Since FreeMarkets (NASDAQ:FMKT) announced the acquisition of the online auto auction services of Covisint last Wednesday, the global supply management (GSM) software maker has made a brief return to its former high-flying ways. Though terms of acquisition were undisclosed, the stock has climbed steadily from its Dec. 30 close at $6.32 per share to over $8 today.

In February of 2000 -- when business-to-business e-commerce was all the rage -- Covisint was created by DaimlerChrysler AG (NYSE:DCX), General Motors (NYSE:GM), and Ford (NYSE:F). The Big Three automakers were later joined by Nissan (NASDAQ:NSANY), Renault, and technology collaborators Oracle (NASDAQ:ORCL) and Commerce One (NASDAQ:CMRC). The goal was to save money by moving auto-part supply sales online and in auction format, bringing down prices for the automakers. However, the collaboration has thus far disappointed.

As a result of the acquisition, FreeMarkets -- which claims to have helped the auto industry source $20 billion in goods at savings of $3.5 billion -- effectively eliminates its major competition in the automotive supply chain space.

Under terms of the deal, Covisint will transfer its customer contracts for auction services to FreeMarkets. These contracts bring committed revenue over the next three years. In addition, FreeMarkets will provide its own sourcing technology and services to the Big Three. FreeMarkets may also provide those services to Covisint's other auction services customers, which include Mitsubishi, Nissan, Renault, PSA Peugot, and Fiat.

FreeMarkets itself has disappointed investors to this point. But even though it may never again see its December 1999 price tag of over $300 per share, FreeMarkets no doubt is in a little better shape without competition.

Jeff Hwang can be reached at JHwang@fool.com.