Agency Studies IBM's Pact With Storage Technology
April 26, 2011
The Justice Department is reviewing the possible antitrust implications of a new disk-drive alliance between International Business Machines Corp. and Storage Technology Corp.. StorageTek, Louisville, Colo., disclosed the inquiry in a quarterly filing with the Securities and Exchange Commission. In June, the company agreed to let IBM, of Armonk, N.Y., resell StorageTek data-storage devices for the mainframe computer market. The alliance has given IBM an opportunity to fill key gaps in its line of high-end storage devices. But it also has united two longtime rivals in a critical segment of the competitive disk-drive market. A Justice Department spokeswoman said, ``We're looking at the possibility of anticompetitive practices in the direct-access storage industry.'' She wouldn't elaborate. StorageTek said it foresaw such a probe when it signed the sales agreement with IBM, and it argued that regulators shouldn't find fault with the arrangement. ``We anticipated that this could happen, and we were very thorough in our examination of whether the agreement would meet all the legal requirements,'' a spokeswoman said. IBM said it was cooperating with the Justice Department's requests for information and was confident there would be no objections to the deal. ``We believe this is beneficial to customers,'' said Carylon Falcon, a spokesman for IBM's storage division. ``And we feel the Justice Department will reach that conclusion. So we're giving them what they're asking for.'' When the deal was unveiled, Wall Street hailed it as positive for both companies. IBM once dominated the market for high-end storage devices, which hold information for mainframe and midsize computer systems. But it lost ground when competitors introduced newer, cheaper systems. For StorageTek, which has been hampered by a weak sales force, the alliance has provided access to IBM's world-wide marketing clout. The deal calls for StorageTek to stop marketing the devices and for Big Blue to sell them under the IBM label. IBM also agreed to help fund the company's research for future advancements. IBM is already selling StorageTek products under the agreement, which is set to expire in 2014. --Royce Diego contributed to this article.
