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IBM faces new mainframe antitrust complaint in Europe

Neon Enterprise Software to file complaint about IBM to European Commission

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Neon Enterprise Software said it plans to file a mainframe-related complaint against IBM with the European Commission, compounding the IT giant's mounting regulatory issues in Europe.

Neon, which makes software for mainframe computers, said the complaint is connected with IBM's "on-going anticompetitive and abusive conduct" in the mainframe business. The company did not comment on when it would file the complaint.

IBM has already been slapped with three mainframe antitrust complaints in Europe from TurboHercules, PSI and T3 Technologies. In March, TurboHercules, a mainframe software company in France, filed a complaint with the Commission in which it said that IBM ties its OS with mainframe hardware, which freezes out smaller competitors.

IBM has not yet received any complaint, wrote Steve Eisenstadt, an IBM spokesman, in an email.

"IBM strongly believes Neon's product offers no innovation," Eisenstadt wrote, adding that Neon's motivation is to profit from the "billions of dollars" IBM has invested in mainframes in the past 10 years.

The "copycat" companies are attempting to mimic the functionality of IBM's mainframe servers, and in doing so, are violating IBM's intellectual property, Eisenstadt wrote. IBM will vigorously protect investments in its mainframe technologies, Eisenstadt wrote.

In October, the US Department of Justice initiated a preliminary investigation related to allegations of IBM's dominant behavior in the mainframe computer market.

Neon makes the zPrime software, which the company says can reduce operating costs by shifting mainframe computing tasks to IBM's zAAP and zIIP specialty mainframe processors. IBM introduced specialty processors (SPs) in mainframes to divert certain workloads from the central processor, and customers don't pay software licensing fees to use those SPs.

The companies have already exchanged legal barbs over zPrime and its functionality. Neon has accused IBM of unlawfully trying to maintain dominance in processing of workloads on IBM's mainframe computers, while IBM accusing Neon of hijacking its intellectual property.

In December Neon filed a lawsuit in the US District Court for the Western District of Texas, accusing IBM of unlawfully interfering in the customers' purchase of zPrime.

According to Neon, IBM told its mainframe customers in a letter that "the use of zPrime will cause Neon's customers to become obligated -- contrary to IBM's original promises to customers that purchased SPs - to pay software license fees for workloads shifted to SPs." IBM's claim is false, Neon said.

IBM filed a counter-claim to Neon's suit in January, accusing Neon of building zPrime in a way to misappropriate IBM's intellectual property.


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