I
107TH CONGRESS
1ST SESSION
H. R. 3590
To require operators of electronic marketplaces to disclose the ownership
and financial arrangements of such marketplaces to market participants,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
DECEMBER 20, 2001
Mrs. MALONEY of New York introduced the following bill; which was referred
to the Committee on Energy and Commerce
A BILL
To require operators of electronic marketplaces to disclose
the ownership and financial arrangements of such mar-
ketplaces to market participants, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; FINDINGS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Electronic Marketplace Ownership Disclosure Act’’.
(b) FINDINGS.—The Congress finds the following:
(1) The phenomenal economic expansion that
our nation experienced during the last decade was
fueled by advances in information technology and
the development of the Internet.
(2) Today, consumers and businesses routinely
participate in new online marketplaces.
(3) Certain Internet exchanges purporting to
provide neutral marketplaces for the exchange of
goods and services are actually owned by market-
place operators with interests in the transactions
taking place on the exchanges.
(4) Certain Internet exchanges have made busi-
ness arrangements with sellers without disclosing the
existence of those arrangements to the consumers.
(5) Additional consumer protections are needed
to increase public confidence in the Internet.
SEC. 2. DEFINITIONS.
As used in this Act:
(1) ELECTRONIC MARKETPLACE.—
(A) IN
GENERAL.—The term ‘‘electronic
marketplace’’ means an enterprise that—
(i) is organized to bring together by
electronic means, on both sides of a trans-
action, the offers, bids, or orders of mul-
tiple participants;
(ii) is accessible to participants from
the general public, and is not restricted to
licensed or qualified specialists;
(iii) lists products and services of such
participants, or provides links or connec-
tions by which access to such lists may be
obtained; and
(iv) is operated as a business and col-
lects compensation from any of such par-
ticipants as a condition of participation.
(B) EXCLUSIONS.—Such term does not
include—
(i) any securities exchange or national
securities association registered under the
Securities Exchange Act of 1934;
(ii) any contract market or derivative
transaction execution facility registered
under the Commodity Exchange Act;
(iii) any marketplace that is operated
for the conduct of retail transactions by a
single vendor, even if that vendor sells or
offers the products or services of multiple
providers of such products or services; or
(iv) any marketplace on which the
total annual volume of transactions is less
than $10,000,000, or such other market-
places as may be excluded from such term
by the regulations prescribed under section
3 on the basis of such factors as minimum
transaction volume or size, minimum num-
ber of transactions, or minimum number of
market participants over a designated pe-
riod of time, or other relevant factors.
(C) OPEN
TO
PUBLIC.—A marketplace
shall not be considered to be restricted to li-
censed or qualified specialists under subpara-
graph (A)(ii) merely because such marketplace
requires participants from the general public to
register and to disclose identifying or financial
information prior to participating.
(2) COMMISSION.—The term ‘‘Commission’’
means the Federal Trade Commission.
(3) AFFILIATE.—The term ‘‘affiliate’’ means
any company that directly or indirectly controls, is
controlled by, or is under common control with an-
other company.
SEC. 3. ELECTRONIC MARKETPLACE DISCLOSURE REGULA-
TIONS.
(a) DISCLOSURE REQUIRED.—The Commission shall
prescribe rules in accordance with this section to prohibit
unfair and deceptive acts and practices in the operation
of an electronic marketplace by requiring the operator of
such market to disclose the following:
(1) OWNERSHIP DISCLOSURES.—The operator
of an electronic marketplace shall disclose—
(A) the identity of any affiliate of such
marketplace; and
(B) contact information, or a website link,
from which a marketplace participant may ob-
tain additional information about such affili-
ates.
(2) DISCLOSURE
OF
FINANCIAL
ARRANGE-
MENTS
BUSINESS
ARRANGEMENTS
WITH
MARKET
PARTICIPANTS.—The operator of an electronic mar-
ketplace shall disclose—
(A) the usual or customary financial ar-
rangements under which the largest portion of
marketplace participants are permitted to par-
ticipate;
(B) any unusual or special financial ar-
rangements under which a smaller number of
marketplace participants are accorded special
privileges or other benefits in their marketplace
participation; and
(C) the identity of any persons or entities
with which the operator has an arrangement
described in subparagraph (B).
(b) CLEAR AND CONSPICUOUS DISCLOSURE.—
(1) REQUIRED DISCLOSURES.—The regulation
prescribed under this section shall require that the
disclosures required by subsection (a)—
(A) be clear and conspicuous to electronic
marketplace participants;
(B) to the extent possible, be stated in
simple and uncomplicated terms; and
(C) be readily accessible to the public
through the Internet.
(2) EXEMPTIONS AND LIMITATIONS ON DISCLO-
SURES.—The regulations prescribed under this
section—
(A) shall require that the disclosures be
updated at least quarterly; and
(B) shall not require the posting or disclo-
sure of the actual contracts with market partici-
pants.
(c) REGULATORY AUTHORITY.—
(1) RULEMAKING.—The Commission shall pre-
scribe such regulations as may be necessary to carry
out the purposes of this Act.
(2) PROCEDURES AND DEADLINE.—Such regu-
lations shall be prescribed in accordance with appli-
cable requirements of title 5, United States Code,
and shall be issued in final form not later than 6
months after the date of the enactment of this Act.
SEC. 4. ENFORCEMENT.
This Act and the regulations prescribed thereunder
shall be enforced by Commission under the Federal Trade
Commission Act.
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