B2B exchanges

The European Commission has given its first judgment on a business-to-business ("B2B") internet marketplace.

On Monday, after a one month investigation, the Commission authorised the creation of a joint venture, MyAircraft.com, an aerospace products and services venture set up by US-based companies United Technologies Corp, Honeywell International Inc. and i2 Technologies.

B2B exchanges are said to account for 80% of all e-commerce. By cutting out the middlemen, costs can be driven down. However there are concerns that some form of B2B exchange could potentially violate competition rules by providing a platform for competitors to fix prices, or rig bids, or exchange price-sensitive or other commercially confidential information, and thus effectively aid anti-competitive collusive behaviour.

The European Commission concluded that the MyAircraft.com operation would not give rise to competition concerns. In particular this exchange faces a high level of competition from other similar web-sites.

The Commission warned, however, that other B2B exchanges could infringe competition rules and the Commission expects to investigate other B2B proposals in the future. An important test case could be Covisint, an automobile parts marketplace which is currently being considered by the US competition authorities. It is expected that the Commission will also receive formal notification of the Covisint venture soon.

So there are important lessons here for any businesses contemplating the setting up of a B2B exchange.

Please contact Sue Hankey or David Marks for further information on the competition aspects of B2B marketplaces or merger controls. Tel 020 7367 3000, Fax 020 7367 2000, E-mail [email protected]

Please contact John Armstrong for advice in relation to the establishment of B2B exchanges and for advice in relation to e-commerce ventures. Tel 020 7367 2701, Fax 020 7367 2000, E-mail [email protected].