U.S. District Court dismisses T3’s antitrust claims against IBM

On 30 September 2009 the U.S. District Court of S.D.N.Y. granted in International Business Machines Corp. v. Platform Solutions, Inc. and T3 Technologies, Inc. (No. 06 Civ. 13565(LAK)) IBM’s motion for summary judgment on antitrust claims raised by T3 Technologies, Inc. (“T3”), a firm involved in the selling of IBM compatible mainframe computers.

In particular, T3 claimed that IBM has attempted to monopolize the market for IBM compatible mainframe computers by refusing to license its mainframe operating system to Platform Solutions, Inc. (“PSI”) and Fundamental Software, Inc. (“FSI”). In absence of such licenses from IBM, PSI and FSI were unable to offer components to T3 which were required for T3 to sell IBM compatible computers. Moreover, according to T3, IBM terminated an earlier agreement that enabled T3 to sell IBM’s 31 bit mainframe servers.

The Court granted summary judgment to IBM, as it found T3 lacked antitrust standing. The Court stated further that even if T3 had antitrust standing, its claims would in any case fail because IBM’s refusal to deal with FSI and PSI does not constitute anticompetitive conduct. The Court, however, noted that that the right to refuse dealings is not unqualified but is subject to a limited exception in case voluntary dealings are terminated so as to forsake short-term profits for an anticompetitive objective.

Nevertheless, on T3’s argument that IBM decided to cease its licensing and support of the 31 bit operating system in the sole purpose of suppressing competition, with no legitimate business reason, the Court considered that T3 did not demonstrate that IBM sacrificed short term profits in order to achieve an anticompetitive end. With this respect, the Court noted the benefits of developing the more functional and competitive 64 bit technology and switching to it from the 31 bit technology. Accordingly, IBM’s refusal to deal in the 31 bit operating system with FSI and PSI did not constitute anticompetitive conduct even under the limited exception. [Juha Vesala]