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QSGI Charges IBM Abused Power In Used Computer Market

Posted  August 12, 2011

QSGI Inc., the former second largest reseller of IBM mainframe computers, has filed a multi-million dollar antitrust suit against IBM in the U.S. District Court for the Southern District of Florida.

The complaint in QSGI Inc. v. IBM Global Financing alleges that IBM violated the Florida Antitrust Act and the Florida Unfair and Deceptive Trade Practices Act by adopting a rule that devastated QSGI’s ability to compete as a seller in the used IBM mainframe computer market.

IBM allegedly instituted a “Six-Month Rule” in 2007, which prohibited outside resellers like QSGI from obtaining the parts and code necessary to modify used IBM mainframes until the computers had been installed for at least six months.  QSGI directly competed with IBM’s own subsidiary, IBM Global Financing (“IGF”), the largest reseller of IBM mainframe computers.  The rule did not apply to IGF, which could still modify used mainframes prior to shipping.

Prior to the Six-Month Rule, QSGI alleges it was able to buy the parts from IBM necessary to turn off unwanted mainframe capacity which led to lower licensing costs for its customers.  QSGI claims that the Six-Month Rule forced it out of the mainframe market and ultimately into bankruptcy because it could no longer compete with IGF on price.  The suit also claims that the rule forced purchasers to buy used mainframes at uncompetitive prices from IGF.

Tagged in: Antitrust Litigation,