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IBM Faces Antitrust Investigation

ARMONK, N.Y. ( TheStreet) -- IBM (IBM - Get Report) is being investigated by the U.S. Justice Department for allegations that it abused its dominance of the mainframe business to squeeze rivals, says Computer and Communications Industry Association Chairman Ed Black.

CCIA, a non-profit trade group, had urged the Justice Department to open the probe, reports Reuters.

CCIA accused IBM of withdrawing licenses for its operating systems from customers who use non-IBM hardware, retaliating against business partners deemed disloyal, and bundling its mainframe operating systems with hardware. The Reuters report also said CCIA alleges that IBM refused to license its mainframe operating systems to users of "Hercules" open-source software for installation on machines other than IBM mainframes.

The Justice Department has begun a CID investigation process, equivalent to a subpoena, and its scope is quite broad with antitrust being one of the primarily focal points, Black said, according to Reuters.

The news comes after software developer T3 Technologies had filed an antitrust suit against IBM in Manhattan federal district court. The judge threw out the suit on Sept. 30.

In a statement, IBM highlighted the dismissal of the suit, but Black pointed out the Obama administration's pledge to deal with antitrust seriously.

The probe by the Justice Department is similar to others it has opened into dominant firms. The head of the department's antitrust division, Christine Varney, said in May she planned to take a more aggressive approach with firms that use their market power to crush competition, Reuters notes.
This article was written by a staff member of TheStreet.com.

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