IBM To Be Hit With Another Antitrust Complaint

BY CCIA Staff
August 11, 2008

T3 Technologies formally announced today it had retained counsel to file an antitrust complaint against IBM in Europe. T3 is a small mainframe supplier, which bills itself on its website as an alternative to being bound by IBM.

The European Commission is already investigating an antitrust complaint filed against IBM by Platform Solutions, Inc., which was a small but significant competitor to IBM. The EC investigation was moving forward despite an announcement last month that IBM was acquiring PSI.

While this complaint will reportedly focus on the abuse by IBM in the European market, IBM’s misconduct is clearly taking place on a global scale, according to a trade association that keeps tabs on antitrust issues. The Computer & Communications Industry Association says these complaints about IBM’s abusive misconduct should raise concerns for competition authorities throughout the world about whether IBM has gone back to its anticompetitive practices.

“T3’s announcement today, a month after the PSI buyout by IBM, adds credence the evidence that competition in this critical market is being stifled and would-be competitors have few other options to seek relief,” said CCIA President and CEO Ed Black. “Authorities need to look at what is happening and step in before it’s too late. The cost to consumers, to the economy and the security risk of having 90 percent of the mainframe market controlled by one company is too high.”

“Unfortunately, U.S. antitrust authorities have been AWOL with regard to many competition and antitrust matters for the last 7 years. The seriousness of this complaint can be partly measured by the caliber of counsel retained. As CCIA learned it is very important to have top quality representation in the EU, and T3 seems to appreciate that reality,” Black said.

IBM had been under a consent decree in earlier decades in the United States as part of an attempt by the Justice Department to curb anticompetitive actions. But since being released from the decree by the Bush administration several years ago, IBM has stopped licensing patents needed so that other companies’ hardware can communicate with IBM’s operating system. It would be too expensive to recreate data residing on mainframes that work with IBM’s OS, so it essentially makes it impossible for companies like PSI and T3 to compete unless IBM licenses these patents.

The reason this action could warrant attention from antitrust authorities is that antitrust law forbids a monopolist from tying the purchase of one product to that of another distinct product.

Both T3 ad PSI already have filed civil lawsuits against IBM in the United States.

“However, it is time for U.S. authorities to get back in the business of protecting U.S. consumers and innovative challenger companies, as the EU has been doing for some time now,” Black said.

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