2B or not 2B has been the crunch question exercising the minds of Europe's most powerful industry regulators in the past few months and the moment of truth is drawing near.
Trillions of pounds are at stake and the European commission has until Monday to make a ruling which is expected to set a global regulatory precedent for the future of business-to-business (B2B) internet marketplaces.
The EC is considering MyAircraft.com, a joint venture between some of the aerospace industry's biggest players who want to trade spare parts and engines over the net. The rationale is that it will allow participating companies to slash costs by pooling their purchasing or selling power to achieve critical mass. Middlemen will be cut out and, in theory, pricing and transaction costs will be transparent and lower.
There is just one problem. Regulators on both sides of the Atlantic have expressed concern that the concept might give rise to price-fixing cartels. The industry players are so big and their collaboration is, to say the least, slightly unusual.
Business-to-business e-commerce is forecast to generate more than £4 trillion by 2005 making retail e-commerce look relatively paltry by comparison. It accounts for four-fifths of global e-commerce and a disparate collection of industries is rushing to join B2B exchanges to cut costs.
In the motor industry a B2B exchange, Covisint, has emerged. A joint venture between Ford, General Motors, DaimlerChrysler and Renault/Nissan, it aims to become not just the main way the car makers' suppliers sell their wares to the big three but eventually the preferred venue for suppliers to trade with their partners.
The commodities marketplace is going online in the form of the Intercontinental Exchange. The venture intends to offer a variety of metals from August, and in the fourth quarter plans to start oil-based derivatives such as swaps - contracts in the difference between a product's prompt price and the price of a forward traded month.
In many cases, some industries have more than one exchange on offer and the idea is that there will come a time when it makes sense for these to link up into a seamless virtual global marketplace. The boundaries between different market players will inevitably become blurred, and regulators in Brussels and Washington are unsure how to deal with this unsettling phenomenon.
In the case of MyAircraft.com, Honeywell International, United Technologies and i2 Technologies have banded together. The aviation industry says it expects to conduct a quarter of its business over the net within a year and it spends £270bn annually on spare parts and engines.
Boeing, BAE Systems, Lockheed Martin and Raytheon have announced that they plan to do the same thing. Their exchange, Exostar, will be up and running in September and its money-making potential is huge.
The four companies do business with 37,000 suppliers and almost every nation's government, and have a combined annual procurement budget of more than £50bn. Ominously, its chief executive has admitted that its activities will over lap with MyAircraft.com and has said that the two exchanges will be connected and might eventually even merge.
Regulators might need more time to assess the problems posed by B2B deals, but MyAircraft.com will be the first real opportunity for Brussels to wade into the debate.
It can opt to approve the deal or initiate a four-month inquiry. Investigations often throw up specific problems which can only be remedied by the companies concerned making certain concessions. The EC will have to tread carefully, because Washington and a host of other industries which plan to create their own exchanges will be watching closely.
EC spokeswoman Amelia Torres explains: "One potential violation of competition rules would be if the companies that enter into online exchange platform deals were to exchange price or other sensitive information, because that would be a cartel and we would not authorise it."
The competition commissioner, Mario Monti, has in recent times shown a willingness to play hardball in the field of mergers and acquisitions. He will be aware that his US counterparts are also looking into B2B exchanges. The US federal trade commission is considering whether it should approve Covisint. Making sure that companies abide by the EU's competition rules and do not abuse their dominant position to squeeze out competitors is the one area of competence where the EC wields real power, and Mr Monti will want to get it right.
B2B marketplaces are said to be so important for the future of e-commerce that he is likely to come under enormous pressure from his colleagues and others not to do anything to stifle its progress. That may prove a difficult balance to strike.
