COMPANIES ARE INCREASINGLY FORMING and joining B2B exchanges to do business over the Internet. B2B marketplaces take many different forms, just as collaborations and joint ventures do offline, but they almost always involve some degree of information exchange or coordination between competitors. Whatever their form, they can offer your company huge opportunities to cut costs, realize efficiencies and enhance competitiveness. But with opportunity comes risk, and one of the biggest risks is the looming specter of antitrust challenges. These antitrust risks are not merely speculative. Government agencies are actively involved in watching B2B marketplaces and assessing their competitive effects. The Federal Trade Commission recently announced that it is continuing to monitor one of the most highly visible B2B collaborations?the Covisint venture involving the Big Three automakers and others. The government is also watching various other B2B exchanges and an uncertain number are facing possible private antitrust challenges. However, B2B participants are in a strong position to address these concerns. Even aggressive government regulators must concede that B2B marketplaces often enable their participants to cut costs and streamline their operations, which arguably is a good development for competition, especially if these cost savings translate into lower prices for consumers. Let\u2019s take a bunch of widget manufacturers, for example. Assume that these suppliers have developed an Internet market to sell their widgets through online catalogs. Here\u2019s what they should ask regarding potential antitrust problems.1. How red are the antitrust flags?Your exchange is more likely to attract antitrust attention if it has significant "market power"?the ability to restrict output, exclude competitors or raise prices. You should feel relatively comfortable if the collective market share of your B2B participants is less than 20 percent in each affected market, a safety zone defined by the government\u2019s competitor collaboration guidelines. But the more you move above this zone, the greater the risk that the government or your competitors will place your exchange under the antitrust microscope.Even assuming the absence of large market shares and clear market power, your B2B collaboration will face close scrutiny if its participants engage in conduct that is unlawful under antitrust principles. Woe to those participants who are working together to affect prices or allocate markets. Our hypothetical widget manufacturers, for example, increase their antitrust risks exponentially if they are sharing cost data or drafts of future catalogs with each other. These violations, however, don\u2019t surface that often, because companies rarely engage in such blatant improprieties in easily detectable forums. Violators tend to stick with handshakes in smoke-filled rooms. 2. Can you identify and prove efficiencies?If you participate in an exchange you should be prepared to show that it results in procompetitive benefits for the participants and the market as a whole. Such market benefits, or efficiencies, might include reduced administrative costs, enhanced systems integration or better supply chain management.While it\u2019s crucial to argue that your B2B marketplace is creating these efficiencies, just arguing isn\u2019t enough. You need solid evidence that these efficiencies are real or at least plausible. Ideally, you want real-world evidence showing that your B2B participants are experiencing lower costs and enhancing the competitiveness of the marketplace (without raising unacceptable antitrust risks). Evidence of prospective efficiencies might help too, but only to the extent that you can demonstrate them through real-time business records, not just through documentation manufactured simply to shake off antitrust suspicion. Our widget manufacturers, for example, should be developing specific estimates of the money and time they and their customers can save through electronic purchases. Perhaps they should hire consultants to estimate the reduced costs of completing electronic transactions compared with the standard sales process and all of its attendant paper, phone calls and delays. 3. Is the B2B venture the only game in town?Exclusivity is an important factor in assessing B2B exchanges\u2019 antitrust risks. If B2B collaborations bar participants from leaving, the possible anticompetitive effects may become more tangible and definitive. They may also cause antitrust problems if they block nonparticipants from joining. The challenge is that there may be legitimate, even procompetitive, business reasons for restricting the ability to join and leave B2B marketplaces. The underlying question is whether a B2B collaboration\u2019s exclusivity affects the ability of participants and industry players to compete. This question requires an investigation to see whether competitively viable alternatives to the B2B exchange exist, and whether the exclusivity restrictions are tailored to accomplish their procompetitive purposes. The hypothetical widget manufacturers should be careful about precluding additional participation if nonparticipant competitors don\u2019t have the ability to form a competitive B2B marketplace. If widget sales alternatives are limited, at the least the exchange should enable participants to leave if they want to offer their widgets elsewhere.4. Is the B2B exchange managed independently?There are many possible ownership, organizational and managerial frameworks you can use to structure your B2B collaboration. But from an antitrust perspective, there are sound reasons why some frameworks are better than others. You run a higher risk of antitrust problems if you or your partners have contributed significant financial investments to the exchange that might reduce your ability or desire to compete independently. You also face greater antitrust exposure if your B2B venture is jointly organized and governed by participants instead of an independent third party. Our widget manufacturers will reduce their antitrust exposure if they establish their B2B marketplace as a separate entity with its own board of directors, officers and facilities.5. Are B2B participants paying enough attention to these issues?With the proliferation of B2B exchanges (approximately 1,300 in the United States and thousands more in development), the reality is that some are ignoring these important questions. Moreover, we\u2019re at the beginning of a new frontier of antitrust law, where rules are in flux and potential challenges are abundant. It\u2019s critical for exchanges to pay careful attention to their antitrust risks from the business-planning phase onward. Your B2B venture will more likely survive antitrust investigation and possible litigation if you face your antitrust risks head-on, aggressively identifying and addressing problem areas before others do.