One estimate puts the number of B2B marketplaces currently in existence at over 700, with a growth to 5000 within 2 years, while Jupiter Research has estimated that up to 1500 such marketplaces are currently in existence. Marketplaces serving the aeronautics, automobile, farming, consumer products, paper, medical products and retailing industries have been announced or are already operating. The rush to develop exchanges that promise lower procurement costs, lower cost of goods, and efficiencies in developing and marketing products has enabled many marketplaces to develop without much attention to potential anticompetitive problems.
In their rush to market these marketplaces failed to realize or acknowledge that many of the business models they are trumpeting violate the Sherman Act's restrictions on information sharing and collusion. Transparent systems allow buyers and sellers to monitor others' transactions, prices, and quantities. An industry led marketplace that controls a substantial segment of a market would allow sellers and buyers to collude to set prices, gain access to information none would have access to on their own, and the ability to exercise monopsony power. This Note examines the FTC's recent review of Covisint, an automotive B2B marketplace, and highlights the potential pitfalls industries face developing similar exchanges.
Anticompetitive Concerns of Internet Bases B2B Marketplaces: Information Sharing, Collusion and Monopsony Power,
53 Hastings L.J. 965
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