IBM pressure eases after complaints dropped

Antitrust pressures on IBM in Europe eased following news that the three companies whose complaints prompted a European Commission investigation into the US group’s mainframe computer business have dropped their protests.

Although the Commission still has the power to press ahead with both of its probes into IBM, one of which was prompted by the complaints, the decision to withdraw grievances raises the chance of IBM being handed a reprieve in at least one of the cases.

The retracted complaints, news of which emerged on Wednesday, come amid signs that Brussels has made little headway in its investigation, according to one person close to the case. However, a separate inquiry into similar issues by the US Department of Justice is still under way, the person said.

The three would-be rivals of IBM alleged that the US technology group illegally tied its mainframe hardware to its mainframe operating system, giving customers no opportunity to use alternative hardware. The complaints stirred up memories of earlier landmark antitrust cases against the IBM mainframe business, which remains one of the company’s most profitable activities due to the long-term investment many big companies and governments have made in the systems.

At the time, IBM reacted angrily to the allegations, saying there was no merit to complaints that it said had been propagated by “Microsoft and its satellite proxies” – a claim that laid bare a heated and bitter behind-the-scenes battle between the rival tech groups over the case. Microsoft made investments in TurboHercules and T3 Technologies, two of the three companies behind the complaints.

It had earlier invested in another company, PSI, which had lodged a complaint in Brussels against IBM, though the PSI case was dropped after IBM bought the company.

Of the three latest complainants to drop their cases, Neon Enterprise Software, a Texas-based company, announced it was to abandon its claim in a US regulatory filing – a move prompted by its defeat against IBM in a US court case. TurboHercules, a small French software company, has decided to drop its claim for business reasons, according to a person familiar with the company.

The Commission declined to comment.

A second Brussels probe into IBM, brought on the Commission’s own initiative, focuses on mainframe maintenance services.

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