From: Adam Rifkin (adam@KnowNow.com)
Date: Tue Sep 12 2000 - 05:17:52 PDT
"Covisint officials have yet to name a chief executive, define who will
own the portal's data -- a potentially valuable trove of purchasing
information -- or devise safeguards to protect suppliers' proprietary
information." I guess they wanted to save the hard stuff for after they
got approval from the antitrust regulators.
> U.S. Approves Formation of Supply Web Site for Automakers
> By CHRISTOPHER MARQUIS, September 12, 2000
> WASHINGTON, Sept. 11 -- Federal antitrust regulators approved today
> the establishment of an online venture that would allow five major
> automakers -- including the top three in America -- to buy supplies
> through a single Internet portal.
> The Federal Trade Commission approved the formation of Covisint,
> the business-to-business Web site, which proponents said would
> streamline the annual purchase of as much as $300 billion in parts
> for the Ford Motor Company, the General Motors Corporation and
> DaimlerChrysler A.G.
> On the proposed site, automakers are expected to list parts they
> seek from suppliers, who will then offer bids to secure a contract.
> The procedure is commonly referred to as a reverse auction.
> In addition, automotive suppliers, who spend $500 billion a year,
> could turn to the site for everything from engine parts to office
> supplies, the proponents said.
> The Nissan Motor Company of Japan and Renault of France are also
> parties to the exchange, as are two information technology
> companies, Commerce One Inc. and the Oracle Corporation. The Toyota
> Motor Corporation is negotiating to join the joint venture,
> Covisint officials said.
> American automakers praised the F.T.C.'s long-awaited ruling in
> favor of Covisint, which they said would enhance efficiency and
> yield significant savings by streamlining the procurement process.
> Brian Kelley, Ford's head of electronic commerce, said the
> exchange would ease online price quoting and collaboration on
> product designs, which in turn will "drive productivity throughout
> our supply network."
> The F.T.C. decision ended a six-month investigation in which
> regulators explored concerns that the exchange might enable the big
> automakers to collude to force down the prices of suppliers.
> The commission -- which voted 4 to 0 in favor of the exchange --
> warned that it would remain vigilant against such anticompetitive
> maneuvers and said that it "reserved the right to take such further
> action as the public interest may require." One commissioner,
> Thomas B. Leary, did not take part in the vote.
> "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," the F.T.C. said in a
> Thomas T. Stallkamp, an expert on automobile industry purchasing,
> said that today's ruling was a "good step forward" for the
> formation of the site. But he added, "There is still a long road to
> getting Covisint up and running."
> Mr. Stallkamp, a former president of Chrysler, said the developers
> of Covisint would have to demonstrate their "true neutrality," so
> the exchange is accepted by suppliers and not seen as weighted in
> favor of the major purchasers.
> He urged the developers to grant suppliers some ownership in the
> Internet site. Automakers have so far ruled that out, trying to
> draw dozens of suppliers into the network by offering them the
> chance to link their sites to the portal's vast revenue pool.
> By sharing equity, the automakers may allay concerns that they
> might use Covisint "as a cost-reduction tool against suppliers,
> rather than a communications tool for the suppliers," said Mr.
> Stallkamp, who now is chief executive of MSX International, a
> Michigan company that helps businesses hire engineers.
> Covisint officials have yet to name a chief executive, define who
> will own the portal's data -- a potentially valuable trove of
> purchasing information -- or devise safeguards to protect suppliers'
> proprietary information.
> The exchange also must still receive approval from Germany's
> antitrust regulatory agency, which is expected soon. Alice Miles,
> Covisint's interim co-chief executive, predicted the electronic
> marketplace will be operational within a month of that final
> In remarks to reporters, Ms. Miles, a Ford employee, said Covisint
> might pursue an initial public offering next year after at least
> two quarters of operation.
> "Covisint is poised to create a leading global e-business trading
> exchange," Ms. Miles said. "The completion of the F.T.C. review
> represents a significant milestone in our efforts to establish a
> transformational business-to-business entity."
> Covisint is the first business-to- business venture to be reviewed
> by the F.T.C. Such Internet sites are seen as a boon to global
> trade with implications that reach to all sorts of industries.
> Business-to-business electronic marketplaces "offer great promise
> as means through which significant cost savings can be achieved,
> business process can be more efficiently organized and competition
> may be enhanced," said Robert Pitofsky, the F.T.C. chairman.
> He cautioned, however, that his agency would scrutinize additional
> ventures to ensure that they "are organized and implemented in ways
> that maintain competition."
James Caan: "Are you the brains of the operation or is he?" Benicio del Toro: "To tell you the truth, I don't think this is a brains operation..." -- The Way of the Gun
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