IBM faces US Justice Dept inquiry on mainframes

Complaint on which inquiry is based has no merit, IBM says

IBM is facing an antitrust inquiry from the US Department of Justice for recent actions the company has taken in the mainframe computer market, according to the Computer and Communications Industry Association (CCIA),a trade group that filed a complaint with the department.

The DoJ has begun issuing formal requests for information related to a complaint filed against IBM in September, according to the (CCIA).

CCIA's complaint against IBM alleges that the company has refused to issue licences for IBM's mainframe OS to competitors, as required in a series of actions the DoJ took against IBM dating back to the 1970s and earlier. In some cases, IBM has yanked the OS licence from customers trying to switch from IBM mainframe hardware to a competitor's, says Ed Black, CCIA's president.

The DoJ abandoned a long-standing antitrust consent decree with IBM in 2001.

Several large and small companies would like to compete with IBM in the mainframe market, particularly in software and services for mainframes, but IBM's actions have allowed it to maintain a monopoly, Black says.

"It's a really big case," adds Heather Greenfield, a CCIA spokeswoman. "There are tons of companies cheering that aren't willing to be quite so public because they have to deal with IBM in other ways."

The DoJ will not comment on the complaint, a DoJ spokeswoman said.

IBM believes there is no merit to antitrust claims brought by competitor T3 Technologies, says Tim Breuer, director of external relations for the IBM Systems and Technology Group. The DoJ has apparently asked T3 for documents related to its lawsuit, Breuer says. IBM intends to cooperate with any inquires from the DoJ, he added.

Last week, a US district court in New York dismissed a lawsuit brought by mainframe vendor T3, Breuer notes.

T3, partly owned by Microsoft, had accused IBM of yanking its IBM reseller agreement when T3 refused to stop selling technology that allowed customers to end older versions of IBM's mainframe operating systems on Intel-based servers. The T3 dispute with IBM is part of CCIA's complaint filed with the DoJ, as well as part of an antitrust investigation against IBM launched by the European Union in mid-2008.

"We continue to believe there is no merit to T3's claims, and that IBM is fully entitled to enforce our intellectual property rights and protect the investments that we have made in our technologies," Breuer says.

Part of CCIA's complaint stems from the tech giant's treatment of former competitor Platform Solutions. IBM had little competition in the mainframe market when Platform Solution, early this decade, began work on servers that could mimic the behavior of more expensive IBM mainframes, the CCIA says.

Platform Solutions, based on past mainframe agreements between IBM and the DoJ, requested copies of IBM's OS and technical information under a licensing agreement. IBM declined to grant Platform Solutions a licence and prohibited customers from transferring IBM software licences to Platform Solutions machines, says CCIA, which has members that are potential competitors of IBM.

In 2006, IBM sued Platform Solutions over licences the smaller company had purchased from Amdahl, a division of former mainframe competitor Fujitsu. IBM's lawsuit alleged that the licences infringed its intellectual property. Platform Solutions filed a countersuit. In 2008, IBM purchased Platform Solutions, putting an end to the legal wrangling.

IBM also refused to licence its mainframe OSes to users of the Hercules open source mainframe project trying to run mainframe software on non-IBM hardware, CCIA says.

But the complaint goes "way beyond" the Platform Solutions, T3 and Hercules cases, Black says. Many mainframe customers would like to find cheaper alternatives, but IBM has prevented them from doing so, he says.

"There's a number of things they have done to numerous companies," he says. "In a time of economic troubles, government deficits and corporate problems, there's a lot of customers that [would find] a choice and lower costs really desirable," Black says.

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Tags platform solutionsIBMDepartment of Justiceccia

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