Anti-trust and Competitive Issues in B2B Trading Exchanges: Covisint Inc. Harvard Case Solution & Analysis

In February 2000, DaimlerChrysler, Ford Motor Co and General Motors Co. have jointly announced plans to join forces and create a global online business-to-business (B2B) exchange. The purpose of the exchange is to provide original equipment manufacturers and suppliers with the ability to reduce costs in their supply chains and to bring the efficiency of their business operations. A few months after the announcement, Renault SA, Nissan, Japan and a number of top-tier automotive parts suppliers have expressed their support and plans to join the exchange. The founders came up with the name "Covisint" for exchange. In July 2000, the Federal Trade Commission (FTC) in Washington, DC, opened an investigation into the structure and mission of Covisint, to investigate possible antitrust implications. FTC was aware that the founders of Covisint represented a large share of the car market. Given the influence of the big players, FTC worried that small companies can be excluded from the market and that the exchange can provide a channel for the transmission of confidential information improperly between participants. Covisint B2B company was the first to be considered by the FTC. Outcome of the case and the issues raised has caused a broad discussion on how, or, B2B industry should be regulated by antitrust provisions. The case also expressed concern for companies that intend to invest or participate in B2B marketplaces. "Hide
by Ali F. Farhoomand, Maria Ho, Phoebe Ho Source: University of Hong Kong, 3 pages. Publication Date: July 12, 2002. Prod. #: HKU205-PDF-ENG

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