Auto industry exchange set to open

Eight months after it was first detailed, the Covisint online exchange being developed by the Big Three automakers is set to open for business next week after announcing Tuesday that the German government had ended an antitrust review of the planned business-to-business marketplace.

The move by the German cartel office, known officially as the Bundeskartellamt, comes two weeks after Covisint received tentative approval on antitrust grounds from the U.S. Federal Trade Commission (FTC). The FTC said its investigation of Covisint was being closed, although it reserved the right to reopen the matter in the future.

Covisint spokesman Thomas Hill Wednesday said the conclusion of the review by the German government means that the B2B exchange – which participating automakers and parts suppliers hope will help reduce purchasing costs and allow them to streamline their operations – can now begin to process supply-chain transactions.

“It is the end of any regulatory clearance [requirements] … that would preclude Covisint from doing business,” Hill said. Other government bodies, including the European Union, are still doing some reviews but Hill said none of those reviews could stop the marketplace from going online.

Peter Weiss, DaimlerChrysler AG’s lead representative on Covisint’s executive planning team, said as part of Tuesday’s announcement that the exchange “is now cleared to transform itself from a planning initiative to a company.”

Ford Motor Co. and General Motors Corp. are the other founders of Covisint, and Renault SA and Nissan Motor Co. have signed on as nonowner participants. More than 25 suppliers of automotive parts also have agreed to take part in the exchange, according to Covisint officials.

Hill said development work has been going on behind the scenes while the necessary regulatory approvals were being sought, to enable Covisint to start operating as soon as possible. Covisint’s Web site has been running “sort of like an exhibition baseball game” while the FTC and the Bundeskartellamt conducted their investigations, he added.

Ronald Exler, an analyst at the Robert Frances Group in Westport, Conn., said the investigations of Covisint’s business plans have been a “learning process” for the U.S. and German governments because the whole idea of B2B marketplaces owned jointly by rival companies is so new.

“I think what is going on right now is that the governments are giving [exchanges] the benefit of the doubt to see how it goes,” Exler said. “They don’t want to stand in the way of Internet commerce.” But, he added, there are still likely to be “significant concerns when competitors get together to do anything.”

And while Covisint has been cleared to open for business, Exler said technical issues remain to be addressed as the participating companies start sharing some data but look to keep critical business information away from the eyes of their rivals. Covisint’s developers “certainly have a lot to do even after they get through the regulatory approvals,” he said.

A pilot program involving a small group of Covisint users is scheduled to begin this Friday, Hill said. The software for powering the new exchange, which is temporarily based in Southfield, Mich., is being provided jointly by Commerce One Inc. and Oracle Corp. – two fierce competitors that were brought into the exchange after Ford and GM agreed to combine what had been plans for two separate exchanges.

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