Big Blue is under scrutiny again by antitrust authorities – this time in the European Union.

On July 26, 2010, the European Commission opened two formal investigations of International Business Machines Corp. (IBM) to probe allegations of IBM’s anticompetitive behavior in the mainframe computer market.  These investigations come on the heels of the investigation launched in October 2009 by the U.S. Department of Justice regarding IBM’s mainframe business.

The EC opened one of the investigations to determine whether IBM has engaged in practices designed to shut out competition for supplying maintenance services for mainframes.  In particular, the EC suspects that IBM may have been “restricting or delaying access to spare parts for which IBM is the only source” in order to stamp out competitors.

The second investigation is looking into whether IBM is improperly tying its mainframe operating system to its mainframe hardware.  Before the investigation had commenced, software emulator providers T3 and TurboHercules had filed complaints alleging that IBM’s tying practices are unfairly preventing customers from using IBM’s mainframe operating system on non-IBM hardware.

According to the EC, approximately 8.5 billion euros ($11 billion) worldwide and roughly 3 billion euros ($4 billion) in Europe were spent in 2009 on new mainframe hardware and operating systems.

More than a decade after British Airlines and American Airlines first sought antitrust immunity for their global alliance, the U.S. Department of Transportation last week granted their request.

The immunity allows the members of the so-called Oneworld Alliance – including British Airlines, American Airlines, and Iberia of Spain – to coordinate on prices, capacity, and service.  The U.S. approval follows on the heels of a similar grant from the European Commission the week before.

Both the U.S. and the E.U. have conditioned immunity on the Oneworld Alliance members’ giving up coveted takeoff and landing positions at Heathrow airport for flights departing to the United States.  But the airlines seem to believe that this sacrifice will be worth the advantage they will gain from partnering with one another.  The Oneworld Alliance will compete against two other global competitors that already have antitrust immunity – Star Alliance (made up of Lufthansa and United/Continental, who have announced a merger) and SkyTeam (made up of Delta Air Lines and Air France-KLM.)

These global partnerships are changing the face of airline competition.  Rather than one airline competing against the others serving the same region, these global alliances will compete against one another.  This will particularly impact corporate travel buyers, who tend to negotiate with the alliances.  Proponents of these ventures argue that forging an alliance, and gaining global reach, keeps the airlines competitive with what business travelers need.

Of course, this means that airlines left without global partners may be at a distinct disadvantage, as critics of the U.S. and E.U.’s actions would be quick to point out.  Virgin Atlantic’s Richard Branson, for example, has been an outspoken critic of the Oneworld Alliance.  Virgin Atlantic has no global partners.

A proposed joint venture between cable giant Comcast and media titan NBC Universal has cleared a major hurdle as European antitrust regulators have blessed the deal.

Because of significant differences between the assets involved in the American and European aspects of the deal, however, it seems likely that U.S. regulators will continue to scrutinize the venture more rigorously.

Comcast is America’s largest cable company and second largest internet service provider.  NBC owns major stakes in television, film, and cable programming as well as a major share in online streaming television service Hulu.  Under the deal, announced December 3, 2009, Comcast would buy a majority stake in NBC from its parent, General Electric.  As a result, Comcast and NBC would form a joint venture owned 51% by Comcast and 49% by NBC; Comcast would also manage the venture.  The deal is valued at $37 billion.

The European Commission has announced that the deal “would not significantly impede effective competition in the European Economic Area or any substantial part of it.”  But they pointedly noted that in Europe, unlike in the U.S., Comcast owns no cable assets.  Thus in Europe the deal creates no vertical relationship between a Comcast cable distribution platform and NBC’s programming assets.  Such a relationship would, however, result from the U.S. portion of the deal.

This vertical relationship was one of several concerns raised by opponents of the deal in a public comment period offered by the U.S. Federal Communications Commission, which has jurisdiction to review the deal.  The venture’s opponents believe it will lead to higher cable bills, fewer independent programmers and less public-service programming.  Comcast and NBC will formally respond to the public comments later this month.  But they have already argued that the deal would be a boon to consumers by improving broadcast operations, pressuring cable networks to lower prices and improve quality, and speeding the development of “anytime, anywhere” video service.  And they say the post-venture NBC would still only account for 12% of national cable network advertising and affiliate revenues, hardly enough to dominate cable advertising.

The FCC and the U.S. Justice Department, which shares jurisdiction over the deal, are expected to decide by year-end whether to approve or deny the deal or approve it with conditions, such as asset divestitures.

Europe’s highest court, the EU Court of Justice (ECJ), has upheld a fine of 85.8 million euros (approximately $100 million) against the German company Knauf Gips KG for participating in a plasterboard price-fixing cartel.

The cartel consisted of Knauf Gips KG, France’s Lafarge SA, Britain’s BPB Plc, and Belgium’s Gyproc Benelux.  The decision upholds part of the European Commission’s November 27, 2002, total fine of 478.32 million euros (approximately $605 million) imposed on the four companies. 

The fines stem from the cartel’s price-fixing of plasterboard for builders in Germany, Britain, France, Belgium, the Netherlands and Luxembourg between 1992 and 1998.  The Commission found that the companies implemented their cartel through a clandestine system that exchanged information and monitored the market to avoid competition.

A few weeks ago, on June 17, 2010, the ECJ upheld a fine of 249.6 million euros (approximately $300 million) against Lafarge for its role in the cartel.  As part of that decision, the ECJ found that the Commission had correctly doubled the fine against Lafarge based on Lafarge’s prior infringement of competition laws.

The General Court of the European Union has upheld a 2005 ruling by the European Commission that AstraZeneca engaged in anticompetitive behavior to shield its anti-ulcer and heartburn drug, Losec, from competition by blocking generic copies from entering the market.

The Commission fined AstraZeneca 60 million euros ($74 million), which the Court reduced to the still significant amount of 52.5 million euros. 

The Court found that between 1993 and 2000, pharmaceutical giant AstraZeneca engaged in anticompetitive behavior in order to preserve its market dominance and prevent generics from entering the market.  AstraZeneca’s scheme was wildly successful.  By 2000, Losec was the world’s highest-selling drug with global sales exceeding $6 billion. 

AstraZeneca was found to have shielded its drug from competition by misleading European patent authorities into granting it additional periods of patent protection.  To gain these additional periods, AstraZeneca told the patent authorities in various European countries that it did not receive approval to market Losec until1998.  The trouble is, AstraZeneca actually received approval in 1997, yet concealed this information from the patent authorities. 

The Court also found that AstraZeneca attempted to block generics from entering the market by changing the form in which Losec was sold from capsule to tablet.  Competing pharmaceutical companies are able to introduce generic versions of brand-name drugs into the market only if the original product is still for sale.  To keep generics off the trail, AstraZeneca asked various European countries to actually withdraw their approval of the capsule form in favor of the new tablet form that AstraZeneca had developed.  The Court found that this was yet another of AstraZeneca’s anticompetitive tactics aimed at creating a roadblock to a rival company introducing a generic version of their blockbuster drug.

In 2008, the European Commission began a probe into the name-brand versus generic rivalry, finding that drug companies routinely engage in anticompetitive practices to shield their name-brand drugs from competition by generics.  The Court’s upholding of the Commission’s ruling against AstraZeneca will provide the Commission with strong precedent to help stop pharmaceutical companies from engaging in such anticompetitive behavior.