EU to investigate IBM over abuse in mainframe computer market

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The European Commission, which is the antitrust regulator of the entire 27-nation European Union (similar to our ACCC), has launched an investigation into IBM on allegations that the company abused its dominant position in the mainframe computer market.

“IBM is alleged to have engaged in illegal tying of its mainframe hardware products to its dominant mainframe operating system,” the European Commission said.

“The complaints contend that the tying shuts out providers of emulation technology which could enable the users to run critical applications on non-IBM hardware.”

“The Commission has concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services (i.e. keeping potential competitors out of the market), in particular by restricting or delaying access to spare parts for which IBM is the only source.”

The allegations, according to the Commission, comes from two software vendors T3 and Turbo Hercules, whose products are typically emulators that allow products to be run from IBM on a non-IBM computer. IBM has since labelled these companies as “satellite proxies” of Microsoft, another of its competitors in the server market.

Mainframe computers are very powerful computers that are used by governments and large companies in order to store critical data about their businesses. IBM has approximately over 90 percent of the entire market, and was the main developers of these types of computers in the 1940s and 1950s.

The European Commission is known to give harsh penalties to companies who breach its strict antitrust rules within the European Union. Microsoft and Intel both received record fines just for breaching antitrust rules within the European Union. Microsoft was also fined further just for not changing its practices. Microsoft avoided another fine from the Commission after satisfying a investigation over Internet Explorer by allowing the option to choose what browser a user could install.

Image from: Kansir/Flickr (CC)