April 30, 2024

I.B.M. Settles Antitrust Case With E.U.

BRUSSELS — The European Union’s competition regulator ended an antitrust investigation into International Business Machines on Wednesday after the company agreed to modify the way it supplied parts and information to rivals.

The commission said it had accepted I.B.M.’s offer to supply some spare parts and technical information to companies that service and maintain I.B.M. mainframe computers on nondiscriminatory terms for five years.

Under the agreement, I.B.M., which also services the mainframes, will have to offer rivals the information speedily, and the parts at a price that does not put them at a competitive disadvantage.

The European commissioner for competition, Joaquín Almunia, welcomed the fact that a swift solution had been found to concerns that were first raised last year.

“Timely interventions are crucial in fast-moving technology markets,” he said in a statement.

The speed with which the sector moves had posed problems for antitrust authorities in earlier, lengthy cases against Microsoft and other technology companies.

“More and more we see an appreciation and an understanding that they cannot treat this industry in the same way as you treat the automobile industry,” said Dennis Oswell, managing partner of Oswell Vahida, a law firm based in Brussels. “If you take your time you could be looking for remedies for problems that no longer exist.”

Mr. Oswell said the commission had been “uncomfortable with the technology sector, but they have really made an effort to get up to speed.”

This is the second case involving I.B.M., based in Armonk, New York, that has been closed by the commission this year. In August, three companies dropped a separate complaint against the company regarding its mainframe computers.

This latest inquiry centered on the fact that maintenance services for I.B.M.’s mainframes were offered both by the company itself and by independent operators, and the commission was worried that I.B.M. might be abusing its dominant position in the market.

Firms providing maintenance needed rapid access to spare parts and technical information in order to compete effectively, the commission argued.

Amelia Torres, a spokeswoman for Mr. Almunia, told reporters that the investigation involved “concerns we had that I.B.M. was imposing unreasonable conditions for supplying spare parts and technical information that is necessary for its competition to maintain or service its mainframes.”

Such maintenance was “crucial” for business continuity in order that “day-to-day work is not disrupted,” she added.

“These commitments are legally binding for five years,” Ms. Torres said. “I.B.M. must respect them or risk a fine.”

Joe Hanley, a spokesman for the company based in London, said in a statement that I.B.M. welcomes the resolution and was “pleased that the commission’s investigation of the IBM mainframe is now concluded.”

The investigation began in July 2010. In September 2011, the commission consulted other market operators on commitments that I.B.M. had proposed to remedy these concerns.

The European Commission is the top antitrust regulator for the European Union and can fine companies up to 10 percent of their global revenue if it finds they engage in anti-competitive practices. In the past it has imposed significant fines against Microsoft and Intel for breaching E.U. competition rules.

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E.U. Accepts IBM Antitrust Concessions, Ends Probe

The U.S. company had in September proposed to provide certain spare parts and technical information to other companies which maintain its mainframe hardware and software, under fair and reasonable terms.

The European Commission said it was satisfied that the concessions, which were revised after a market test and are valid for five years, were sufficient to address competition issues.

“I am pleased that we could find a swift solution with IBM to our competition concerns. Timely interventions are crucial in fast-moving technology markets,” EU Competition Commissioner Joaquin Almunia said in a statement.

The Commission’s decision confirmed what two sources familiar with the matter had told Reuters last week.

IBM said it was glad the matter had been resolved.

“IBM welcomes this final resolution of the inquiry into certain IBM mainframe maintenance practices and is pleased that the Commission’s investigation of the IBM mainframe is now concluded,” the company said in a statement.

Many big firms, universities and governments use mainframe computers to store and process large quantities of data.

This is the second case involving IBM that the European Commission has wrapped up this year. The EU watchdog closed an investigation into IBM in August after three small rivals dropped complaints.

The Commission, which acts as competition regulator for the EU and can fine companies up to 10 percent of their global turnover, has imposed billion-euro fines against technology firms such as Microsoft and Intel for breaching EU rules.

(Reporting by Foo Yun Chee; Editing by Rex Merrifield and David Holmes)

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