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December 14, 2011

IBM Concessions Compel European Regulators to Drop Antitrust Investigation
By Ashok Bindra
TMCnet Contributor

Based on complaints from smaller third party mainframe maintenance companies, a European Commission began investigating in mid-2010 whether the IT giant IBM (News - Alert) was abusing its dominant position in the mainframe market. According to these allegations, the company was inhibiting access to critical spare parts, and putting these smaller vendors at a disadvantage.

To put a stop to such investigations, which can result in fines up to 10 percent of the company’s global turnover, IBM made a few concessions and expressed willingness to comply with EU regulators’ demands. While IBM made these concessions in September, it, however, did not agree with the European Commission's charge that it might have abused its dominant position in the market by forcing unfair supply terms for some mainframe spare parts, including software, to competitors of mainframe maintenance services.

According to a report by International multimedia news agency Reuters (News - Alert), the Commission said on Wednesday that the European Union antitrust regulators have accepted IBM’s concessions and will, therefore, drop the investigation. As per this report, IBM will provide certain spare parts and technical information to other competing companies in the mainframe hardware and software maintenance service business.

After some revision and market verification, the European Commission told Reuters that it was pleased with the concessions offered by IBM. The IBM concessions are valid for five years, and are sufficient to address the antitrust problems, the Commission said, wrote Reuters.

Reuters quoted EU Competition Commissioner Joaquin Alumna as saying in a statement, "I am pleased that we could find a swift solution with IBM to our competition concerns. Timely interventions are crucial in fast moving technology markets."

As per the report, this is not the first time IBM is being investigated for infringing EU competition rules. In August, the EU regulators had dropped another investigation against IBM after three small vendors involved withdrew their objections.

Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves


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