European Commission Launches Antitrust Investigations Of IBM Mainframe Practices


Announcement of the investigations comes just four days after IBM unveiled the zEnterprise, the latest generation of its System z line of mainframes, which the company said will help customers save millions of dollars in storage, power, labor and other computing costs.

In a statement issued Monday the EC, the executive body for the European Union, said the investigations involve mainframe software and services.

The software case follows complaints from emulator software developers T3 Technologies Inc. and TurboHercules SAS and focuses on IBM’s alleged “illegal tying of its mainframe hardware to its dominant mainframe operating system.” The complaints charge that the tying “shuts out providers of emulation technology which could enable the users to run critical applications on non-IBM hardware.”

The other investigation, which the EC said it was undertaking on its own initiative, involves “concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services.” The EC statement said the investigation specifically focuses on whether IBM sought to keep potential customers out of the mainframe services market by restricting or delaying access to spare parts for which IBM is the only source.

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IBM issued a statement saying that it “intends to cooperate fully with any inquiries from the European Union.” But IBM suggested that Microsoft, which invested in T3, was behind the complaints. T3’s software transfers mainframe functions to servers running Microsoft Windows.

“Certain IBM competitors which have been unable to win in the marketplace through investments in fundamental innovations now want regulators to create for them a market position that they have not earned,” IBM’s statement said. “The accusations made against IBM by TurboHercules and T3 are being driven by some of IBM's largest competitors -- led by Microsoft -- who want to further cement the dominance of Wintel servers by attempting to mimic aspects of IBM mainframes without making the substantial investments IBM has made and continues to make. In doing so, they are violating IBM's intellectual property rights.”

“Let there be no confusion whatsoever: there is no merit to the claims being made by Microsoft and its satellite proxies. IBM is fully entitled to enforce its intellectual property rights and protect the investments we have made in our technologies. Competition and intellectual property laws are complementary and designed to promote competition and innovation, and IBM fully supports these policies. But IBM will not allow the fruits of its innovation and investment to be pirated by its competition through baseless allegations.”

In a Bloomberg Businessweek story, a Microsoft spokesman said Microsoft is not a party to the T3 complaint. “We do share T3’s belief that there needs to be greater openness and choice for customers in the mainframe market,” he said. “Customers tell us that they want greater interoperability between the mainframe and other platforms.”

The EC said that in both cases the initiation of the investigations did not imply that the commission has proof of infringements. “It only signifies that the Commission will further investigate the cases as a matter of priority.”

The EC did not provide a timetable for when it might complete its investigations.

Ironically, the investigations sound similar to the lengthy battles between the EC and Microsoft over its practice of bundling its Windows Media Player and Internet Explorer browser with the Windows operating system.