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FTC probes Big 3 venture
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March 22, 2000: 9:40 a.m. ET
Agency targets carmakers' B2B effort to link with major suppliers
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NEW YORK (CNNfn) - The plan to link the world's major automakers and their suppliers via the Internet and save billions in parts purchase costs is subject of a federal inquiry, according to a report in Wednesday's Wall Street Journal.
The paper said the Federal Trade Commission is looking into the agreement between General Motors Corp. (GM: Research, Estimates), Ford Motor Co. (F: Research, Estimates) and DaimlerChrysler AG (DCX: Research, Estimates) to establish a joint system to make almost a quarter-trillion dollars in purchases on the Web. GM and Ford originally announced plans last fall to form competing B2B e-commerce systems, but suppliers objected to the idea of having to work with two different systems.
Officials of the Big Three also said they would seek to add other major global automakers to the effort and have their suppliers use the system to make their own purchases. If successful with that plan, the joint venture could transact more than $1 trillion in purchases, dwarfing any other e-commerce efforts.
The companies expect to operate the venture as a separate company with its own, yet-unnamed management. The system is not yet in operation, and has yet even to named.
When they announced plans for the venture Feb. 25, the automakers' said they did not anticipate any federal clearance being necessary.
And as of Wednesday morning officials working on the joint venture have not been notified of any federal inquiry, according to David Barnas, a spokesman for GM.
"It's something we're looking into, and we'll cooperate fully," said Barnas. "We don't expect any negative repercussions from any investigation."
The Journal story said the FTC is launching an inquiry, which is a less formal process than an investigation. Citing unnamed people close to the inquiry, the Journal reported that the FTC is expected to focus on the structure of the online marketplace and whether it could lead to unlawful price "signaling" or coordination among buyers and sellers.
A spokesman with the FTC said the agency had no comment on the report.
The automakers have insisted the system is designed to be confidential, allowed to companies to make purchases without information being seen by competitors.
Besides the Big Three, the two technology partners involved in the venture are Commerce One Inc. (CMRC: Research, Estimates), which originally partnered with GM in its efforts, and Oracle Corp. (ORCL: Research, Estimates), which had partnered with Ford.
In early trading Wednesday, Commerce One shares lost 1-1/2 to 207-1/2, while Oracle shares fell 11/16 to 80.
The Big Three stocks were mixed, with shares of Ford slipping 15/16 to 44-7/8 while General Motors shares gained 5/16, to 80-1/2, and DaimlerChrysler shares gained 1-1/16 in New York trading to 66-1/2. 
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