The EU made a Decision in 2011 to break the monopoly of IBM on the secondary market of maintenance and support of IBM mainframes. During the last five years mainframe users who chose Independent Service Providers (ISP) as an alternative to IBM, have reaped the benefit of millions of euro in costs savings as is to be expected in a fair, open and competitive landscape.
This Decision expired on December 14th 2016 when, in accordance with the spirit of competition rules it was expected that all the stakeholders involved would come to a gentleman’s agreement to renew it on equitable terms. If the regulatory authorities cannot make a difference in applying Article 101 & 102 of the “Treaty on the Functioning of the European Union” (TFUE) this case shows its limitations in the real world.
ISPs need a long term “(main)frame of regulation” to protect their investments, their skills and their customers. Customers need to be sure ISPs will be able to comply with their needs. Customers need the certainty there is an authority that is strong enough to guarantee the balance between IBM and ISPs and, in case of any infringement, an authority that has the power to impose penalties.
It is illusory to believe that a multinational such as IBM would act in compliance with a Decision that is expired. It is more realistic to consider that IBM would impose, without any negotiation, unilateral Terms and Conditions that dramatically reduces the level of the obligations IBM was forced to accept. The reality is that IBM is now ready and prepared to engage in a fast winback of the market share of the ISPs on the secondary market of services.
As a result the cost to Europe will be in excess of €250m.per year through higher maintenance and support costs with potentially up to €1bn in additional capital costs as the US giant, International Business Machines Corp (IBM), takes back total control of the mainframe hardware market in Europe.
Who will pay? Well of course it will be the European taxpayers and consumers of the large European organisations such as banks, insurance companies and financial institutions that still invest in this reliable technology that is critical to their businesses.
Don’t sleep at the wheel !
Having been alerted by the ISPs and then on its own initiative, the EU took bold step in dealing with the discriminatory behaviour toward competing suppliers of mainframe maintenance and support services. In 2016 the EU has to investigate again as, to not do so they will be handing back to IBM complete control of this lucrative market.
Despite the efforts of many European bodies and organisations to warn the EU of the potential costs of not renewing this arrangement, the Decision has not been renewed.
Nevertheless, the EU has received many requests from ISPs to re-open the case in order to renew the Decision. There is no doubt that any upcoming investigation will demonstrate IBM will again be in a monopoly without the Decision, and will come to the same conclusion it did in 2011.
Free ICT Europe is calling on the EU to make this a priority.
The inevitable impact of this on the European IT services providers who operate in this sector are job losses. Of even greater significance will be the inevitable job losses from the organisations that use mainframes as they struggle with higher costs and the need to reduce their IT budgets. People are always the first thing to go in times of austerity.
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