[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3590 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 3590

    To require operators of electronic marketplaces to disclose the 
  ownership and financial arrangements of such marketplaces to market 
                 participants, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 20, 2001

   Mrs. Maloney of New York introduced the following bill; which was 
            referred to the Committee on Energy and Commerce

_______________________________________________________________________

                                 A BILL


 
    To require operators of electronic marketplaces to disclose the 
  ownership and financial arrangements of such marketplaces to market 
                 participants, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Electronic 
Marketplace Ownership Disclosure Act''.
    (b) Findings.--The Congress finds the following:
            (1) The phenomenal economic expansion that our nation 
        experienced during the last decade was fueled by advances in 
        information technology and the development of the Internet.
            (2) Today, consumers and businesses routinely participate 
        in new online marketplaces.
            (3) Certain Internet exchanges purporting to provide 
        neutral marketplaces for the exchange of goods and services are 
        actually owned by marketplace operators with interests in the 
        transactions taking place on the exchanges.
            (4) Certain Internet exchanges have made business 
        arrangements with sellers without disclosing the existence of 
        those arrangements to the consumers.
            (5) Additional consumer protections are needed to increase 
        public confidence in the Internet.

SEC. 2. DEFINITIONS.

    As used in this Act:
            (1) Electronic marketplace.--
                    (A) In general.--The term ``electronic 
                marketplace'' means an enterprise that--
                            (i) is organized to bring together by 
                        electronic means, on both sides of a 
                        transaction, the offers, bids, or orders of 
                        multiple participants;
                            (ii) is accessible to participants from the 
                        general public, and is not restricted to 
                        licensed or qualified specialists;
                            (iii) lists products and services of such 
                        participants, or provides links or connections 
                        by which access to such lists may be obtained; 
                        and
                            (iv) is operated as a business and collects 
                        compensation from any of such participants as a 
                        condition of participation.
                    (B) Exclusions.--Such term does not include--
                            (i) any securities exchange or national 
                        securities association registered under the 
                        Securities Exchange Act of 1934;
                            (ii) any contract market or derivative 
                        transaction execution facility registered under 
                        the Commodity Exchange Act;
                            (iii) any marketplace that is operated for 
                        the conduct of retail transactions by a single 
                        vendor, even if that vendor sells or offers the 
                        products or services of multiple providers of 
                        such products or services; or
                            (iv) any marketplace on which the total 
                        annual volume of transactions is less than 
                        $10,000,000, or such other marketplaces as may 
                        be excluded from such term by the regulations 
                        prescribed under section 3 on the basis of such 
                        factors as minimum transaction volume or size, 
                        minimum number of transactions, or minimum 
                        number of market participants over a designated 
                        period of time, or other relevant factors.
                    (C) Open to public.--A marketplace shall not be 
                considered to be restricted to licensed or qualified 
                specialists under subparagraph (A)(ii) merely because 
                such marketplace requires participants from the general 
                public to register and to disclose identifying or 
                financial information prior to participating.
            (2) Commission.--The term ``Commission'' means the Federal 
        Trade Commission.
            (3) Affiliate.--The term ``affiliate'' means any company 
        that directly or indirectly controls, is controlled by, or is 
        under common control with another company.

SEC. 3. ELECTRONIC MARKETPLACE DISCLOSURE REGULATIONS.

    (a) Disclosure Required.--The Commission shall prescribe rules in 
accordance with this section to prohibit unfair and deceptive acts and 
practices in the operation of an electronic marketplace by requiring 
the operator of such market to disclose the following:
            (1) Ownership disclosures.--The operator of an electronic 
        marketplace shall disclose--
                    (A) the identity of any affiliate of such 
                marketplace; and
                    (B) contact information, or a website link, from 
                which a marketplace participant may obtain additional 
                information about such affiliates.
            (2) Disclosure of financial arrangements business 
        arrangements with market participants.--The operator of an 
        electronic marketplace shall disclose--
                    (A) the usual or customary financial arrangements 
                under which the largest portion of marketplace 
                participants are permitted to participate;
                    (B) any unusual or special financial arrangements 
                under which a smaller number of marketplace 
                participants are accorded special privileges or other 
                benefits in their marketplace participation; and
                    (C) the identity of any persons or entities with 
                which the operator has an arrangement described in 
                subparagraph (B).
    (b) Clear and Conspicuous Disclosure.--
            (1) Required disclosures.--The regulation prescribed under 
        this section shall require that the disclosures required by 
        subsection (a)--
                    (A) be clear and conspicuous to electronic 
                marketplace participants;
                    (B) to the extent possible, be stated in simple and 
                uncomplicated terms; and
                    (C) be readily accessible to the public through the 
                Internet.
            (2) Exemptions and limitations on disclosures.--The 
        regulations prescribed under this section--
                    (A) shall require that the disclosures be updated 
                at least quarterly; and
                    (B) shall not require the posting or disclosure of 
                the actual contracts with market participants.
    (c) Regulatory Authority.--
            (1) Rulemaking.--The Commission shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this Act.
            (2) Procedures and deadline.--Such regulations shall be 
        prescribed in accordance with applicable requirements of title 
        5, United States Code, and shall be issued in final form not 
        later than 6 months after the date of the enactment of this 
        Act.

SEC. 4. ENFORCEMENT.

    This Act and the regulations prescribed thereunder shall be 
enforced by Commission under the Federal Trade Commission Act.
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