Brussels launches inquiry into IBM over 'anti-competitive' allegations

EUROPEAN regulators launched two competition investigations against IBM yesterday, suspecting it of abusing its dominant position on the mainframe computer market.

One investigation followed complaints by software developers T3 and TurboHercules against IBM's practices, and focuses on the US computer giant's alleged tying of mainframe hardware to its mainframe operating system.

The second probe, opened on the European Commission's own initiative, concerns alleged discriminatory behaviour towards competing suppliers of mainframe maintenance services.

In a statement, the EC said: "The Commission has concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services … in particular by restricting or delaying access to spare parts for which IBM is the only source."

The Commission enforces EU competition rules and can fine companies that break them.

IBM rejected the allegations, but promised to co-operate fully with the investigation.

"IBM is fully entitled to enforce its intellectual property rights and protect the investments we have made in our technologies," the company said.

It added that Microsoft and its other big competitors had inspired the Commission's action.

"The accusations made against IBM by TurboHercules and T3 are being driven by some of IBM's largest competitors - led by Microsoft," it said, adding that in this way the software giant wanted to cement the dominance of its Wintel servers.

Mainframes are powerful computers which many large companies and government institutions use to store and process critical information. The vast majority of corporate data worldwide resides on mainframes.

In 2009, customers spent some 8 billion worldwide and more than 2.5bn in the European economic area on new mainframe hardware and operating systems.

The Commission said that T3 and TurboHercules had alleged IBM had been illegally tying its mainframe hardware products to its dominant mainframe operating system.

According to the complaints, the tying shuts out providers of so-called emulation technology which enable the users to run applications on non-IBM hardware.

IBM's last set of results revealed a 19 per cent drop in the value of outsourcing contracts - used by client companies to hand the running of their entire IT departments over to IBM.

Both service and outsourcing contracts are important for the US firm, because they lock in revenue streams for several years, and because they can be used by the company to sell other products to clients.

Earlier this year, it emerged that IBM had cut some 1,500 posts across a number of its divisions.

The company, which employs nearly 400,000 workers around the world, would not comment on the move, but documents submitted by redundant workers to the Alliance@IBM, a union representing a small percentage of IBM employees, indicated that 1,518 jobs were shed.

IBM, which is based in Armonk, New York, generally does not release details of its job cuts. Its overall head count has grown over the past few years, despite continuing redundancy programmes.