01-7784. Public Workshop: Emerging Issues for Competition Policy in the World of E-Commerce

AGENCY:

Federal Trade Commission.

ACTION:

Notice announcing workshop.

SUMMARY:

The Federal Trade Commission (“FTC” or “Commission”) will hold a public workshop on May 7 and 8, 2001, to examine selected competition policy issues that arise in connection with business-to-business (“B2B”) and business-to-consumer (“B2C”) electronic commerce. Interested parties are invited to attend or to submit written presentations.

DATES:

The workshop will be held on May 7 and 8, 2001. It will be open to the public, without fee, and advance registration is not required. Seats in the workshop room will be available on a first-come, first-served basis; some overflow seating will be available. Written presentations may be submitted through May 21, 2001.

ADDRESSES:

The workshop will be held in Room 432 of the Federal Trade Commission Headquarters Building, 600 Pennsylvania Avenue, NW., Washington, DC. Any interested person may submit a written presentation that will be considered part of the public record of the workshop. Written presentations should be submitted in both hard copy and electronic form. Six hard copies of each submission should be addressed to Donald S. Clark, Office of the Secretary, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580. Submissions should be captioned “Comments regarding E-Commerce Antitrust Issues.” Electronic submissions may be sent by electronic mail to [e-mail]. Alternatively, electronic submission may be filed on a 31/2 inch computer disk with a label on the disk stating the name of the submitter and the name and version of the word processing program used to create the document.

FOR FURTHER INFORMATION CONTACT:

To obtain information about the workshop, please contact Gail Levine, Assistant Director for Policy Planning, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580, telephone [phone], e-mail [e-mail]. A detailed agenda and additional information relating to the workshop will be posted on the Commission's web site, www.ftc.gov/​opp/​ecommerce,, in advance of the workshop.

SUPPLEMENTARY INFORMATION:

Overview

In June 2000, the FTC held a public workshop on B2Bs entitled “Competition Policy in the World of B2B Electronic Marketplaces.” In October 2000, FTC staff issued a report, available at www.ftc.gov/​bc/​b2b/​index.htm,, that summarized the workshop and laid the foundation for understanding how to answer traditional antitrust questions in the context of new B2B technology.

The May 2001 workshop will build upon and extend that foundation. It will be divided into two sessions. The May 7 session will invite antitrust practitioners, economists, and business representatives to examine B2B mergers, interoperability, and operating rules against the background of specific hypotheticals. The goal is to elicit more detail about varying approaches to competition issues that may be raised by B2Bs and to analyze certain issues not addressed at the June 2000 workshop. Among other things, the hypotheticals will invite discussion of competitive effects of mergers and acquisitions among B2Bs and exchange-to-exchange interoperability. The hypotheticals will be available at www.ftc.gov/​opp/​ecommerce before the workshop.

The May 8 session redirects the focus to selected competition issues that are beginning to emerge in B2C contexts. Rather than debating familiar, long-standing issues, the session will focus on new fact patterns and selected competition policy issues that may arise in distribution and marketing over the Internet, in conjunction with or in comparison to offline commerce. It will explore such issues as price and promotional coordination between online and offline distribution channels, sole online distributorships, exclusive dealing over the Internet, and the role of information-collection technologies in online distribution. The goals will be to gain a better understanding of online distribution and marketing competition and to begin to develop a framework for assessing antitrust issues arising in those contexts.

A transcript of the discussions at the workshop will be publicly available after the workshop at www.ftc.gov/​opp/​ecommerce.

Specific Questions To Be Addressed

May 7 Session: B2B Mergers, Interoperability, and Operating Rules

The hypotheticals will raise competition issues involving B2Bs, including the following:

Mergers

What is the relevant market for purposes of analyzing the effects of a merger of B2Bs on competition in offering marketplace services? The market for online marketplaces? The market for marketplaces, whether online or offline? Another market? What facts are needed to address these questions?

Who are participants in the relevant market? Is entry likely? What facts are needed to address these questions?

What are likely adverse competitive effects of a merger of B2Bs in the market for marketplaces? In the market(s) for goods traded on B2Bs (or for the goods derived from them)? What facts are needed to address these questions?

What efficiencies are likely to be accomplished with a merger of B2Bs? Are the supply-side or demand-side scale economies to be gained through such a merger? Are these merger-specific efficiencies, or are there practical alternatives, in the business situation faced by the merging B2Bs, that could mitigate competitive concerns? What facts are needed to address these questions?

How, if at all, do the financial pressures faced by B2Bs today effect the analysis? What additional facts are needed to address this issue?

Interoperability

How does interoperability among B2Bs work, as a practical matter? Do interoperable B2Bs share fees or other resources?

What factors are relevant to ascertaining the likely effect of an interoperability agreement on the ability and incentive of B2Bs to compete? How does an interoperability agreement affect incentives to lower price, increase quality and service, and innovate?

What are the procompetitive benefits of interoperability agreements? What factors are relevant to this analysis?

Operating Practices

What B2B information-sharing practices may facilitate collusion? What safeguards could—or should—be erected to avoid such collusion. Which safeguards are most effective? Are there practical problems with implementation of certain safeguards? Do some types of safeguards interfere with the achievement of efficiencies? If so, why and in what circumstances? What are reasonable audit mechanisms for ensuring that safeguards are actually working?

How can efficient joint purchasing be distinguished from the improper exercise of monopsony power in a B2B? What factors are relevant to this analysis?

What B2B practices have the potential to harm competition by excluding competitors? What are the countervailing efficiencies of such parties?

May 8 Session: Online Distribution and Marketing

What are the benefits of online distribution and marketing (“online distribution”) to manufacturers and traditional offline retailers? What are the costs of setting up an online distribution system? What problems do moderately-sized manufacturers or retailers face in developing online distribution systems?

How have relationships been structured between manufacturers or offline retailers, on the one hand, and online distributors, on the other? What factors determine whether the online distributor is fully or partially owned by a manufacturer or offline retailer? What factors determine whether an online distributor is set up as competitor collaboration? What factors affect whether the online distributor is established as a principal or agent?

How have online distributors and the manufacturers they serve coordinated their marketing efforts? How have offline distributors and their associated, online counterparts coordinated their marketing activities? Under what circumstances have they coordinated pricing, advertising, or advertised pricing? Under what circumstances have they allocated business opportunities? What are the justifications for coordination? What are the relevant competition issues? How should dual distribution in these contexts be assessed?

Under what circumstances have manufacturers prohibited online distribution of their products or confined it to specific web-sites? What are the business justifications? How have the limitations been enforced? What are the relevant competition issues?

Under what circumstances have manufacturers contracted with Internet service providers or search engines for exclusive or preferential treatment of a manufacturer's products? Under what circumstances have manufacturers contracted with online retailers for exclusive or preferential treatment of a manufacturer's products? What are the efficiencies associated with such practices? What factors are relevant to determining whether such exclusive or preferential arrangements are likely to cause anticompetitive harm? How do efficiencies and other factors differ between online and offline distribution?

What steps have offline distributors taken in opposing online distribution? Have joint activities been involved? What is the role of state law? What are the relevant competition issues?

To what extent are shopbots or other information-collection technologies used to gather data from online distribution systems? What are the likely benefits of such technologies? Have on-line distributors limited access such technologies to their data? How? What are the business justifications for such limitations? What are the relevant competition issues?

The Commission welcomes suggestions for other questions that also should be addressed. Proposed questions, identified as such, may be sent by electronic mail to [e-mail].

By direction of the Commission.

Donald S. Clark,

Secretary.