EU Settles IBM Mainframe Antitrust Concerns

IBM and European regulators have settled their dispute regarding antitrust concerns around Big Blue’s mainframe business.

In a statement 14 December, the European Commission announced that it was accepting IBM’s commitment to quickly make available spare parts and technical information to companies that help businesses maintain their IBM mainframes.

Right Steps

European regulators were concerned that IBM was making it difficult and costly for independent companies that maintain mainframes to get the parts and information they need to run their businesses. The EC, which is the antitrust arm of the European Union, indicated that IBM was abusing its dominant market position in the mainframe space to hinder competition from the independent mainframe maintenance businesses.

However, after a trial run with the new IBM commitments regarding spare parts and technical information, EC regulators said they were satisfied that the giant IT vendor had made the right steps.

“I am pleased that we could find a swift solution with IBM to our competition concerns,” Joaquín Almunia, commissioner vice president in charge of competition policy, said in a statement. “Timely interventions are crucial in fast-moving technology markets.”

In a statement given to Reuters, IBM officials also were happy to put the case behind them.

“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.

The resolution helps wrap up what had been a number of regulator investigations and competitor complaints both in the United States and Europe involving IBM’s business practices around its mainframe unit. IBM, with its System z business, by far is the world’s largest vendor of these massive systems, which run mission-critical workloads in a variety of businesses and government agencies.

Mainframe Longevity

The mainframes were expected to die out as smaller, cheaper and increasingly high-performing servers running x86 chips from Intel and Advanced Micro Devices flooded the market. However, IBM has been able to modernise the systems, and the business continues to bring in millions of dollars in revenues every year. In the second quarter, System z revenues rose 61 percent over the same period last year, while MIPS jumped 86 percent. However, the third quarter saw revenues drop 5 percent and MIPS 11 percent.

IBM in 2011 was able to set aside most of the complaints against its mainframe business. In May, Neon Enterprise Software officials announced that they and IBM had settled their legal disputes stemming from lawsuits filed involving Neon’s zPrime software. IBM had created specialty processors to enable businesses to run particular workloads. zPrime was designed to let businesses run even more workloads on the specialty processors, which are less expensive than the primary processors. IBM officials said running workloads that were not authorised by Big Blue on specialty engines violated customers’ licenses with IBM. A U.S. District Court judge agreed, and Neon dropped the suit and took zPrime off the market.

In August, Neon, T3 Technologies and TuboHercules withdrew their complaints with European regulators. Each complained that IBM was violating antitrust laws by using its dominant position to unfairly hurt their businesses by tying their System z machines to its mainframe operating system. IBM argued that the companies’ products violated IBM patents and that they were trying to make money off of the billions of dollars IBM had put into its mainframe business.

The EU had opened the investigation of IBM in regards to the mainframe maintenance market in July 2010, and talked with stakeholders in September to discuss IBM’s proposal for remedying the situation. That move led to the EC dropping the investigation, according to the an EC statement.