FTC Terminates HSR Waiting Period for Covisint B2B Venture

The Federal Trade Commission today informed the founders of the proposed Covisint business-to-business (B2B) venture that the Commission has closed its investigation of whether the formation of Covisint violates Section 7 of the Clayton Act and has terminated the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act ("HSR").

In notifying the parties of its action, the Commission noted that, because Covisint is in the early stages of its development and has not yet adopted bylaws, operating rules, or terms for participant access, because it is not yet operational, and because its founders represent such a large share of the automobile market, the Commission cannot say that implementation of the Covisint venture will not cause competitive concerns. In view of this, the Commission reserved the right to take such further action as the public interest may require.

Covisint is the first B2B venture to be reviewed by the Commission. It is a proposed joint venture that plans to operate an internet-based business-to-business exchange providing services for firms in the automotive industry supply chain. The venture's core offerings will include services to assist in product design, supply chain management and procurement functions performed by auto manufacturers and their direct and indirect suppliers.

The firms intending to form Covisint are five automotive manufacturers -- General Motors Corp., Ford Motor Co., DaimlerChrysler AG, Renault SA, and Nissan Motor Co. Ltd. -- and two information technology firms -- Commerce One, Inc. and Oracle Corporation. The auto manufacturers involved in founding the planned venture account for roughly one-half of total worldwide auto production.

The parties to the proposed Covisint transaction made HSR filings in June 2000 and completed their response to the Commission's requests for further information in late August.

FTC Chairman Robert Pitofsky stated, "As we learned at the FTC's workshop in June, B2B electronic marketplaces offer great promise as means through which significant cost savings can be achieved, business processes can be more efficiently organized, and competition may be enhanced. B2Bs have a great potential to benefit both businesses and consumers through increased productivity and lower prices. Of course, as is the case with any joint venture, whether in the traditional or new economy, B2Bs should be organized and implemented in ways that maintain competition. The antitrust analysis of an individual B2B will be specific to its mission, its structure, its particular market circumstances, procedures and rules for organization and operation, and actual operations and market performance."

The Commission vote to close the investigation was 4-0 with Commissioner Thomas B. Leary not participating.