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T3 Hits IBM With Antitrust Charge - InternetNews.
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T3 Hits IBM With Antitrust Charge

IBM has been touting the success of its resurgent mainframe business, but one company thinks Big Blue hasn't played fair with the competition.

T3 Technologies announced today that it filed a formal complaint with the European Commission, charging IBM with abusing its monopoly position in the mainframe business. Previously, T3 had filed an antitrust claim against IBM (NYSE: IBM) in the U.S. District Court for the Southern District of New York alleging antitrust violations and unfair competition.

In a release, T3 accused 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. It accused Big Blue of withholding patent licenses and certain intellectual property to the detriment of mainframe customers.

"IBM has not seen T3's alleged EU complaint, nonetheless, IBM is confidant that it is no violation of competition laws for IBM to rightfully seek to prevent another company from violating IBM's intellectual property rights," IBM spokesperson Tim Breuer told InternetNews.com. "IBM has spent great time and expense developing its technology and will defend its intellectual property right vigorously."

For ten years (1992 to 2002) T3 was an IBM Business Partner selling IBM mainframes and eventually produced alternative mainframe product lines. But after initial success, T3 claims it was shut out of key technical information by IBM that "prevented the industry from having a choice in the market."

In July of 2008 IBM purchased another would be mainframe competitor, Platform Solutions, which had earlier joined T3 in legal action against the hardware giant.

An abusive monopoly?

Analyst Charles King said in order to prevail in its action, T3 will have to prove IBM is abusing a monopoly position and that could be tricky. Although IBM dominates in mainframe sales in most regions (Japan is a notable exception), King notes there are plenty of hardware alternatives from a variety of server manufacturers. "What IBM has argued is its z/OS operating system requires the power and resources of its mainframes for a true experience," King, president of Pund-IT, told InternetNews.com. "And that anything less is a degraded experience."

King did add that the European Commission tends to be more receptive to taking a tougher stance on antitrust complaints than U.S. regulators have to date, though that could change with the new Obama administration.

T3 Technologies could not be reached for comment, but in a statement said the mainframe is a distinct market that should not be closed to competition.

"The mainframe market is not only vibrant but growing. The mainframe remains essential to the operation of just about every industry including manufacturing, banking, healthcare, retail and governments," said T3 president Steven Friedman in the release.

"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% of all existing IBM-compatible mainframes in use today."