T3 files antitrust complaint against IBM in Europe

Mainframe company files a complaint with European antitrust regulators, alleging that IBM is blocking competition by tying its operating system with its mainframe hardware.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read

Update at 9:12 a.m. PST, with comment from IBM.

T3 Technologies filed a complaint against IBM with European antitrust regulators on Tuesday, alleging that Big Blue is blocking competition by tying its operating system with its mainframe hardware.

T3, a maker of IBM-compatible mainframes for small to midsize companies, is asking the European Commission to investigate IBM's market pricing and alleged effort to eliminate competition by withholding its patent licenses for its mainframe operating system and certain intellectual property.

"Since November 2006, we have not been able to sell any of our hardware. No rational buyer would buy any hardware without software," said Steven Friedman, T3's president.

T3 currently offers maintenance and support for its existing IBM-compatible mainframe customers and integration services.

IBM, in a statement, contends there is no violation of antitrust laws:

IBM has not seen T3's alleged EU complaint. Nonetheless, IBM is confident 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 has spent great time and expense developing its technology and will defend its intellectual property rights vigorously.

T3, a small, privately held mainframe company in Florida, alleges, however, that IBM is engaging in behavior that previously had been barred under the consent degree that the Department of Justice began to phase out in 1997 over a five-year period.

T3 began marketing its IBM-compatible tServer mainframe line in 2000, using software from Fundamental Software that was based on an IBM patent license.

But in 2005, T3 signed an agreement with Platform Solutions Inc. (PSI), which would enable the small mainframe maker to create a more robust mainframe system, Liberty, that would put it in further competition with IBM, Friedman said.

The following year, T3 was hit with a one-two punch, as it shipped Liberty. IBM said it would not license its operating system to PSI or to Fundamental Software any longer.

PSI and T3 filed a lawsuit against IBM in the U.S. District Court for the Southern District of New York in late 2007, alleging Big Blue violated the nation's antitrust laws and engaged in unfair competition.

PSI, however, was acquired by IBM in July. T3 is continuing with the lawsuit, which is scheduled to go to trial in mid-summer.

Since 2006, T3 has laid off 80 percent of its workforce in the U.S. and Europe, as its revenue has dropped by a similar proportion, Friedman said.

"IBM has left the industry with one (mainframe) vendor. They have successfully foreclosed all competition in this industry," Friedman said.

With the European Commission having recently shown it will pursue tying cases, such as in the Microsoft and Media Player case and now its recent objection to tying Microsoft's Internet Explorer browser with Windows, Friedman said he is optimistic the European Commission will investigate its complaint.