Updated as at 27/3/2001.

Business to business (B2B) trading hubs on the internet

1. What is a B2B Hub?

An electronic meeting place (or portal) on the internet through which business entities conduct electronic transactions with each other.

2. Benefits of a B2B Hub

Minimise traditional off-line trading inefficiencies and limitations in relation to information, geography or business hours.

3. Successful B2B Hubs offer

A centralised marketplace, buyer-seller neutrality, standardisation of contracts and products, pre-qualification and regulation of users, dissemination of bid and ask information and pricing history, regulation to maintain the integrity of the market, transparency, clearing and settlement, fulfilment services, confidentiality and an exchange "community".

4. Regulation of B2B Hubs

The Australian Consumer and Competition Commission (ACCC) treats B2B Hubs in the same way as off-line business activity under the trade practices legislation to ensure competition is maintained. (See http://www.accc.gov.au)

5. When will a B2B Hub contravene the trade practices legislation?

(a) Where competitors participating in the B2B Hub agree to fix prices or organise primary boycotts against third parties.

(b) The B2B Hub facilitates collusion, substantially lessens competition in a market or involves a misuse of market power.

6. Authorisation of a B2B Hub

Parties to a B2B Hub which otherwise contravenes the trade practices legislation may seek authorisation of such an arrangement from the ACCC if the public benefits of the B2B Hub outweigh the detriment.

7. Trade practices liability checklist

A B2B Hub will be assessed by the ACCC on a case by case basis and may attract liability under the trade practices legislation if the B2B:

(a) allows competitors access to each otheries prices or other commercially sensitive information;

(b) involves the formation of a buying group to co-ordinate the acquisition of business inputs, and whether this is likely to result in the exercise of market power against suppliers;

(c) enables participants to create rules to discriminate against third parties;

(d) requires some degree of exclusivity or adoption of technology which may lock in participants and foreclose the development of competing B2Bs; or

(e) involves setting Industry Standards and the structure could enable a small group of competitors to control standard-making procedures for their own advantage.

8. When will a B2B Hub not contravene the trade practices legislation?

Generally, B2B Hubs are unlikely to cause serious competitive concerns where underlying markets are highly competitive, barriers to entry are low and equity-participants in the B2B do not have a large combined market share.

In many cases the issues in the liability checklist (above) can be addressed through appropriate structuring of B2B rules and regulations.

9. Ongoing regulation of B2B Hubs

Given many B2B Hubs are still in a state of flux, the ACCC will assess them on an ongoing basis as the internal rules or market power of the B2B Hub change over time.

10. Regulation of global B2B Hub ventures

Global B2B ventures may be assessed by the ACCC in conjunction with appropriate authorities in foreign jurisdictions.

The potential anti-competitive effects of a B2B Hub may vary in different jurisdictions and may have particular regional effects that need to be assessed separately.

Developing B2B Hubs in consultation with the ACCC Parties developing B2B Hub ventures may consult with the ACCC during the development phase to address anti-competitive trade practices issues as they arise.

11. Regulation of B2B Hub Rationalisation

Any rationalisation (or consolidation) of B2B Hubs may be assessed by the ACCC under the mergers provisions of the trade practices legislation.



Other relevant Fact Sheets:

Sources of Law
Trade Practices Act 1974 (Cth)
End Notes