a setting?

6. What role do computer programs play in comparing prices or other competitive terms or in authorizing purchases in B2B electronic marketplaces?

7. What information, if any, can buyers receive about each other's purchases? Does complexity of the product affect the answer?

8. What rules do buyers typically want to govern B2B electronic marketplace solicitations? Are there circumstances when buyers wish to limit the number or identity of bidders or otherwise structure auction procedures?

9. Do B2B electronic marketplaces require participants to purchase minimum quantities or minimum Start Printed Page 30122percentages of their needs through the exchange? Are there circumstances when it is likely to make business sense for a buyer to participate solely in one B2B electronic marketplace? What factors are relevant to whether a buyer participates in multiple B2B electronic marketplaces selling similar products?

10. What consequences can be expected to follow from a decision to join, or not to join, a B2B electronic marketplace? Do B2B electronic marketplaces have implications for wholesalers or other middlemen? For long-term contracting?

Seller Perspectives

1. What business reasons prompt sellers to be interested in selling through B2B electronic marketplaces? For example, what savings do sellers expect to gain through such marketplaces? How were sales made before the availability of such marketplaces? Are sellers based outside the United States participating in such marketplaces?

2. What are the sources of the expected savings? Are savings expected to come from reductions in transactions costs? From volume-related scale economies? From inventory reductions? From the ability to do business more readily with distant buyers? From other sources?

3. What factors affect the desirability of transacting business through B2B electronic marketplaces and the extent of likely electronic marketplace usage? Does it matter whether the product at issue is homogeneous or differentiated?

4. Does it make a difference to sellers who owns or operates the B2B electronic marketplace? If so, why? How do sellers decide in which marketplaces to participate? What factors affect participation decisions?

5. Are there any increased costs to sellers of doing business in B2B electronic marketplaces? Are any distribution costs increased? What effects will B2B electronic marketplaces likely have on sellers' profit margins?

6. Do sellers see competitors' prices posted on B2B electronic marketplaces? If so, how do sellers respond? What role do computer programs play?

7. What other information, if any, do B2B electronic marketplaces make available to sellers about competing sellers? For example, can sellers receive information about competitors' available capacity?

8. What rules do sellers typically want to govern B2B electronic marketplace solicitations? Are there circumstances when sellers may wish to limit the number or identity of possible purchasers or otherwise structure auction procedures?

9. Must a minimum level or percentage of sales be made through a B2B electronic marketplace in which a seller participates? Do B2B electronic marketplaces impose any other requirements affecting participants' outside sales?

10. What consequences can be expected to follow from a decision to join, or not to join, a B2B electronic marketplace? Do B2B electronic marketplaces have implications for wholesalers or other middlemen? For long-term contracting?

Public Policy Perspectives

1. What competition issues may be raised by B2B electronic marketplaces? What are likely procompetitive benefits, and what are possible anticompetitive concerns?

2. Under what circumstances are B2B electronic marketplaces likely to increase or diminish competition? What has the experience been so far?

3. How do B2B electronic marketplaces affect entry at the buyer or seller level? How does entry occur in the market for B2B electronic marketplaces?

4. What issues are relevant to structuring and implementing B2B electronic marketplaces so as to both realize efficiencies and avoid competition problems? For example, what mechanisms might be included to prevent inappropriate sharing of competitive, confidential information? Are any of these mechanisms likely to be impractical or undesirable from a business perspective?

5. Does the development of competition within and among B2B electronic marketplaces depend in part on any intellectual property rights relating to the design or operation of such marketplaces?

6. What implications, if any, do B2B electronic marketplaces have for market structure and market concentration?

The Commission welcomes suggestions for other questions that also should be addressed. Proposed questions, identified as such, may be sent by electronic mail to b2bmarketplaces@ftc.gov.

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By direction of the Commission.

Donald S. Clark,

Secretary.

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[FR Doc. 00-11604 Filed 5-9-00; 8:45 am]

BILLING CODE 6750-01-P