[Federal Register Volume 65, Number 91 (Wednesday, May 10, 2000)]
[Notices]
[Pages 30120-30122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11604]


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FEDERAL TRADE COMMISSION


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

AGENCY: Federal Trade Commission.

ACTION: Notice Announcing Workshop.

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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

[[Page 30121]]

may be sent by electronic mail to [email protected]. 
Alternatively, electronic submissions may be filed on a 3\1/2\ 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.

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 
[email protected].

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

[[Page 30122]]

percentages 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 [email protected].

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 00-11604 Filed 5-9-00; 8:45 am]
BILLING CODE 6750-01-P