Reuters
Technology
IBM offers concessions to settle EU antitrust probe
Tue, Sep 20 09:31 AM EDT

By Foo Yun Chee

BRUSSELS (Reuters) - International Business Machines Corp (IBM) has offered concessions to settle an EU investigation into its business practices, which could allow it to ward off a possible fine and an antitrust infringement finding.

The European Commission opened a probe into IBM in July last year after competing suppliers of mainframe maintenance services accused the U.S.-based company of discriminatory behavior.

A preliminary finding showed IBM's practices "may amount to a constructive refusal to supply these inputs (required for the maintenance of IBM mainframe hardware and software)," the Commission said in a statement on Tuesday.

"IBM does not agree with the Commission's preliminary assessment. It has nevertheless offered commitments... to meet the Commission's competition concerns," the EU's executive Commission said.

Antitrust lawyers said a settlement was an easy way for IBM and the regulator to resolve the issue, but that it was difficult to assess the impact on the market.

"If it (the offer) is accepted it's a win-win situation as IBM doesn't get fined and the Commission doesn't have to prove its case," said Marc Israel, a partner at London-based law firm Macfarlanes. The Commission would also not have to defend a ruling against any appeal that would almost inevitably follow.

"Whether the offer is likely to have any material impact on the maintenance market is an issue the Commission will want to consider, especially if many customers may still prefer to use 'official' maintenance contractors," he said.

IBM offered to provide certain spare parts and technical information to other companies which maintain its mainframe hardware and software under reasonable and non-discriminatory terms and conditions, said the Commission, which acts as competition regulator in the 27-member EU.

The company proposed appointing a manager to handle dealings with other firms. The concessions would last for five years.

EU regulators said third parties now had a month to comment on the proposals. If the proposals were accepted, IBM would not be fined. Penalties for breaking the rules allow for fines of up to 10 percent of global revenues.

The Commission also closed a separate investigation into IBM after three small rivals withdrew their complaints that the firm had tied its mainframe hardware with its operating system.

IBM had said at the time of the allegations that Microsoft and other competitors had inspired the actions by emulator software vendor T3 Technologies Inc. and France's TurboHercules.

The third complainant was Texas-based Neon Enterprise Software.

IBM welcomed the Commission's decision on both issues.

"IBM has put in place certain ... parts ordering procedures, and we look forward to that providing the basis for the final resolution," the company said in a statement.

(Editing by Rex Merrifield and Helen Massy-Beresford)


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