EU Announces Full Investigation Into IBM’s Anticompetitive Conduct

BY CCIA Staff
July 26, 2010

Today, the European Commission announced that it was opening a full investigation into IBM’s behavior in the mainframe computer market.  This follows many months during which a variety of companies and knowledgeable organizations have been providing evidence of IBM’s misconduct to the European Competition Directorate and during which the professional staff of the EU have been evaluating such submissions.

The following statement can be attributed to Ed Black, president & CEO of the Computer & Communications Industry Association:

“Although we are pleased the European Commission is taking a serious look into IBM’s actions, it comes as no surprise to us as the evidence of anticompetitive behavior is strong. We believe competition authorities around the world, as they learn about and focus on this  vital market will take similar actions.

“Competition authorities must take action given the importance of the mainframe market to governments and businesses throughout the world.   It is vital that a market that is responsible for more than three quarters of the world’s government and business data not be walled off from competition and innovation.  All we ask is that IBM actually apply the same principles they espouse in the open source world to their mainframe business as well.

“The European Commission’s announcement shows that the charges are more serious than IBM has made them out to be.  The Commission would not take such a major step if they did not have serious reason to suspect that European law had been violated.  The Commission has even initiated an investigation, on aftermarket maintenance — which was outside the scope of the original complaints. This is significant because it indicates there is evidence that IBM’s anticompetitive behavior runs deeper than even we alleged.

“Mainframe users on both sides of the Atlantic, and around the world,  cannot easily migrate off of the mainframe to more cost-effective platforms.  Thus they have been forced to pay demonstrably higher prices and have had less choice on account of IBM’s efforts to eliminate competition and block outside sources of innovation from the market.  Given current economic conditions, this is hardly a time for businesses, small or large, to being paying billions of dollars extra for the cost of essential inputs.”

In the United States, the Department of Justice, which has committed itself to a more vigorous antitrust enforcement policy than during the prior administration, has also been looking into IBM’s actions against its competitors.  Unlike its European counterpart, the DOJ does not typically announce when it opens up full investigations.

Here are some quick facts about the mainframe market:

  • Over 95 percent of the world’s government and business data resides on mainframes.
  • Over 80 percent of Fortune 1000 companies utilize mainframes.
  • More than 50 billion transactions—including financial ATM sessions, healthcare record access, tax accounts and other critical information—are running through mainframe-based databases on a daily basis.
  • More commercial transactions are processed on the mainframe than any other platform.

 

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