IBM could face mainframe antitrust investigation

Florida mainframe manufacturer T3 Technologies has filed a formal complaint against IBM with the European Union's antitrust authority, it said Tuesday. In its complaint, T3 accuses IBM of refusing to sell its mainframe operating system to customers wanting to run it on computers made by T3.

The company wants the Commission to investigate the prices IBM charges for its mainframe systems, saying that European mainframe buyers could save $48 billion over 20 years if there was fair competition in the market

T3's complaint had not reached the Commission by late afternoon European time, said Commission spokesman Jonathan Todd.

However, the Commission on its own initiative is already looking at competition in the mainframe sector, he said.

“It's not a formal investigation,” but could become one if the Commission became convinced that there had been market abuses, he said.

IBM was ordered by the U.S. Department of Justice to stop its tying of hardware and software sales in a landmark case half a century ago.

Since then, according to T3, IBM has taken a calculated series of actions to stop companies such as Amdahl, Hitachi, Comparex, PSI, and T3 from selling IBM-compatible mainframes, giving IBM an exclusive lock on the mainframe market.

T3 warned last August that it was preparing to file the complaint with the European Commission's Directorate General of Competition, shortly after IBM acquired Platform Solutions Inc., putting an end to an antitrust case brought by PSI in which T3 had wanted to participate.

That case began in 2006, when IBM sued PSI in the U.S. District Court for the Southern District of New York, alleging patent infringement. PSI countersued in early 2007, accusing IBM of antitrust violations and unfair competition, and T3 asked the court to be allowed to join the case against IBM. PSI withdrew the case after its acquisition by IBM.

U.S. taxpayers too have something to gain from T3's European action, according to the Computer and Communications Industry Association, a lobby group based in Washington, D.C. Many banks and government departments are reliant on mainframes and must pay the price IBM demands, the CCIA said.

The fact that a U.S. company had to go to Europe to seek relief is indicative of the vacuum in U.S. competition law enforcement, the CCIA said. It called on Barack Obama and the incoming U.S. government to direct the U.S. Department of Justice and the U.S. Federal Trade Commission to better protect competition in the mainframe market.

A former IBM partner and mainframe reseller, T3 introduced its own competing IBM-compatible computers, the tServer range, at the low end of the market starting in 2000. It introduced a new family of mainframes, Liberty, in 2006.

T3 now has the backing of Microsoft, which invested an undisclosed sum in the company last November to fund development of new products for mutual customers. Microsoft has had its own share of antitrust conflicts with the Commission, which opened a new investigation last week into the company's practice of bundling its Internet Explorer browser application with its Windows operating system.

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