“Both IBM and Telelogic are active in the market for software development tools,” the Commission, the EU’s competition regulator, said in a statement.
Preliminary investigations found that the proposed $745 million (€528 million) takeover bid raises “serious doubts … given the strong market position that IBM would achieve for certain types of software development tools, in particular so-called ‘software modelling and requirements management’ tools,” the EU’s executive arm said.
“The combination of these two companies could have adverse effects on competition and, inter alia, give the merged entity the ability and incentive to slow down innovation and interoperability with tools from third party vendors,” it said in a statement.
The Commission now has until February 20, 2008 to either clear the deal or prohibit it.
“After this transaction IBM would become by far the largest vendor of software development tools for software modelling and for requirements management,” said EU Competition Commissioner Neelie Kroes
“It is the Commission’s duty to thoroughly analyze the effects of such a transaction and to ensure that it would not harm competition in the software development tools sector”.
Modelling tools are designed to help software developers model the software before developing it.
Requirements management tools are designed to streamline and document a development team’s analysis of the requirements.