T3 Technologies sues IBM with the European Commission for allegedly maintaining an illegal monopoly tying mainframe software and hardware. T3 had previously filed an antitrust claim against IBM in United States District Court for the Southern District of New York alleging antitrust violations and unfair competition.
T3 Technologies has announced its filing of a lawsuit against IBM
with the European Commission for allegedly illegally tying mainframe
software and hardware.
T3 initially announced that it was preparing to file suit in August,
but has now moved forward with its complaint. On Jan. 20, T2 filed a
formal complaint against IBM with the European Commission's Directorate
General for Competition (DG-Comp) in Brussels. T3 has previously filed
an antitrust claim against IBM in the United States District Court for
the Southern District of New York alleging antitrust violations and
unfair competition.
According to a T3 statement, T3's complaint alleges a history of IBM
abusing its monopoly power in the mainframe industry. T3 accuses IBM of
engaging in a range of anti-competitive actions, including preventing
the sales of competing mainframe hardware products by tying the sale of
its operating system to its mainframe hardware, and withholding patent
licenses and certain intellectual property to the detriment of
mainframe customers.
IBM did not respond to requests for comment on this story in time for publication.
"Despite reports in the press that the mainframe market is
shrinking, nothing could be further from the truth," said Steven
Friedman, president of T3 Technologies, said in a statement. "The
mainframe market is not only vibrant but growing. The mainframe remains
essential to the operation of just about every industry including
manufacturing, banking, health care, retail and governments. In the
past, companies such as Amdahl, Hitachi, Comparex, PSI and T3 used to
compete in the mainframe market. However, through a calculated set of
actions, only IBM now offers IBM-compatible mainframes and, based on
IDC reports, controls over 99 percent of all existing IBM-compatible
mainframes in use today."
T3 also accuses that "through its focused action against mainframe
competitors, IBM now has an exclusive lock on the mainframe market. In
IBM's most recent quarter, it announced that its mainframe business
grew by 25 percent year over year. It is estimated that over 25 percent
of IBM's $100 billion in revenue and 40 percent of its profits are
derived from its monopoly in the mainframe market. T3 hopes that the
European Commission will investigate IBM's above-market prices for its
mainframe monopoly solutions and its actions to eliminate competition.
According to one industry expert, it is estimated that Europeans could
save $48 billion over 20 years if the mainframe market were opened up
to fair competition."
Moreover, T3 officials said that from 1992 to 2002, T3 was an
important IBM Business Partner selling IBM mainframes. T3 has produced
two successful alternative mainframe product lines. Yet, despite this
success, "IBM shut T3 and any future competitors down and prevented the
industry from having a choice in the mainframe market," T3 said in a
statement. "Over the past two years, T3 joined Platform Solutions Inc.
(PSI) - another company affected by IBM's anti-competitive action - in
legal actions against IBM. However, IBM chose to acquire PSI in July
2008, leaving T3 to pursue actions on its own behalf and on behalf of
companies and customers negatively affected by IBM's monopolistic
practices."
"For decades, IBM licensed its system software and intellectual
property to other computer manufacturers," said Friedman. "However, for
no reason other than to remove all competition from the mainframe
market, IBM eliminated programs to allow customers to buy its mainframe
software for use on non-IBM mainframe solutions. It also used legal
threats and anti-competitive actions to shut down competitors such as
T3 and PSI."
This is not IBM's first foray in court relating to its mainframe
business. The company fought a protracted legal battle with the U.S.
Department of Justice beginning in 1969.
The DOJ filed a complaint for the case U.S. v. IBM in the United States District Court for the Southern District of New York, on January 17, 1969. The suit alleged that IBM violated Section 2 of the Sherman Act by monopolizing
or attempting to monopolize the general purpose electronic digital
computer system market, specifically computers designed primarily for
business. Litigation continued until 1983. However, in 1973, IBM was
ruled to have created a monopoly via its 1956 patent-sharing agreement
with Sperry-Rand.
Meanwhile, in related news, T3 announced the launch of a new
community Web site - OpenMainframe.org - to share information related
to the mainframe market and IBM's actions.
Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.
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