Antitrust regulators have approved an online venture that would allow five major automakers – including America’s top three – to buy supplies through a single source.
The Federal Trade Commission has given its blessing to a web site which could ease the purchase of $300 billion in parts each year for Ford, General Motors and DaimlerChrysler. On the site, Covisint, automakers will list parts they seek from suppliers, who will bid for the contract. This is known as a reverse auction.
The Nissan Motor Company of Japan and Renault of France are also involved, as are Commerce One and Oracle, while Toyota is still at the bargaining stage.
A Ford spokesperson said the exchange would ease online price quoting and collaboration on design. Regulators had initially been concerned that the exchange might allow the big automakers to collude in forcing down prices.
The commission said that because its founders represented such a large share of the auto market, it was impossible to say that the venture would not cause competitive concerns.
Thomas Stallkamp, a former president of Chrysler, said the developers of Covisint would have to demonstrate their true neutrality, so the exchange was not seen as weighted in favor of the major purchasers.
Automakers are trying to attract suppliers by offering them the chance to link their sites to the portal’s vast revenue pool.
Covisint is the first business-to-business venture to be reviewed by the FTC. Robert Pitofsky, the FTC chairman, cautioned that the agency would scrutinize all ventures to ensure that they were organized and implemented in ways that maintain competition.