FTC and DOJ Issue Joint Antitrust Guidelines

Just days after the landmark antitrust ruling was handed down against Microsoft Corp., the U.S. Federal Trade Commission (FTC) and the Department of Justice (DOJ) have issued joint guidelines for companies that seek to collaborate with competitors on the Internet.

The guidelines were issued Friday amid recent rumblings that new online alliances in the auto, aerospace and food sectors, among others, are running the risk of monopolizing their industries and violating U.S. antitrust laws.

The “Antitrust Guidelines for Collaborations Among Competitors” mark the first time the two agencies have jointly addressed a broad range of horizontal agreements among competitors.

“The guidelines will help businesses assess the antitrust implications of collaborations with rivals, thereby encouraging pro-competitive collaborations and deterring collaborations likely to harm competition and consumers,” FTC Chairman Robert Pitofsky said.

B2B Concerns Spurred Guidelines

In recent weeks, particularly in the business-to-business (B2B) sector, electronic commerce has experienced an increasing number of new alliances, some of which have already drawn the attention of the FTC. Just last month, Bert Foer, former assistant director of the FTC’s Bureau of Competition, confirmed that the FTC has begun an investigation into the new online auto exchange.

Brian Kelley, vice president of Ford’s e-commerce operations, sees little conflict in his company’s alliance with General Motors and DaimlerChrysler. “We’ve historically been competitors,” Kelley said. “And we’ll still be competitors, but we’ll create an independent company that can go off and help our suppliers, our dealers, our customers and each of us.”

Upon issuing the new guidelines, the agencies said that technology is driving more companies toward collaborative ventures, and although very few antitrust cases have occurred in the past 20 years, the new economy has caused renewed concern about the risks of reducing competition in the marketplace.

Globalization Raises New Challenges

A statement about the guidelines from the FTC said, “Competitive forces of globalization and technology are driving firms toward complex collaborations to achieve goals such as expanding into foreign markets, funding expensive innovation efforts and lowering production and other costs. The increasing varieties and use of collaborations by rivals have yielded requests for improved clarity regarding their treatment under the antitrust laws.”

While the guidelines were not issued directly in response to the Microsoft case, it would appear that the government would prefer to avoid similar cases in the future. Not only has the litigation been costly for both industry and government, but it manifested itself in volatile stock market activity which still has not fully corrected itself.

Other industries are already waiting in the wings for a response from the government regarding complaints about online collaborations. Earlier this year, the American Society of Travel Agents (ASTA) asked the Justice Department to investigate a possible monopoly situation developing in the travel industry caused by a mega-travel site. ASTA expressed concern about possible price fixing.

Mergers Versus Competitive Collaborations

The agencies were careful in the guidelines to distinguish between mergers and collaborations among previously competitive companies. Mergers, the guidelines indicate, “completely end competition between the merging parties,” while collaborations “preserve some form of competition among the participants. This remaining competition may reduce competitive concerns, but also may raise questions about whether participants have agreed to anti-competitive restraints on the remaining competition.”

Most of the recent online exchanges and marketplaces among previously competitive companies are not intended to be mergers. In fact, the exchanges have, in many cases, set up a separate company from any of the principal investors. It is the separate company approach that is causing concern from the government, since it potentially threatens to quash the competition from others in the industry that choose not to participate in the online exchange.

E-Commerce Still Evolving

Commenting about the new guidelines, FTC Commissioner Mozelle W. Thompson conceded that they are not comprehensive and will not address every question that arises in the evolving new economy.

Although the guidelines will help analyze antitrust issues, “we acknowledge that there may be areas in which additional guidance is desirable,” Thompson said.