U.S. Begins Antitrust Inquiry of I.B.M.

The Justice Department has started a preliminary investigation into whether I.B.M. has abused its monopoly position in the market for mainframe computers, which remain vital to many of the world’s largest businesses.

This month, antitrust regulators at the Justice Department began seeking information about I.B.M.’s business practices from companies that compete with I.B.M. in the market for large computer hardware and software, people who had been contacted in the inquiry said.

The requests for information followed a complaint filed by the Computer and Communications Industry Association, a trade group with a history of involvement in antitrust disputes. The organization, which is backed by I.B.M. competitors like Microsoft and Oracle, contends that I.B.M. stymied competition in the mainframe market and blocked efforts by competitors and potential partners to license I.B.M.’s software.

The complaint follows similar legal action taken by T3 Technologies against I.B.M.

A Justice Department spokeswoman declined to comment.

In a statement on Wednesday, I.B.M. cited the judge’s ruling last week against T3 and said, “We continue to believe there is no merit to T3’s claims.”

While sometimes called the dinosaurs of computing, mainframes continue to play a vital role in business. The systems are estimated to handle 50 billion transactions a day in such areas as automated teller machines, health records and accounting.

Mainframes are also important to I.B.M. About 25 percent of its $104 billion in annual revenue comes from the sale of mainframes and associated products like storage systems, software and services, said A. M. Sacconaghi, a securities analyst with Sanford C. Bernstein.

Analysts contend that I.B.M.’s dominance in the mainframe market gives it a major advantage because it deals with its customers’ most confidential information. They also say that I.B.M.’s practices have resulted in higher costs for customers.

From The New York Times
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