International companies create Internet marketplaces Envera Albemarle Anstech Chemical BF Goodrich Performance Materials Castrol International ChemCentral Eastman Chemical Ethyl Hercules Occidental Chemical PPG Industries Rohm and Haas Solutia Sunoco Chemicals Ultramar Diamond Shamrock

IntercontinentalExchange BP Amoco Deutsche Bank Goldman Sachs Morgan Stanley

Dean Witter Royal Dutch/Shell Group SG Investment Banking Totalfina Elf Group

mySAP.com market BASF Degussa-Huls Henkel Metallgesellschaft

ly efficient transactions," says Michael Giesler, who is in charge of information technology at Envera and is also Ethyl's chief information officer. "Our research shows that the average transaction cost in our industries ranges from $50 to $180. We see this cost dropping below $20."

In a second venture, a group of four major German chemical producers has joined with enterprise software provider SAP to develop an electronic market­place for chemicals and pharmaceuti­cals. The partners will base their efforts on mySAP.com technology, expanding a similar SAP initiative announced in December 1999. Although the structure of the joint venture is still being worked

out, the companies expect to launch their marketplace in the second quarter.

"The global ap­proach and the inte­gration of this new marketplace into our existing SAP systems will be a tremendous breakthrough toward efficiency and trans­parency of markets," says Gustav Roethe, head of corporate pur­chasing and logistics at Degussa-Huls.

In yet another ini­tiative, oil and met­als producers, along

with several financial institutions, are creating IntercontinentalExchange. The exchange is to be used for over-the-counter trading of energy, metal, and commodity products. Based in Atlanta, the venture expects trading in petro­leum and precious metal products to be­gin later this year.

All three exchanges are open to new members and partners. Interest ex­pressed by other companies "clearly shows that a neutral trading site is the key to a long-term growing and success­ful marketplace," Envera's Mooney says. "We believe that we already have the critical mass to get going and that we are a very viable business."

Ann Thayer

FDA's Regulation Of Tobacco Struck Down A closely divided Supreme Court last week upheld an appellate court ruling that the Food & Drug Administration lacks statutory authority to regulate to­bacco products. Thus, the sales and marketing regulations FDA issued in 1996 are now moot.

The 5-to-4 ruling is a severe setback for the Clinton Administration's effort to curb teenage smoking. Approximately 400,000 Americans die from smoking-related diseases each year, and nearly 80% of them started smoking as children. The 39-page opinion, however, is a major victory for a tobacco industry faced with civil lawsuits seeking huge damages for smoking-related illnesses, and a Justice Department criminal lawsuit

Writing for the majority, Justice San­dra Day O'Connor acknowledges that FDA has amply shown "that tobacco

use, particularly among children and adoles­cents, poses perhaps the single most significant threat to public health in the U.S." Still, the majori­ty of the Court ruled that Congress has never giv­en FDA the power to reg­ulate tobacco products and that FDA exceeded its authority in doing so. "An administrative agen­cy's power to regulate in the public interest must O'Connor always be grounded in a valid grant of authority from Congress," O'Connor concludes.

Traveling in India, President Bill Clin­ton issued a statement taking note of the Supreme Court's recognition of the haz­

ards of tobacco smoking and calling on Congress to pass legislation giving FDA the authority to regulate tobacco prod­ucts. The American Medical Association, the American College of Cardiology, and antismoking activists joined Clinton in his call for congressional action.

On the Democratic side, the re­sponse of Rep. Henry A. Waxman of Cal­ifornia was to immediately introduce two bills: a comprehensive one that would impose penalties on companies if youth smoking did not decline, and a narrowly focused bill that would give FDA the authority to regulate nicotine as a drug and cigarettes as drug deliv­ery systems. House Majority Leader Dick Armey of Texas succinctly summed up the Republican leadership's position: "I'm not anxious to expand the power and the authority of FDA."

Given that position and a short legisla­tive session, enactment of any FDA legis­lation is unlikely this year. But tobacco companies, clearly pleased with the Su­preme Court's ruling, are showing signs of accepting some regulation of their in­dustry. Philip Morris, the nation's largest cigarette maker, cited some "useful ap­proaches" to legislation. These included steps designed to reduce youth smoking while respecting adults' rights to smoke, "appropriate" federal oversight of ciga­rette making and use of ingredients, and government mandates on further disclo­sures to smokers about cigarettes.

Philip Morris also wouldn't mind see­ing government define lower risk ciga­rettes that could be marketed to adult smokers. It and several other manufac­turers are close to introducing cigarettes

made from tobacco leaves containing substantially lower levels of nitro-samines, a typical carcino­gen in current cigarettes.

Even without new laws this year, ongoing suits could force the industry to change its ways. Tobacco company stock prices rose sharply after O'Connor's opinion was released, but fell back quickly on fears of punitive damages that a Florida jury is poised to is­sue in afew weeks in atrial in which the tobacco in­

dustry has already been convicted of ad­versely impacting smokers' health. Dam­ages in this class-action lawsuit could reach the tens of billions of dollars.

Lois Ember

MARCH 27,2000 C&EN 9