CCIA Reaction To Potential IBM, Sun Microsystems Merger

BY CCIA Staff
March 18, 2009

According to various news reports, IBM is in merger talks with Sun Microsystems Inc. These high tech giants have several overlapping products and services and are key players in numerous markets, including the critical server market, and a merger will impact the key area of cloud computing. The Computer & Communications Industry Association was founded more than 35 years ago by companies trying to fight anticompetitive behavior by mega companies with too much market power.

The following statement can be attributed to CCIA President & CEO Ed Black:

“If this merger is announced, it will require careful, extensive review by antitrust authorities because of the wide range of tech products both companies now produce. IBM and Sun have been fierce competitors for years. A merger would eliminate a key competitor, which affects choice and prices down the line on numerous IT products.”

“In these economic times we need innovation. A competitive marketplace boosts innovation. We do not need “companies too big to fail” at the center of our critical digital infrastructure.

“ IBM’s continued monopoly dominance of the high end computer market is a key factor and starting point in any analysis of this proposed deal. As we evaluate the complex aspects of what would be IBM’s largest acquisition ever, we would look at all the relevant factors of the deal, while remembering that IBM has been under federal supervision for decades because of anticompetitive behavior. This potential merger has the attention of many tech companies and others who might wind up with fewer choices in computer services. We expect it will be scrutinized by all who use tech products, and all who care about a competitive, innovative business environment and its role in the economy.

“IBM is currently under investigation because of its monopoly in the mainframe market. Acquiring a more dominant position in related areas including servers would require a great deal of scrutiny and time to review. A merger of IBM and Sun would impact the server market where both companies hold a dominant market share in servers running on the Unix operating system. It also would have implications in the storage, middleware, java and database sectors. The impact of such a deal on competition and the price consumers pay for tech products would be far-reaching and deserves careful review by antitrust authorities.”

IBM is currently facing an antitrust investigation in Europe over its mainframe business practices. Last year it bought PSI Networks to end several lawsuits involving its actions involving PSI, although the investigation by European antitrust authorities is ongoing. Big Blue also faces an antitrust investigation by the European Union after one of its last standing competitors in the mainframe market, T3, filed a formal antitrust complaint against IBM in January.

 

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