Brussels, 04/10/2007 (Agence Europe) - On 3 October 2007, the European Commission opened an in-depth investigation into the proposed takeover of the Swedish company Telelogic by the American IBM. According to Neelie Kroes, the Competition Commissioner, “After this transaction IBM would become by far the largest vendor of software development tools for software modelling and for requirements management. It is the Commission's duty to thoroughly analyse the effects of such a transaction and to ensure that it would not harm competition in the software development tools sector.”
An initial investigation carried out by the Commission revealed competition problems on the two software development markets: software modelling tools, which are designed to help developers model software prior to developing it, and requirements management tools, which streamline and document a development team's analysis of the requirements. These products help companies model, construct and test complex systems such as radars and ABS systems. On these two markets IBM and Telelogic are the two world leaders, and direct competitors. The acquisition would risk placing the new entity in a position to unseat what little competition remains, discourage interoperability and halt innovation on these markets. These observations were the reason for the Commission's decision to open an in-depth investigation to determine more closely the exact risks to competition which the proposed takeover would entail, and any possible conditions to which the merger should be subject. The Commission has 90 working days (until 20 February 2008) to take a decision. IBM's offer for Telelogic, which is based in Malmö and employs more than 1100 people in 22 countries, is 5.2 billion Swedish kronor ($800 million). (cd)