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e-Commerce Collusion? The Trustbusters Take Aim
The Federal Trade Commission likely will regulate those business-to-business Web portals, but how much?
Electric utility executives may be a step behind the Internet revolution, but in one key respect they may have an advantage over anyone else building an e-commerce Web portal for business-to-business (B2B) procurement.
Utility executives don't fear government regulation. They're already caught in the net.
That affinity may in fact prove downright useful. Consider the comments and reactions heard in Washington, D.C. in late June, when business leaders from around the country gathered with government regulators at the U.S. Federal Trade Commission to share ideas on how to avoid collusion and ensure fair trade when industry competitors collaborate in e-commerce ventures.
The public workshop, "Competition Policy in the World of B2B Electronic Marketplaces," took place less than three months after the FTC had issued new antitrust guidelines for evaluating "collaborations among competitors," including joint ventures and strategic alliances. In that action, taken on April 7, the FTC had referred specifically to purchasing collaboratives to centralize procurement. It said such deals could "facilitate collusion" by standardizing costs or enhancing a competitor's ability to "monitor a participant's output level through knowledge of its input purchases."
And at the workshop itself, the discussions revealed a definite concern for antitrust issues and a leaning by the participants and hosts alike toward regulatory oversight.
Susan S. DeSanti, director of policy planning at the FTC, set the tone in her opening remarks. "B2B e-marketplaces offer opportunities for substantial productivity-increasing effects, but also raise concerns. Collusion, monopsony, and exclusionary conduct preceded the e-commerce revolution and will no doubt succeed it as well," she said.
Certainly, the possibility of the FTC taking a more active role in overseeing B2B platforms is of particular interest for the many e-procurement ventures by the electric utilities industry. In one of the earliest such ventures, for instance, PG&E Corp. and 20 other major energy companies created the Pantellos Corp. to operate and manage an open, independent Internet marketplace for the purchase of goods and services between the energy industry and its suppliers.
FTC rulings on e-commerce marketplaces also might affect the scores of energy trading platforms being built by utilities and power marketers. For example, Aquila Energy (a subsidiary of UtiliCorp United), Duke Energy, American Electric Power, El Paso Energy, Reliant Energy, and Southern Company Energy Marketing (a unit of Southern Co.) have entered into an agreement to purchase an equity position in Intercontinental Exchange, an independent online market for energy and metals.
In addition, Williams and Dynegy formed an energy-trading platform named E-Speed, while Enron and Coral Energy, an affiliate of Shell, built Internet-based transaction systems for customers to buy and sell energy-related products directly with them. Then there are the scores of independent e-commerce energy trading exchanges such as Altrade, Houston Street, Red Meteor, and the Intercontinental Exchange.
And new platforms are being created all the time. American Electric Power, Carolina Power & Light, Duke Energy, and Unicom will launch an independent Internet-based exchange that offers a single gateway, or portal, for arranging electric transmission capacity.