Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie,  DG COMP MERGER REGISTRY, 1049 Brussel,   BELGIË  
 
Tel: +32 229 -91111. Fax: +32 229 -64301. E -mail: COMP -MERGER -REGISTRY@ec.europa.eu .  EUROPEAN COMMISSION  
Brussels, 27.6.2019  
C(2019 )5011 final  
PUBLIC VERSION  
 
To the notifying party  
Subject : Case M. 9205 – IBM / RED HAT  
Commission decision pursuant to Article 6(1)(b) of Council 
Regulation No  139/20041 and Article 57 of the Agreement  on the 
European Economic Area2 
Dear Sir or Madam,  
(1) On 20 May 2019,  the European Commission received notification of a proposed 
concentration pursuant to Article 4 of the Merger Regulation by which  
International Business Machines Corporation ( “IBM” or “Notifying Party”, USA ) 
intends to acquire sole control of Red Hat Inc. (“Red Hat”, USA) (the 
“Transaction”)3. IBM and Red Hat  are collectively referred to as "Parties".  
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation '). With effect from 1 December 2009,  the Treaty on 
the Functioning of the European Union ( 'TFEU ') has introduced certain changes, such as the 
replacement of  'Community ' by 'Union ' and 'common market ' by 'internal market '. The terminology of 
the TFEU will be used t hroughout this decision.  
2  OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').  
3  Publication in the Official Journal of the European Union No C 185 , 29.05.2019, p. 21. 

 
2 1. THE PARTIES  
(2) IBM is a public company headquartered in Armonk, New York, USA. It is acti ve 
worldwide in the development, production, and marketing of a wide variety of 
information technology (“IT”) solutions, namely enterprise IT software and 
systems (such as servers, storage systems, cloud, and cognitive offerings) and IT 
implementation serv ices (such as business consulting and IT infrastructure 
services).  
(3) Red Hat  is a public company headquartered in Raleigh, North Carolina, USA. It 
is a global provider of open -source software and support services, using a 
community -powered approach to develo p and offer a wider range of open -source 
software solutions for enterprise customers, including in hybrid cloud 
environments.  
2. THE TRANSACTION  
(4) Under an agreement and plan of merger dated 28 October 2018 (the 
“Agreement”), IBM will acquire all of Red Hat’s issued and outstanding common 
shares for a total value of approximately USD 34 billion. Therefore, the 
Transaction consists of the acquisition of sole control by IBM over Red Hat 
within the meaning of Article 3(1)(b) of the Merger Regulation . 
3. EU DIMENSION  
(5) The Parties  concerned have a combined aggregate world -wide turnover of more 
than EUR 5 000 million4 (IBM: E UR 67 392 million; Red Hat : EUR  2 53 1 
million) . Each of them has a n EU-wide turnover in excess of EUR 250 million  
(IBM: EUR […]; Red Hat: EUR […]), but they do not achieve more than two -
thirds of their aggregate EU-wide turnover within one and the same Member 
State. The notified operation therefore has an EU dimension.  
4. RELEVANT MARKETS  
4.1. Introduction  – approach  to market definition  
(6) Red Hat and IBM are bo th active in IT software for enterprise customers across 
different layers of the IT stack.   
                                                 
4  Turnover calculated in accordance with Article 5 of the Merger Regulation .  
 
3  
(7) The Parties’ activities overlap in a number of plausible markets or market 
segments at nearly all levels of the IT software stack. The Transaction also creates 
a large number of non -horizontal relationships.  
(8) In determining the relevant markets, where possible, the Notifying Party provided 
its views on the product and geographic market definitions on the basis of 
previous Commission decisions. The Notifying Party also relies on the 
segmentation of the market intelligence companies IDC and/or Gartner ,5 which 
the Notifying Party submits has been used in previous Commission decisions, in 
order to identify the narrowest possible product markets on which the Parties are  
active . 
(9) For the purpose of the present decision , the Commission  carried out its 
competitive assessment on the basis of the narrowest possible product market 
segments identified by the Notifying Party in accordance with IDC and Gartner 
segmentation s for which market share data is available and  which were affected  
on the basis of 2018 market shares data .6 
(10) In the following Sections, the Commission carries out an assessment on the basis 
of IDC's primary markets for (i) Application Development and Deploy ment 
Software (Section 4.2) and (ii) System Infrastructure Software (Section 4.3) .  
(11) IDC sub -segments the primary market  for Application Development and 
Deployment Software into the secondary markets for (i) Application Platform 
Software,7 (ii) Integration and Orchestration,8 (iii) Application Development,9 (iv) 
Data Management.10  
                                                 
5  IDC and Gartner classifications are not directly comparable with each other. This decision refers to the 
segments as indicated by the Notifying Party in the Form CO.  
6  In the present decision, the Commission only refers to market segments which are horizontally o r non -
horizontally affected based on 2018 market shares data. On that basis, the following possible segments 
are not discussed in this decision: (i) Storage Resource Management, (ii) ITOM Mainframe Tools, (iii) 
Performance Analysis: Artificial Intelligence  for Operations, IT Infrastructure Monitoring and Other 
Monitoring Tools.  
7  Within the secondary market for Application Platform Software, IDC identifies the functional markets 
for (i) Deployment -Centric Application Platforms (Section 4.2.1) and (ii) Tra nsaction Processing 
Monitors (Section 4.2.2).  

 
4 (12) IDC sub -segments the primary market for System Infrastructure Software into the 
secondary markets for (i) Storage,11 (ii) Physical and Virtual Computing 
Software,12 (iii) Network13 and (iv) Operating Systems14.  
(13) When relevant, the Commission also relied on the Gartner segmentation.15 
4.2. Application Development and Deployment Software (Middleware)  
(14) Middleware is a large and diverse category of software that is used for building 
and operating  large enterprise software applications. Some middleware is 
provided as prebuilt libraries or components that developers incorporate into 
applications and components. Middleware simplifies and accelerates development 
by reducing the need to recreate common  functionality required by many 
applications . Middleware includes several products that could constitute sub -
segments such as deployment -centric application platforms, business process 
management suites, integration software, event -driven middleware, busin ess rules 
management systems, transaction processing monitors, managed file transfer 
software, non -relational database management systems, etc.  
(15) In Oracle/Sun Microsystems16, Oracle/BEA17, and IBM/ILOG18 the Commission 
considered whether all types of middleware belong to a single product market  or 
whether it would be necessary to further sub -segment the possible market 
according to the end use of the product, but ultimately left the precise product 
market  definition open  in Oracle/Sun Microsystems  and Oracle/BEA . In those 
decisions, the Commission also relied on IDC and Gartner segmentation in order 
to identify the possible affected markets.  
                                                                                                                                                 
8  Within the secondary market for Integration and Orchestration, IDC identifies the functional markets 
for (i) Integration Software and a sub -market for API Management (Section 4.2.4), (ii) Event -Driven 
Middl eware (Section 4.2.5), and (iii) Managed File Transfer (Section 4.2.6).  
9  Within the secondary market for Application Development, IDC identifies the functional market for 
Business Rules Management Systems (Section 4.2.7).  
10  Within the secondary market  for Data Managment, IDC identifies the functional markets for Non -
Relational Database Management (Section 4.2.8).  
11  Within the secondary market for Storage, IDC identifies the functional market for Software -Defined 
Storage Controller (Section 4.3.1).  
12  Within the secondary market for  Physical and Virtual Computing Software , IDC identifies the 
functional market for Software -Defined Storage Compute and the sub -market for Container 
Infrastructure Software (Section 4.3.2).  
13  Within the secondary market fo r Network, IDC identifies the functional markets for (i) Network 
Management Software (Section 4.3.3).  
14  Within the secondary market for  Operating Systems , IDC identifies the functional markets for (i) 
Server Operating Systems (paid and unpaid) and (ii) Se rver Operating Systems (paid only) (Section 
4.3.10).  
15  Gartner identifies the following macromarkets which are referred to in this decision: (i) Storage 
Management and its sub -segment Storage Management Mainframe Software (Section 4.3.4); (ii) 
Security an d its sub -segments Security Information and Events Management (Section 4.3.5), Security 
Testing (Section 4.3.6), Web Access Management (Section 4.3.7); (iii) IT Operations and its sub -
segment Other ITOM (Section 4.3.8); (iv) Application Development and its  sub-segment AD 
Mainframe Tools (Section 4.3.9). These Gartner macromarkets would broadly fall within IDC’s 
primary market for System Infrastructure Software.  
16  Commission decision of 30 July 2009 in case M.5529 Oracle/Sun Microsystems , recitals 763 -765. 
17  Commission decision of 26 March 2008 in case M.5080 Oracle/BEA , paragraphs 9 -12. 
18  Commission decision of 6 October 2008 in case M.5317 IBM/ILOG , paragraph 20.  
 
5 (16) In Oracle/Sun , the Commission concluded that the relevant geograp hic market for 
middleware is world wide.  
4.2.1.  Deployment -Centric Application Platforms  
(17) Deployment -centric application platforms (“DCAPs”) host applications and 
provide them with common services that allow the application to operate 
effectively. DCAPs include application server software platforms (referred to as 
“application servers” or “app servers”) that provide a common framework for 
applications to provide services that would need to be duplicated across multiple 
applications, manage the application runtime  environment consistently and at 
scale, and implement complex functions (e.g. the management of database 
connections) with high quality and resiliency.19 
(18) The Parties’ products are: (i) IBM’s WebSphere Application Server (“WAS”)20 
and (ii) Red Hat’s JBoss Ent erprise Application Platform (“JBoss”), and JBoss 
Web Server. Both IBM’s WAS and Red Hat’s JBoss products are Java Enterprise 
Edition (“Java EE”) compliant products . Java EE extends Java to include a 
defined list of capabilities that  have proven valuable across enterprise 
applications. These  capabilities are typically called Java EE Web Profile and  Java 
EE Full Profile .21 
(19) Traditional application servers are "heavyweight" and are designed to support 
large monolithic application architecture . Legacy  applicati ons are typically 
written as monoliths (i.e. all features of the application are contained within that 
application ).  
(20) Applications are increasingly built on the principles of integrating many small 
and dispersed components (a microservices architecture) in stead of having to 
integrate each new application into an existing, large monolithic architecture. 
These principles allow application components to evolve independently and 
rapidly, to scale when workloads are unpredictable, and to be reused in a 
predictab le manner.  DCAPs supporting these applications have different 
requirements compared to traditional middleware: they must be lightweight for 
rapid delivery and startup, use different mechanisms to ensure resilience, focus on 
integration of dispersed applica tions rather than on heavy application servers, and 
address different security risks.  
(21) To capture the distinction between architectural needs that process large amounts 
of data or perform complex processes across multiple systems, IT systems are 
                                                 
19  Form CO, paragraphs 314 -316. 
20  There are currently three main editions of WAS, with each edition providing progressively greater 
functionality: (i) WAS Liberty Core; (ii) WAS (Base), (iii) WAS ND. WAS (Base) and WAS ND are 
suited to customers with legacy, on -premises workloads . WAS Libe rty Core —which includes only the 
features of Java EE required by web applications —is offered to customers with purely cloud -based 
workloads (where a minimal resource footprint is crucial) and for applications that do not require 
clustering or the same degr ee of functionality as those supported by traditional WAS.  
21  Java EE Web Profile includes security, connections to web services, and transaction integrity, among 
other things;  Java EE Full Platform includes all of Java EE Web Profile and adds features e.g . Java 
batch (for data processing), JavaMail (for sending and receiving email), and Java Message Queues (for 
enabling communication between components of a distributed application).  
 
6 sometimes placed in the two following categories: (i) system of record and (ii) 
system of engagement . 
 Systems of record are IT systems that focus on managing vast quantities 
of data. These systems typically interact with databases and manage high 
volumes of transact ions. They have capabilities (also referred to as “back -
end capabilities”) focusing on the storing and processing of information.22  
 System of engagement: systems of engagement are IT systems that focus 
on interacting with users. Systems of engagement are t ypically immediate, 
open, and accessible ad hoc —e.g. software delivered through the cloud 
and on mobile devices. They have capabilities that focus on interfaces 
engaging with users (also referred to as “front -end capabilities”), which 
typically do not requ ire the same degree of data and transactional integrity 
as systems of record.23  
(22) On that basis, the Notifying Party has identified three use cases which DCAPs can 
support : (i) back -end workloads which require extensive capabilities (such as high 
availa bility and cluster management, legacy integration, performance and 
optimization, standards support ), (ii) back -end workloads which do not require 
these capabilities and (iii) front -end workloads.  
4.2.1.1.  Commission precedents  
(23) In Oracle/Sun24 and Oracle/BEA25, the Commission considered a possible 
relevant product market for all application servers without further segmenting 
according to programming language, operating system compatibility, or 
proprietary/open source, although it ultimately left the product market de finition 
open.  
(24) In Oracle/Sun26, the Commission concluded that the relevant geographic market 
for middleware and sub -segments thereof is worldwide.  
4.2.1.2.  Notifying Party’s view s 
(25) The Notifying Party submits that the relevant product market for DCAPs should 
encompas s all platforms (i.e. application server software platforms as well as 
deployment -orientated platforms operating in public and private clouds) that host 
applications, provide them with common services that would otherwise need to be 
                                                 
22  Mainframes or other larger servers, coupled with databases like Oracle or Db2, application servers like 
WebLogic, WAS, or transaction processing monitors like CICS, are typically systems of record. They 
are used, for example, to constantly and accurately process payments and reservations against 
databases with minimized risk of error or failure.  
23  Social media (e.g. Facebook), online collaboration (e.g . Google Docs), and messaging applications 
(e.g. WhatsApp) are examples of systems of engagement.  
24  Commission decision of 30 July 2009 in case M.5529 Oracle/Sun Microsystems , recitals 761 -765. 
25  Commission decision of 26 March 2008  in case M.5080 Oracle/BEA , paragraphs 9 -12 and paragraph 
34 
26  Commission decision of 30 July 2009 in case M.5529 Oracle/Sun Microsystems , paragraphs 776 -769. 
 
7 duplicated across multi ple applications, and manage the application runtime 
environment consistently and at scale.27 
(26) The Notifying Party argues that DCAPs running monolithic applications and 
DCAPs running cloud -native microservices belong to the same product market. 
According to the Notifying Party, there is a continuum of DCAPs spanning from 
those suitable for heavyweight workloads requiring sophisticated back -end DCAP 
capabilities in addition to those offered by the Java EE specification to those best -
suited for cloud -native app lications and front -end workloads, depending on the 
functionalities of each DCAP. It is therefore difficult to establish clear -cut 
categories in which to fit each DCAP.28  
(27) Furthermore, in the Notifying Party’s view, DCAPs vendors have no way of 
discriminati ng between customers according to use case, since they have no 
visibility over how their DCAPs are ultimately used. Therefore, the Notifying 
Party submits that pursuant to the Market Definition Notice,29 there are no 
grounds on which to define a separate pr oduct market for DCAPs running 
monolithic or microservices workloads, as the overlap between these two 
(hypothetical) groups of customers is necessarily fluid.30 
(28) The Notifying Party submits that , in line with  the Commission d ecisions listed at 
paragraph s (23) and (24 ), the relevant geographic market for DCAPs is global. 
Nevertheless, the Notifying Party also provided EEA -based market shares for 
completeness.31  
4.2.1.3.  Commission ’s assessment  
(29) The Commission considers that the possible market for DCAPs does not need to 
be further sub -segmented based on  programming language, operating system 
compatibility or use cases  / types of applications (e.g. monolithic applications, 
applications built as a system of microservices) for the following reasons.  
(30) First, the results of  the market investigation indicated that further segmentation by 
use cases to which DCAPs can cater is not warranted. A competitor expressed the 
view that customers do not distinguish between back -end workloads and  front -
end workloads but “in general custo mers are looking for an application server 
platform that supports the Java EE APIs and that is generally applicable to the 
wide range of workloads found typically in a large organisation” .32 Another 
competitor explained that customers are primarily interest ed in the outcome based 
on their application needs and “the technical requirements can be met with many 
application server and architectural options”33. Customers responding to the 
                                                 
27  See Form CO, paragraph  331. 
28  See Form CO, paragraph  332. 
29  Commission Notice on the definition of relevant market for the purposes of Community competition 
law [1997] OJ C372/5, paragraph 43.  
30  See Form CO, para graph  332. 
31  See Form CO, para graph  337. 
32  See r eplies to Questionnair e Q1 to competitors, question 14.1.  
33  See r eplies to Questionnair e Q1 to competitors, question 15.1.  
 
8 market investigation confirm that their DCAPs choice depends on the features  
required by the various applications and technology decisions.34 
(31) Therefore, the Commission considers that, f rom the demand side, customers 
employ different types of DCAPs which cover  a range of use cases and 
functionalities.  
(32) From the supply side, competito rs indicated that DCAPs  can support a range  of 
different use cases, without making a clear -cut distinction between their 
functionalities and suitability for specific use cases.35 These DCAPs include Java 
EE, other platforms/programming languages, cloud -native application platforms 
offered by CSPs, serverless programming etc. 36 
(33) Furthermore, with the emergence of new technologies such as Container 
Infrastructure Software (see Section 4.3.2 ), any distinction between use cases 
(back -end and front -end) becomes even more blurred. A competitor explained 
that “the more modern approach to this class of problems (“how do I run this 
application”) is to use containers, which wrap up the language togeth er with the 
application into a container. In that world, the distinctions of front and back end, 
and compatibility with legacy apps, are very different”37.  
(34) In addition, the market investigation results did not sugest that DCAPs vendors 
can discriminate bet ween customers using DCAPs for different use cases.38  
(35) Second, a majority of customers consider that they can switch their traditional 
(legacy and heavy -weight) application server  either to other heavy -weight 
application servers or to applications built as a system of microservices .39 
Customers responding to the market investigation switched away from WAS to 
other Java EE DCAPs (e.g. JBoss, Weblogic, Tomcat, Jetty, Pivotal tc Server  
etc.), or to other platforms e.g. Springboot  or .NET . A number of customers 
indicated that they switched to JBoss mainly due to cost considerations (some 
mention in addition that they moved to more light -weight options). Even if 
customers acknowledge that sw itching entails time, substantial  costs and 
engineer ing efforts, a large number of customers which responded to the market 
investigation have migrated at least some existing applications. A small number 
of customers explained that switching is only likely to happen as part of a wider 
IT architecture transfo rmations.40 
(36) In light of the above, the Commission considers that the possible market for 
DCAPs does not need to be further sub -segmented based on  programming 
language, operating system compatibility or use cases  / types of applications (e.g. 
monolithic appl ications, applications built as a system of microservices) . 
However, as regards free and unsupported  open source  DCAPs , the Commission 
considers that demand -side substitution is most likely too limited to exercise a 
                                                 
34  See replies to Questionnaire Q2 to customers, question 5.  
35  See r eplies to Questionnair e Q1 to competitors, questions 7, 8, 9, 10, 11, 12.  
36  Ibid. 
37  See replies to Questionnair e Q1 to competitors, question 14.1.  
38  See r eplies to Questionnair e Q1 to competitors, question 14.  
39  See r eplies to Questionnair e Q1 to customers, question 10.  
40  See r eplies to Questionnair e Q1 to customers, question 10.  
 
9 competitive constraint on DCAPs with com mercial support or proprietary DCAPs 
for the following reasons.  
(37) First, customers responding to the market investigation consider free and 
unsupported open source DCAPs as credible alternatives to proprietary or 
supported open -source DCAPs only for low -risk use cases.41 A small number of 
customers explained that for low -risk use cases, they can self -support open -source 
software, which requires developing in -house capabilities and relying on the open 
source community for updates, bug fixes etc. According to so me customers, this 
is an expensive option as compared to procuring commercial support . 
(38) Second, f or mission -critical applications the majority of customers using open 
source DCAPs procure commercial support (directly from the vendor or from 
third parties sp ecialised in providing commercial support for open source 
software).42 A number of customers explained that internal companies’ policies 
and IT startegies would not allow the use  of unsupported DCAPs.43 
(39) Therefore, the Commission does not consider that free a nd unsupported open 
source DCAPs belong to the same product market as proprietary or commercially 
supported DCAPs.  
(40) The Commission considers that for the purpose of the present decision, the exact 
product market definition can be left open as the Transactio n does not raise 
serious doubts as to its compatibility with the internal market under any plausible 
product market definition . 
(41) In line with the Commission d ecisions listed at paragraph (23), the Commission 
considers that the relevant geographic market for  DCAPs is global. Nevertheless, 
for completeness, the Commission carried out the comp etitive assessment in 
Section  5.2.2  also at the EEA -wide level.  
4.2.2.  Transaction Processing Monitors  
(42) A Transaction Processing Monitor (“TPM”) is a control program that ensures  
transactions are completed successfully. It primarily handles resource sharing 
(also referred to as load balancing), as well as ensures optimal use of resources by 
applications.  
(43) IBM offers the following TPM products : (i) IBM CICS is IBM’s main TPM 
produc t44, (ii) IBM TXSeries , (iii) IBM z/OS Connect Enterprise Edition , (iv) 
IBM z/Transaction Processing Facility , (v) IMS Transa ction Manager/Database 
Manager. Red Hat is not active in TPMs.  
                                                 
41  See r eplies to Questionnair e Q2 to customers, question 15.  
42  See r eplies to Questionnair e Q2 to customers, question 16.  
43  See r eplies to Questionnair e Q2 to customers, question 17.1.  
44  It is a set of enterprise application servers with transactional performance and connectivity for 
mission -critical transactions.  
 
10 4.2.2.1.  Commission  precedents  
(44) In Dell/EMC45 and Oracle/BEA46, it referred to TP Ms as a possible sub -segment 
of the overall middleware market. In Oracle/Sun47, the Commission identified 
TPMs as a product within application server middleware, in accordance with 
IDC’s classification although it ultimately left the market definition open . 
(45) In Oracle/Sun48, the Commission concluded that the relevant geographic market 
for middleware and sub -segments thereof is worldwide . 
4.2.2.2.  Notifying Party's view s 
(46) The Notifying Party submits that, in accordance with IDC’s taxonomy, TPMs 
could be viewed as a separ ate relevant product market.  The IDC taxonomy 
identifies a functional market TPMs , within the secondary market Application 
Platforms and the primary market Application Development and Deployment 
Software. IDC does not segment this functional market further.49 
(47) In the Notifying Party’s view, TPMs have a distinct functionality within 
enterp rise middleware as they mediate and optimize the use of resources (e.g. 
databases) by applications, balance load of dynamic processes, and monitor and 
fix processes between the applications and the databases.50 According to the 
Notifying Party, the Transact ion does not raise any concerns on any of the 
possible segmentations, and the precise product market definition can be left 
open.51 
(48) The Notifying Party submits that, in line with the Commission decisions listed at 
paragraphs (44)-(45), the relevant geograph ic market for TPMs is global. 
Nevertheless, the Notifying Party also provided EEA -based market shares for 
completeness.52 
4.2.2.3.  Commission’s assessment  
(49) In line with Dell/EMC , Oracle/BEA  and Oracle/Sun , a possible product market 
for TPMs can be identified. Neverth eless, t he Commission considers that for the 
purpose of the present decision, the exact product market definition can be left 
open as the Transaction does not raise serious doubts as to its compatibility with 
the internal market under the narrowest possibl e product market definition  
identified by IDC for which market shares data is available .  
(50) In line with the Commission decisions listed at paragraphs (44)-(45), the 
Commission considers that the relevant geographic market for TPMs is global. 
                                                 
45  Commission decision of 25 January 2016  in case M.7861 Dell/EMC , paragraph 55.  
46  Commission decision of 26 March 2008  in case M.5080 Oracle/BEA , paragraph 8.  
47  Commission decision of 30 Ju ly 2009 in case M.5529 Oracle/Sun Microsystems , recital 777.  
48    Commission decision of 30 July 200 9 in c ase M.5529 Oracle/Sun Microsystems , recitals  776-769. 
49  See Form CO, paragraph 730.  
50  According to the Notifying Party, TPMs are typically defined by most market analysts (including IDC 
and Gartner) as mainframe -based legacy application runtime environments that focus primarily on 
supporting “pre -web” era programming languages (such as COBOL, C, C++, PL/I, and Assembler ). 
51  See Form CO, paragraphs  729-733. 
52  See Form CO, paragraph  734. 
 
11 Nevertheless, f or completeness, the Commission carried out the competitive 
assessment in Section 5.3.7.3  also at the EEA -wide level.  
4.2.3.  Business Process Management Suites  
(51) Business process management (“BPM”) Suites provide intuitive, point -and-click 
environments for non-programmers to model business processes and develop and 
run simple, process -driven applications based on these models.  
(52) In the BPM Suite segment, IBM offers IBM Business Process Manager (“IBM 
BPM”), including three versions – i.e. BPM Express, BPM, and BPM on Cloud. 
Red Hat offers Red Hat Process  Automation Manager (formerly Red Hat JBoss 
BPM Suite).  
4.2.3.1.  Commission precedents  
(53) In IBM/ILOG53 and Oracle/Sun54 the Commission identified a possible relevant 
market for “process automation middleware” (which corresponds to model -driven 
application platforms today).55 The Commission adopted this  segment  as the 
relevant market in IBM/ILOG , but left the  product  market definition open in 
Oracle/Sun . 
(54) In Oracle/Sun56, the Commission concluded that the relevant geograp hic market 
for middleware and sub -segments thereof is worldwide.  
4.2.3.2.  Notifying Party's view s 
(55) The Notifying Party refers to  the Commission decisions listed at paragraph (53) 
and to Gartner's segment fo r BMP S uites.  
(56) The Notifying Party submits that the term “process automation middleware”, as 
used in the IBM/ILOG and Oracle/Sun Microsystems decisions, refers to a former 
IDC segment that has not been included in the IDC Wor ldwide Software 
Taxonomy since 2013. The closest segment in IDC’s 2018 taxonomy is the 
“Model -Driven Application Platforms” (“MDAP”) functional market, which 
however includes both process -centric and data -centric platforms. As the Parties’ 
products are bot h process -centric platforms, and as data -centric platforms 
typically offer a more limited range of functionality for the design, modelling, and 
optimization of business processes than process -centric platforms, the Notifying 
Party submits that the Gartner segment Business Process Management Suites may 
be an appropriate representation of the relevant product market on a conservative 
basis.  
                                                 
53  Commission decision of 6 October 2008  in case M.5317 IBM/ILOG , paragraphs 19 -20. 
54  Commission decision of 30 July 2009, Case M.5529 Oracle/Sun Microsystems , recitals 760 -765. 
55  Gartner’s taxonomy identifies a sub segment for Business Process Management Suites, which is part of 
the Application Infrastructure and Middleware macromarket. It corresponds to but is narrower than 
IDC’s functional market for Model -Driven Application Platforms within the secondary market fo r 
Application Platforms.  
56  Commission decision of 30 July 2009 in case M.5529 Oracle/Sun Microsystems , paragraphs 776 -769. 
 
12 (57) According to the Notifying Party, the Transaction does not raise any concerns on 
any of the possible segmentations, and  the precise product market definition can 
be left open.57 
(58) The Notifying Party submits that , in line with  the Commission decisions list ed at 
paragraph  (54), the relevant geographic market for BPM Suites is global. 
Nevertheless, the Notifying Party also provided EEA -based market shares for 
completeness.58 
4.2.3.3.  Commission ’s assessment  
(59) In line with IBM/ILOG  and Oracle/Sun , the possible product market for BMP 
Suites can be identified. Nevertheless,t he Commission considers that for the 
purpose of the present decisi on, the exact product market definition can be left 
open as the Transaction does not raise serious doubts as to its compatibility with 
the internal market under the narrowest product market definition identified by 
Gartner for which market shares data is a vailable  and which leads to the highest 
combined market shares of the Parties .  
(60) In line with the Commission d ecisions listed at paragraph (54), the Commission 
considers that the relevant geographic market for BMP Suites is global. 
Nevertheless, for complet eness, the Commission carried out the comp etitive 
assessment in Section 5.2.3  also at the EEA -wide level.  
4.2.4.  Integration Software  
(61) Integration Software is server software used to connect two or more separate 
applications, to coordinate requests from an applica tion’s front end and back -end 
services, and to connect applications to databases. The Parties’ activities overlap 
in Integration Software overall, as well as in two types of Integration Software: 
API management software59 and integration platforms60. 
(62) As rega rds API Management Software, IBM offers IBM API Connect, whereas 
Red Hat offers 3scale API Management. As regards integration platforms, IBM 
offers IBM App Connect and Red Hat offers Fuse and Fuse Online . 
4.2.4.1.  Commission precedents  
(63) In Oracle/BEA61, the Commission identified application integration software as a 
possible relevant market, although it ultimately left the market definition open.  
(64) In Oracle/Sun , the Commission concluded that the relevant geographic market for 
application integration software is worldwide.62 Similarly, in  Oracle/Sun , the 
                                                 
57  See Form CO, paragraphs  421-422. 
58  See Form CO, paragraph 427. 
59  APIs may be used by companies to deliver their data and servic es to customers. In this context, 
enterprises release public APIs that enable other applications to incorporate their services or have 
access to their data.  
60  Integration platforms connect different applications, systems, and data in a single platform.  
61  Commission decision of 26 March 2008  in case M.5080 Oracle/BEA , paragraph 12.  
62  Commission decision of 30 July 2009 in case M.5529 Oracle/Sun Microsystems , recital 15.  
 
13 Commission concluded that the relevant geographic market for middleware and 
sub-segments thereof is worldwide.63 
4.2.4.2.  Notifying Party's view s 
(65) The Notifying Party refers to IDC’s segment for Integration Software which  is 
further sub -segmented into (i) API Management Software, (ii) Integration 
Platforms, and (iii) Connectivity Adapters And Plug -in Software. The Notifying 
Party submits  that the relevant product market should encompass all Integration 
Software products without distinguishing between the three categories of 
products. In the Notifying Party’s view, all these products perform the same 
function of enabling communication and the exchange of services and data 
between  applications in real time.64 Nevertheless, the Notifying Party provided 
market shares data both for  Integration Software and the narrowest possible sub -
segments as per IDC where both Parties are active, i.e. (i) API Management 
Software  and (ii) Integration Platforms .65 Only the overall Integration Soft ware 
segment and its API Management Software sub -segment are affected.  
(66) The Notifying Party submits that , in line with the Commission d ecisions listed at 
paragraphs (63)-(64), the relevant geographic market for Integration Software 
(and any possible sub-segment thereof)  is global. Nevertheless, the Notifying 
Party also provided EEA -based market shares for completeness.66 
4.2.4.3.  Commission ’s assessment  
(67) In line with  Oracle/BEA  and IDC segmentation , the possible product market for 
Integration Software and its su b-segment for API Management Software  can be 
identified . Nevertheless, t he Commission considers that for the purpose of the 
present decision, the exact product market definition can be left open as the 
Transaction does not raise serious doubts as to its co mpatibility with the internal 
market under the narrowest possible product market definition identified by IDC  
for which market shares data is available  and which leads to the highest combined 
market shares of the Parties.   
(68) In line with the Commission decis ions listed at paragraphs (63)-(64), the 
Commission considers that the relevant geographic market for Integration 
Software (and any possible  sub-segment thereof ) is global. Nevertheless, for 
completeness, the Commission carried out the comp etitive assessme nt in Section 
5.2.4  also at the EEA -wide level.   
4.2.5.  Event -Driven Middleware  
(69) Event -Driven Middleware is software that enables program -to-program (or 
component -to-component) communication —i.e. it facilitates the transfer of 
                                                 
63  Commission decision of 30 July 2009 in case M.5529 Oracle/Sun Microsystems , recital  769. 
64  According to the Notifying Party, Integration platforms typically incorporate connectivity adaptors and 
plug-in software as a feature: these serve to translate data from one protocol or format to another. 
Integration platforms may also include API  management functionality, such as the ability to build 
APIs and publish APIs to internal development teams and developer communities products that 
integrate disparate applications and information systems.  
65  See Form CO, paragraphs  477-482. 
66  See Form CO, paragraph  483. 
 
14 information between disparate applica tions and components across multiple 
hardware and software platforms that would not otherwise be able to 
communicate.  
(70) IBM offers the following products that fall into Event -Driven Middleware: IBM 
MQ, IBM Event Streams, and Cloud Functions. Red Hat offers Red Hat AMQ 
(including Red Hat AMQ Streams).  
4.2.5.1.  Commission precedents  
(71) There is no Commission precedent with regard to Eve n-Driven Middleware.  
(72) In Oracle/Sun67, the Commission concluded that the relevant geographic market 
for middleware and sub -segments thereof is worldwide.  
4.2.5.2.  Notifying Party's view s 
(73) The Notifying Party refers  to IDC’s segment  for Event -Driven Middleware which 
is further sub-segmented into (i) Message -Oriented Middleware, (ii) Streaming 
Analytics Software, and (iii) Functions Software.68 IDC does not provide market 
shares for these sub -segments.  
(74) The Notifying Party submits that the relevant product market should encompass 
all Event -Driven Middleware  without distinguishing between the three categories 
of products.  In the Notifying Party’s view, all these products perform  the same 
function: monitor ing and detect ing events and transmitting  the events to relevant 
applications and systems to execute a response.   
(75) According to the Notifying Party, while certain software are more adapted to the 
transmission of structured messages rather than real -time events, other software 
combine both capabilities in one product. For exa mple, Red Hat AMQ is 
equipped to handle traditional messages (including through a centralized message 
hub) and to carry out real -time event streaming based on Apache Kafka 
technology. The Notifying Party explains that w hile certain software may focus 
on th e transmission of events rather than their processing and analysis, other 
products incorporate all these functions. For example, AWS Kinesis provides 
customers with the ability to capture continuous real -time data (such as video 
streams from security camer as), and to process and analyze these volumes of data 
(for example, to solve traffic problems, prevent crime, or dispatch emergency 
responders). 69  
(76) The Notifying Party argues that there is also significant substitution of supply, as 
the main providers of Event-Driven M iddleware have all developed offerings 
suitable for transmitting traditional messages and/or real -time events and products 
with processing and analytics capabilities.  
                                                 
67  Commission decision of 30 July 2009 in case M.5529 Oracle/Sun Microsystems , recital 769.  
68  The Notifying Party submits that the IDC segmentation should be preferred to Gartner segmentation as 
Gartner’s “Message -Oriented Middlewa re” corresponds to IDC’s overall “Event -Driven Middleware”, 
without accounting for streaming analytics.  
69  See Form CO, paragraphs  500-503. 
 
15 (77) The Notifying Party submits that, in line with the Commission decision liste d at 
paragraph  (72), the relevant geographic market for Even -Driven Middleware is 
global. Nevertheless, the Notifying Party also provided EEA -based market shares 
for completeness.70 
4.2.5.3.  Commission ’s assessment  
(78) The Commission considers that  in line with IDC’s segmentation, a possible 
product market for Event -Driven Middleware can be identified. Based on the 
Notifying Party’s submission, there are many offerings which can support  and 
combine capabilities for messaging, s treaming analytics and functions software.  
Therefore, the Commission does not consider that it would be justified to further 
sub-segment the possible market for Event -Driven Middleware.  
(79) Nevetheless, the Commission considers that for the purpose of the present 
decision the produc t market definition can be left open as the Transaction does 
not raise serious doubts as to its compatibility with the internal market regardless 
of whether there is an overall market for Event -Driven Middleware or whether 
there are separate markets for di fferent types of Event -Driven Middleware.  
(80) In line with the Commissio n decisions listed at paragraph  (72), the Commission 
considers that the relevant geographic market for Event -Driven Middleware is 
global. Nevertheless, for completeness, the Commission ca rried out the 
competitive assessment in Section 5.2.5  also at the EEA -wide level.  
4.2.6.  Managed File Transfer Software  
(81) Managed File Transfer Software enables enterprises to transfer files securely and 
at high speeds over a network, such as the Internet. Managed File T ransfer 
software typically offers a higher -level of security and/or convenience compared 
to other file transfer options, such as e -mail or external storage devices. They may 
include additional f eatures such as reporting (i.e.  notification of successf ul file 
transfers), automation of file transfer -related activities and auditability.  
(82) IBM offers the following solutions: IBM Connect:Direct, IBM Aspera, IBM File 
Gateway, IBM Supply Chain Business Network File Transfer Service, and IBM 
WebSphere MQ. Each offering provides specific capabilities or deployment 
models targeting a comprehensive range of use cases. Red Hat is not active in 
Managed File Transfer Software.  
4.2.6.1.  Commission precedents  
(83) There is no Commission precedent with regard to Managed File Transfer 
Software.  
(84) In Oracle/Sun71, the Commission concluded that the relevant geographic market 
for middleware and sub -segments thereof is worldwide . 
                                                 
70  See Form CO, paragraph  504. 
71  Commission decision of 30 July 2009 in case M.5529 Oracle/Sun Microsystems , recit al 769.  
 
16 4.2.6.2.  Notifying Party 's views  
(85) The Notifying Party submits that Managed File Transfer Software (in line with 
IDC’s taxonomy) constitutes a separate relevant product market.72 The IDC 
taxonomy identifies the functional market Managed File Transfer Software within 
the secondary market for Integration and Orchestration Software and the primary 
market Application Developmen t and Deployment Software. IDC does not 
segment this functional market further.  
(86) The Notifying Party submits that, in line with the Commission decision  listed at 
paragraph  (84), the relevant geographic market for Managed File Transfer 
Software is global. Ne vertheless, the Notifying Party also provided EEA -based 
market shares for completeness.73 
4.2.6.3.  Commission’s assessment  
(87) The Commission considers that in line with IDC ’s segmentation,  a possible 
product market for Managed File Transfer Software can be identified. 
Nevertheless, t he Commission considers that for the purpose of the present 
decision, the exact product market definition can be left open as the Transaction 
does not raise serious doubts as to its compatibility with the internal market under 
the narrowest product market definition identified by IDC for which market 
shares data is available and which leads to the highest market shares of the 
Parties .  
(88) In line with the Commission decisions listed at paragraph (84), the Commission 
considers that the relevant g eographic market for Managed File Transfer Software 
is global. Nevertheless, for completeness, the Commission carried out the 
competitive assessment in Section 5.3.7.3  also at the EEA -wide level.  
4.2.7.  Business Rules Management Systems  
(89) Business rules management systems (“BRMS”) enable business managers to 
define business rules in a familiar language and manage them in a central 
repository. Business applications can then be programmed to draw on these rules. 
This eliminates the need to modify the source code of in dividual applications each 
time rules are implemented or updated.  
(90) IBM offers IBM Operational Decision Manager  (“ODM”)  in this market segment, 
whereas Red Hat offers Red Hat Decision Manager  (formerly Red Hat JBoss 
BRMS).  
4.2.7.1.  Commission precedents  
(91) In IBM/ILOG74, the Commission identified BRMS as a relevant market.  
(92) In Oracle/Sun , the Commission concluded that the relevant geographic market for 
middleware and sub -segments thereof is worldwide . Similarly, in IBM/ILOG , the 
                                                 
72  See Form CO, paragraphs  741-745. 
73  See Form CO, paragraph 746. 
74  Commission decision of 6 October 2008  in case M.5317 IBM/ILOG , paragraphs 17 and 20.  
 
17 Commission concluded that the relevant geographic market for BRMS is 
worldwide.75 
4.2.7.2.  Notifying Party's view s 
(93) The Notifying Party submits that relevant product market should be defined as the 
market for BRMS, as per IDC’s taxonomy . In the Notifying Party's view, BRMS 
form  a separate relevant product market to BPM Suites  (see Section  4.2.3). The 
Notifying Party submits that BPM Suites  and BRMS products are often sourced 
independently of each other,  and there is robust demand for standalone BRMS 
software.76  
(94) The Notifying Par ty submits that, in line with the Commission d ecisions listed at 
paragraphs (91)-(92), the relevant geographic market for BRMS  is global. 
Nevertheless, the Notifying Party also provided EEA -based market shares for 
completeness.77 
4.2.7.3.  Commission ’s assessment  
(95) In line with  IBM/ILOG , the product market for BRMS can be identified. 
Nevertheless, t he Commission considers that for the purpose of the present 
decision, the exact product market definition can be left open as the Transaction 
does not raise serious doubts as  to its compatibility with the internal market under 
the narrowest possible product market definition for which market shares data is 
available and which leads to the highest combined market shares of the Parties.  
(96) In line with the Commission decisions  listed at paragraphs (91)-(92), the 
Commission considers that the relevant geographic market for BRMS is global. 
Nevertheless, for completeness, the Commission carried out the comp etitive 
assessment in Section 5.2.6  also at the EEA -wide level.  
4.2.8.  Non-Relational D atabase Management Systems  
(97) According to the Notifying Party, most databases systems today are relational 
databases that store data in separate tables, instead of placing all data in one large 
table, and define relationships between these tables. Non -relati onal database 
management systems  ("DBMS")  refer to a residual category of database systems 
which do not use this system. Non-relational DBMS differ from relational DBMS 
in programming language and the structure used to organize the data.  
(98) IBM offers a non -relational database management system (“DBMS”), called 
Information Management System . Red Hat is not active in non -relational database 
management systems.  
                                                 
75  Commission decision of 6 October 2008  in case M.5317 IBM/ILOG , paragraph 23.  
76  According to the Notifying Party, t his is evidenced by the fact that the IDC functional market for 
BRMS, which only encompasses standalone BRMS products, has an estimated size of approximately 
USD […] for 2017.  See Form CO, paragraphs 526 -532. 
77  Form CO, paragraph 533. 
 
18 4.2.8.1.  Commission precedents  
(99) In IBM/Informix78, the Commission considered the database market as a whole 
(without segmentation by relational and non -relational databases), and also 
considered possible segmentations by “legacy” and distributed environments, 
operative system and customer requirements, but ultimately left the product 
market definition open.  In Oracl e/Sun  and SAP/Sybase79, the Commission 
segmented the database market between relational and non -relational databases. It 
also considered further sub -segmentation, but ultimately left the question open.80 
(100)  In Oracle/Sun , SAP/Sybase , and IBM/Informix , the Commission concluded that 
the relevant geographic market for databases is global .  
4.2.8.2.  Notifying Party's view s 
(101)  The Notifying Party refers  to IDC’s segment  for Non -Relational DBMS , which is 
sub-segmented into  four sub-markets : (i) end -user, (ii) navigationa l, (iii) object -
oriented, and (iv) multivalue database management systems.  The Notifying Party 
submits that  IDC’s segment  for Non -Relational Database Management Software 
(“DBMS”) constitutes the relevant product market .81 Nevertheless, the Notifying 
Party s ubmitted market shares data for the narrowest possible market 
segmentation including IBM’s product: the Gartner subsegment Prerelational Era 
DBMS  (see Section 5.3.7.3) .  
(102)  According to the Notifying Party, Non -relational DBMS differ from relational 
DBMS in p rogramming language and the structure used to organize the data: 
Non-relational DBMS are not strictly based on the (standard) programming 
language SQL for data definition and access or on relational theory, i.e. an 
organization of data in different tables which are formally related to each other.  
(103)  In the Notifying Party ’s view , a large number of competitors are active in Non -
Relational DBMS, including Microsoft’s NoSQL on Azure, InterSystems’ Caché, 
CA Technologies’ Datacomm, and Apple’s FoundationDB, each generating at 
least USD 100 million in annual worldwide revenues from sales of Non -
Relational DBMS. In addition, there is a large range of popular and successful 
open source offerings, including MongoDB, Redis, Apache Cassandra, HBase, 
Couchbase and many m ore. The Notifying Party submits that customers consider 
these Non -Relational DBMS products substitutable for each other as they all 
support a multi -value format, in -database computing, intelligent interface 
services, and emerging data types suited for clo ud environment, providing 
comparable level of support and interoperability.82 
(104)  The Notifying Party submits that, in line with the Commission decisions listed at 
paragraphs (99)-(100) , the relevant geographic market for Non-Relational DBMS  
                                                 
78    Commission decision of 19 June 2001 in case M.2460 IBM/Informix . 
79  Commission decision of 20 July 2010 in case M.5904 SAP/Sybase , paragraph 16.  
80   Commission decision of 30 July 2009  in case M.5529 Oracle/Sun Microsystems , recitals 27 and 109.  
81  See Form CO, paragraphs  753-755. 
82  See Form CO, paragraph  755. 
 
19 is global. Neverthe less, the Notifying Party also provided EEA -based market 
shares for completeness.83 
4.2.8.3.  Commission ’s assessment  
(105)  In line with  Oracle/Sun, SAP/Sybase , and IBM/Informix , the product market for 
Non-Relational DBMS  can be identified. The Commission considers that, for the 
purpose of the present decision it can be left open whether Non -Relational DBMS 
constitute a relevant product market and whether it needs to be further sub -
segmented as the competitive assessment under Section 5.3.7.3 remains 
unchanged irrespective  of the exact product market definition.   
(106)  In line with the Commission decisions listed at paragraphs (99)-(100) , the 
Commission considers that the relevant geographic market for Non -Relational 
DBMS is global . Nevertheless, for completeness, the Commission  carried out the 
competitive assessment in Section 5.3.7.3  also at the EEA -wide level.  
4.3. System Infrastructure Software   
4.3.1.  Software -Defined Storage Controller Software  
(107)  Software -Defined Storage (“SDS”) refers to computer software programs that 
have been developed to optimize available storage hardware resources by creating 
a virtualized layer on top of the underlying physical storage hardware and that 
operates independent ly of the hardware to enable the efficient management of 
data storage and the scaling of data capacity, without being reliant on the 
hardware itself.  
(108)  IBM’s offering in the Software -Defined Storage Controller space includes: IBM 
Spectrum Virtualize (for bl ock storage), IBM Spectrum Accelerate (for block 
storage), IBM Spectrum Scale (for file storage), IBM Spectrum NAS (for file 
storage), IBM Cloud Object Storage (formerly Cleversafe) (for object storage). 
Red Hat offers two basic SDS products: (i) Red Hat C eph Storage and (ii) Red 
Hat Gluster Storage, based on open source Ceph and Gluster, respectively. These 
two products form the basis for Red Hat’s other offerings such as Red Hat 
Storage One, Red Hat Hyperconverged Infrastructure, and Red Hat OpenShift 
Container Storage.  
4.3.1.1.  Commission precedents  
(109)  In Dell/EMC84, the Commission considered the segment of “storage and 
virtualization software”  but ultimately left the precise product market definition 
open.   
(110)  In Symantec/Veritas85, the Commission considered whether the broader market 
for storage software was worldwide or at least EEA -wide, but ultimately left the 
exact scope of the relevant geographic market open.  
                                                 
83  See Form CO, paragraph 756. 
84  Storage virtualization software is a type of SDS controller software.  See Commission decisio n of 25 
January 2016 in c ase M.7861 Dell/EMC , paragraphs 134, 139. 
85  Commission decision of 15 March 2005 in case M.3697  Symantec/Veritas . 
 
20 4.3.1.2.  Notifying Party's view s 
(111)  The Notifying Party refers to IDC’s functional market for SDS Controller 
Software wh ich is further sub -segmented into (i) Block -Based, (ii) File -Based, 
(iii) Object -Based, and (iv) Hyperconverged Software -Defined Storage Controller 
Software.   
(112)  The Notifying Party submits that the relevant product market with regard to the 
Parties’ activiti es in the storage level of the IT stack is storage software which 
encompasses all software that manages, stores and/or ensures the accessibility, 
availability, and performance of information stored on physical storage media. As 
the Parties’ activities do n ot give rise to a horizontally affected market on the 
overall market for Storage Software, the Notifying Party refers to the narrower 
possible market for SDS Controller Software.86 
(113)  According to the Notifying Party, under IDC’s taxonomy, SDS Controller 
Softw are includes and combines block, file, object, and hyperconverged software 
offerings that enable the creation of a storage system. Most SDS offerings support 
at least one of the three main types of storage methods: file, block and object 
storage.87 
(114)  With reg ard to SDS  Controller Software , according to the Notifying Party, the 
various types of SDS Controller S oftware are substitutable from a supply 
perspective. A number of vendors are active with SDS offerings for multiple 
storage formats. For example, Dell EM C, Hitachi, NetApp, SUSE and Nexenta all 
offer SDS products for more than one type of storage.88 
(115)  The Notifying Party submits that, in line with the Commission d ecisions listed at 
paragraphs (109) -(110) , the relevant geographic market for SDS Controller 
Software is global. Nevertheless, the Notifying Party also provided EEA -based 
market shares for completeness .89 
4.3.1.3.  Commission ’s assessment  
(116)  The Commission considers that i n line with Dell/EMC , a possible product market 
for SDS Controller Software can be identified.  Based on the Notifying Party’s 
submission, there are a number of SDS Controller Software which support 
multiple types of storage.   
(117)  Neve rtheless, for the purpose of the present decision the exact product market 
definition can be left open as the Transaction does not raise serious doubts as to 
its compatibility with the internal market regardless of whether there is an overall 
market for SDS Controller Software or whether there are separate markets 
depending on the type of storage ( Block -Based,  File-Based, Object -Based, and 
Hyperconverged Software -Defined Storage Controller Software ). 
                                                 
86  See Form CO, paragraph  563. 
87  See Form CO, paragraphs  554-556. 
88  See Form CO, paragraph  560. 
89  See Form CO, paragraph 564.  
 
21 (118)  In line with the Commission decisions listed at paragraphs (109) -(110) , the 
Commission considers that the relevant geographic market for SDS Storage 
Controller Sof tware is at least EEA -wide if not global . For the purpose of the 
present decision, the exact geographic market definition can be left open as the 
Transaction does not raise serious doubts as to its compatibility with the internal 
market under any plausible  geographic market definition.  
4.3.2.  Container Infrastructure Software  
(119)  Containers are small, isolated, lightweight virtual workspaces that sit on an 
operating system and are used to build, host, and deploy an application. Their 
small footprint compared to other  virtual workspaces (like virtual machines) 
makes containers easily portable between different systems and well -suited to 
deployment across multiple clouds. Container Infrastructure Software (or 
“container platforms”) comprises container engines, which ins tantiate containers, 
and orchestration software, which facilitate the management of containers and 
automate tasks such as deployment, workload balancing between containers, and 
the movement of containers between hosts.  
(120)  IBM provides Container I nfrastru cture  Software in two products: (i) IBM Cloud 
Private (“ICP”) and (ii) IBM Cloud Kubernetes Service (i.e. IBM’s public cloud 
managed Kubernetes service).   
(121)  ICP is a platform for developing and managing containeri sed applications. It is an 
integrated environment  for managing containers that includes the container 
orchestrator (Kubernetes90), a private image repository, a management console, 
and monitoring frameworks. According to the Notifying Party, ICP is focused on 
[…]: it consists of a private cloud that offer s open source container platforms 
focused on using containers to achieve enhanced operational efficiency (targeting 
[…]) and enable new […] technologies.91 
(122)  Red Hat offers several container infrastructure software products as part of the 
OpenShift family of products.92 Red Hat OpenShift Container Platform (formerly 
known as OpenShift Enterprise) provides a platform for deploying both new and 
existing applications on secure, scalable resources with minimal configuration 
and management overhead. Enterprises run OpenShift on a wide variety of 
infrastructure, including public cloud environments, private cloud infrastructure, 
virtualization software, as well as bare -metal servers or a combination of all or 
some of the above.  
(123)  Red Hat OpenShift Container Platform shou ld be distinguished from Red Hat 
OpenShift Container Engine —both are forms of the paid -for OpenShift product 
offered by Red Hat, but Red Hat OpenShift Container Engine consists simply of 
the RHEL or Core OS operating system,  a container engine, and Red Hat ’s 
Kubernetes orchestrator, while Red Hat OpenShift Container Platform also 
                                                 
90  An open source container management system, based on Google -developed technology.  
91  According to the Notifying Party, ICP can be used on customers’ servers and infrastructure of choice 
and with their hosting partner of choice. IBM currently supports ICP on bare metal servers, VMware, 
OpenStack, Ope nShift, Amazon Web Services, Microsoft Azure, and IBM Cloud. IBM Cloud Private 
customers can therefore use IBM Cloud Private with a variety of third -party cloud providers.  
92  Red Hat OpenShift Online, Red Hat OpenShift Dedicated, Red Hat OpenShift Application Runtimes, 
Red Hat Container Development Kit (formerly OprnShift Developer Studio).  
 
22 includes advanced management capabilities and more detailed development 
functionality.  
4.3.2.1.  Commission precedents  
(124)  In Dell/EMC93, the Commission considered container technology and virtual 
machine -based virtualization software as distinct product markets within the 
broader category of virtualization software, but ultimately left the market 
definition open.  
(125)  In Dell/EMC94, the Commission considered whether the market for Container 
Infra structure Software was worldwide or at least EEA -wide, but ultimately left 
the exact scope of the relevant geographic market open.  
4.3.2.2.  Notifying Party's view s 
(126)  The Notifying Party submits that IDC defines three submarkets within the 
functional market for Softw are Defined Compute Software: (i) Container 
Infrastructure Software, (ii) Virtual Machine Software, and (iii) Cloud S ystem 
Software. According to the Notifying Party , the Transaction does not raise any 
concerns on any of the possible segmentations , and the  precise product market 
definition can be left open.95  
(127)  The Notifying Party submits that, in line with the Commission decisions listed at 
paragraphs (124) -(125) , the relevant geographic market for Container 
Infrastructure Software is global. Nevertheless, t he Notifying Party also provided 
EEA -based market shares for completeness.96 
4.3.2.3.  Commission ’s assessment  
(128)  In line with Dell/EMC  and IDC’s segmentation, a possible market for Contain er 
Infrastructure Software can b e identified. Nevertheless, t he Commission consid ers 
that for the purpose of the present decision, the exact product market definition 
can be left open as the Transaction does not raise serious doubts as to its 
compatibility with the internal market under the narrowest product market 
definition identifie d by IDC for which market shares data is available and which 
leads to the highest combined market shares of the Parties. As only the 
subsegment for Container Infrastructure Software is affected, the  Commission 
carried out the competitive assessment in Sect ion 5.2.8  on the basis of the 
segmentation put forward by the Notifying Party in accordance with IDC ’s 
segment for Container Infrastructure Software . 
(129)  In line with the Commission decisions listed at paragraphs (124) -(125) , the 
Commission considers that the relevant geographic market for Container 
Infrastructure Software is at least EEA -wide if not global . For the purpose of the 
present decision, the exact geographic market definition can be left open as the 
                                                 
93  Commission decision of 25 January 2016 in case M.7861 Dell/EMC , paragraph 67.  
94  Commission decision of 25 January 2016 in case M.7861 Dell/EMC , paragraph 70.  
95  See Form CO, paragraphs  587-592. 
96  See Form CO, paragraph 593 . 
 
23 Transaction does not raise serious doubts as to its  compatibility with the internal 
market under any plausible geographic market definition.  
4.3.3.  Network Management Software  
(130)  Network management software is designed to reduce the burden on IT teams by 
facilitating and automating the network management process. Ne twork 
management software monitors the devices connected to the network and collects 
reportable data on these devices. When the software detects a problem on the 
network (e.g.  network faults, performance bottlenecks, or compliance issues), the 
software wil l either take any necessary remedial action automatically, or it will 
present the data to the relevant network administrator which allows the 
administrator quickly to identify and resolve the problem.  
(131)  IBM has one offering with network management features, i.e. IBM Netcool 
Network Management. Red Hat offers Red Hat Ansible Networ k Automation.  
4.3.3.1.  Commission precedents  
(132)  There is no Commission precedent with regard to Network Management 
Software.  
4.3.3.2.  Notifying Party's view s 
(133)  The Notifying Party submits that the IDC segm ent for Network Management 
Software constitutes the relevant product market.  The IDC taxonomy identifies a 
functional market for Network Management Software and does not segment this 
functional market further. According to the Notifying Party, the Transact ion does 
not raise any concerns on any of the possible segmentations, and the precise 
product market definition can be left open.97 
(134)  The Notifying Party submits that, in line with Commission’s previous  decisions 
concerning software , the relevant geographic m arket for Network Management 
Software is global . Nevertheless, the Notifying Party also provided EEA -based 
market shares for completeness.98 
4.3.3.3.  Commission ’s assessment  
(135)  In line with IDC taxonomy, the possible market for Network Management 
Software can be identi fied. Nevertheless, t he Commission considers that for the 
purpose of the present decision, the exact product market definition can be left 
open as the Transaction does not raise serious doubts as to its compatibility with 
the internal market under the narr owest product market definition identified by 
IDC for which market shares data is available and which leads to the highest 
combined market shares of the Parties.  
(136)  The Commission considers that the relevant geographic market for Network 
Management Software is at least EEA -wide, if not global. For the purpose of the 
present decision, the exact geographic market definition can be left open as the 
                                                 
97  See Form CO, paragraphs  676-678. 
98  See Form CO, paragraph  679. 
 
24 Transaction does not raise serious doubts as to its compatibility with the internal 
market under any plausible geographic market definition.  
4.3.4.  Storage Management Mainframe Software  
(137)  Storage Management Mainframe Software includes tools for storage mainframe 
implementations, including for archive, backup and recovery, core storage, data 
replication, and device resource management.   
(138)  IBM offers DFSMS, which comprises a suite of related data and storage 
management products for the z/OS operating system focused on managing the 
life-cycle of data and the devices and media associated with that data . Red Hat is 
not active in Storage Management Mainframe Software . 
4.3.4.1.  Commission precedents  
(139)  In Symantec/Veritas99, the Commission  considered the market definition for 
storage software more generally and considered that it was not necessary to 
distinguish the segments backup and archive sof tware according to the OS on 
which software may run nor according to customer but category and ultimately 
left the market definition open.  
(140)  In Symantec/Veritas100, the Commission considered whether the market for 
Storage Software was worldwide or at least EEA -wide, but ultimately left the 
exact scope of the relevant geographic market open.  
4.3.4.2.  Notifying Party's view s 
(141)  The Notifying Party refers to Gartner’s macromarket for Storage Management 
Software, which is further divided into nine subsegments, including Stora ge 
Management Mainframe Software.101 The Notifying Party submits that the 
relevant product market should encompass all  software that manages, stores 
and/or ensures the accessibility, availability, and performance of information 
stored on physical storage med ia, and Storage Management Mainframe Software 
falls within that product market.   
(142)  In the Notifying Party’s view, vendors of storage software (including Dell EMC, 
Veritas, NetApp, Microsoft and HPE) are all active across a wide range of storage 
software and offer products with comparable levels of support and 
interoperability. The Notifying Party submits that these vendors, together with a 
number of other vendors and unpaid open source offerings, provide credible 
alternatives to and exercise a competitive con straint on IBM’s storage software 
offering.102 
(143)  According to the Notifying Party, the Transaction does not raise any concerns on 
any of the possible segmentations, and the precise product market definition can 
                                                 
99  Commission decision of 15 March 2005 in case M.3697  Symantec/Veritas , paragraphs 15 -16. 
100  Commission decision of 15 M arch 2005 in case M.3697  Symantec/Veritas , paragraph 21.  
101  The other segments are: (i) Archive, (ii) Backup and Recovery, (iii) Management Software Defined 
Storage, (iv) Data Replication, (v) Infrastructure Software -Defined Storage, (vi) File Analysis, (v ii) 
Storage Resource Management, and (viii) Other Storage Management Software.  
102  See Form CO, paragraph 765. 
 
25 be left open.  For the purpose of the present decision, the Notifying Party provides 
information needed to carry out the com petitive assessment in Section 5.3.7.3  on 
the basis of Gartner’s sub -segment for Storage Management Mainframe Software , 
the only one of the nine s ub-segments in which IBM is active .103  
(144)  The Notifying Party submits that, in line with Commission’s previous decisions 
concerning software , the relevant geographic market for Storage Management 
Mainframe Software  is global. Nevertheless, the Notifying Party also provided 
EEA -based market shares for completeness.104 
4.3.4.3.  Commission ’s assessment  
(145)  In line with the Commission decision in  Symantec/Veritas  and Gartner’s 
segmentation, a possible product market for Storage Management Mainframe 
Software  can be identified.  The Commission considers that for the purpose of the 
present decision the question whether Storage Management Mainframe 
constitutes a relevant product market and whether it needs to be further sub -
segmented into different types of storage depending on their use can be left open 
as the Transaction does not raise serious doubts as to its compatibility with the 
internal market under the narrowest possible product market definition for which 
market shares data is available . As Gartner’s segment for Storage Manage ment 
Mainframe Software  is the only one affected by the Transaction, the  Commission 
carried out the competitive assessment in Section 5.3.7. 3 on the basis of the 
segmentation put forward by the Notifying Party in accordance  with Gartner’s 
segment  for Storage Management Mainframe Software . 
(146)  The Commission considers that the relevant geographic market for Storage 
Management Mainframe Software  is at least EEA -wide, if not global. For the 
purpose of the present decision, the exact geographic market definiti on can be left 
open as the Transaction does not raise serious doubts as to its compatibility with 
the internal market under any plausible geographic market definition.  
4.3.5.  Security Information and Event Management Software  
(147)  Security information and event manage ment products provide a real -time analysis 
of the security alerts that have been generated by applications and network 
hardwa re. Once security threats (e.g.  attacks by a hacker) have been identified, 
the product alerts the business to the attack and automa tes the response to such 
incident.  
(148)  IBM offers the QRadar family of products which provides an overview visibility 
of any organization´s security system, since they are able to detect security 
offences and report them, as well as provide insight that allow  teams to respond 
quickly to reduce the impact of incidents. Red Hat is not active in security 
information and event manage ment software.  
                                                 
103  See Form CO, paragraphs  763-766. 
104  See Form CO, paragraph 767. 
 
26 4.3.5.1.  Commission precedents  
(149)  In Intel/McAfee105, the Commission segmented the market for Security S oftware 
following IDC and id entified IDC’s functional market Endpoint Security  as the 
relevant product market . It also envisaged further segmentation according to the 
type of end -customers , but ultimately left the market definition open.106 
(150)  In Intel/McAfee , the Commission considered wh ether the market for Security  
Software was worldwide or at least EEA -wide, but ultimately left the exact scope 
of the relevant geographic market open.  
4.3.5.2.  Notifying Party's view s 
(151)  The Notifying Party submits that in line with the Commission  decision listed at 
paragraph (149) , the relevant market is the IDC segment for Security Analytics, 
Intelligence, Response, and Orchestration Software . However, as un der this IDC 
segment, a non -horizontally affected market does not arise, the Notifying Party 
provides information needed to carry out the competitive assessment in Section 
5.3.7.3  on the basis of Gartner’s sub -segment  for Security Information and Event 
Management Software . According to the Notifying Party, the Transaction does 
not raise any concerns on any of the possible segmentations, and the precise 
product market definition can be left open.107  
(152)  The Notifying Party submits that, in line with line with Commission’s previous  
decisions concerning software , the relevant geographic market for Security 
Information and Event Management Software  is global. Nevertheless, the 
Notifying Party also provided EEA -based market shares for completeness.108 
4.3.5.3.  Commission ’s assessment  
(153)  In line with the Commission decision in  Intel/McAfee  and Gartner’s 
segmentation, a possible product market for Storage Management Mainframe 
Software  can be identified.  Nevertheless, t he Commission considers that for the 
purpose of the present dec ision, the exact product market definition can be left 
open as the Transaction does not raise serious doubts as to its compatibility with 
the internal market under under the narrowest possible  product market definition  
for which market shares data is availa ble. As no IDC segments would be affected 
by the Transaction, t he Commission therefore carried out the competitive 
assessment in Section 5.3.7.3  on the basis of the segmentation put forward by the 
Notifying Party in accordance with Gartner’s narrower  segment  for Security 
Information and Event Management Software . 
(154)  The Commission considers that the relevant geographic market for Security 
Information and Event Management Software  is at least EEA -wide, if not global. 
For the purpose of the present decision , the exact geographic market definition 
can be left open as the Transaction does not raise serious doubts as to its 
                                                 
105  Commission decision of 26 January 2011 in case M.5984  Intel/McAfee . 
106  Commission decision  of 26 January 2011  in case M.5984 Intel/McAfee , paragraph 50.  
107  See Form CO, paragraphs  782-785. 
108  See Form CO, paragraph  786. 
 
27 compatibility with the internal market under any plausible geographic market 
definition.  
4.3.6.  Security Testing  
(155)  Security testing encompasses prod ucts aimed at software developers that want to 
test their web and mobile applications prior to deployment, to detect and fix any 
security issues. Security testing refers to both dynamic application security testing 
(“DAST”)109  and static application securit y testing (“SAST”)110.  
(156)  IBM offers IBM Security AppScan which is a family of web security testing and 
monitoring tools. Red Hat is not active in Security Testing Software.  
4.3.6.1.  Commission precedents  
(157)  In Intel/ McAfee111, the Commission segmented the market for securi ty software 
following IDC and identified Endpoint Security . It also envisaged further 
segmentation according to the type of end -customers , which is an IDC functional 
market, as the relevant product market.   
(158)  In Intel/McAfee112, the Commission considered whether the market for Security 
Software  was worldwide or at least EEA -wide, but ultimately left the exact scope 
of the relevant geographic market open.  
4.3.6.2.  Notifying Party's view s 
(159)  The Notifying Party submits that the relevant product  market with regard to 
Security Testing is IDC’s functional market for Other Security Software. 
However, as under this IDC segment, a non -horizontally affected market does not 
arise, the Notifying Party provides information needed to carry out the 
comp etitive assessment in Section 5.3.7.3  on the basis of Gartner’s sub -segment  
for Security Testing S oftware (which is narrower  than the IDC segment ).113 
(160)  The Notifying Party submits that, with line with Commission’s previous  decisions 
concerning software , the relev ant geographic market for Security Testing 
Software  is global. Nevertheless, the Notifying Party also provided EEA -based 
market shares for completeness.114 
4.3.6.3.  Commission ’s assessment  
(161)  In line with the Commission decision in  Intel/McAfee  and Gartner’s 
segmentatio n, a possible product market for Storage Management Mainframe 
Software  can be identified.  Nevertheless, t he Commission considers that for the 
                                                 
109  DAST is a program that communicates with a web application through the web front -end to detect 
security vulnerabilities in the web application as well as architectural weaknesses.  
110  Static application security testing is a technology aimed at analyzing the source code, byte code and 
binaries from coding and design conditions that could indicate security vul nerabilities. Red Hat is not 
active in security testing software.  
111  Commission decision of 26 January 2011  in case M.5984 Intel/McAfee , paragraph 50.  
112  Commission decision of 26 January 2011  in case M.5984 Intel/McAfee , paragraph 55.  
113  See Form CO, paragraphs  793-796. 
114  See Form CO, paragraph 797. 
 
28 purpose of the present decision, the exact product market definition can be left 
open as the Transaction does not raise serious doubts as to its compatibility with 
the internal market under the narrowest possible product market definition for 
which market shares data is available.  As no IDC segments would be affected by 
the Transaction, t he Commission therefore carried out the comp etitive assessment 
in Section 5.3.7.3  on the basis of the segmentation put forward by the Notifying 
Party in accordance with Gar tner’s segment for Security Testing S oftware . 
(162)  The Commission considers that the relevant geographic market for Security 
Testing S oftware  is at least EEA -wide, if not global. For the purpose of the 
present decision, the exact geographic market definition ca n be left open as the 
Transaction does not raise serious doubts as to its compatibility with the internal 
market under any plausible geographic market definition.  
4.3.7.  Web Access Management Software  
(163)  Web access management software is a form of identity managemen t that controls 
access to web resources, by providing authentication management, policy -based 
authorisations, reporting and auditing services as well as single sign -on 
convenience.  
(164)  IBM’s range of products115 ensures that the relevant people have access to 
business  resources, by providing access controls for web, mobile, cloud and 
legacy apps, as well  as desktops, VPNs, and servers.  Red Hat is not active in Web 
Access Management Software.  
4.3.7.1.  Commission precedents  
(165)  In Intel/ McAfee116, the Commission segmented the market for security software 
following IDC.  
(166)  In Intel/McAfee117, the Commission considered whether the market for Security 
Software was worldwide or at least EEA -wide, but ultimately left the exact scope 
of the relevant geographic market open.  
4.3.7.2.  Notifying Party's view s 
(167)  The Notifying Party submits  that the relevant product market with regard to its 
activities in Web Access Management Software is IDC’s segment  for Identity 
And Digital Trust Software.  However, as under this IDC segment, a non -
horizontally affe cted market does not arise, the Notifying Party provides 
information needed to carry out the competitive assessment in Section 5.3.7.3  on 
the basis of Gartner’s sub -segment  for Web Access Management Software  (which 
is narrower  than the IDC segment).118 
                                                 
115  IBM Security Access Manager, IBM Security Identity Governance and Intelligence, IBM Security 
Secret Server, IBM Cloud Identity, IBM Security Directory Suite, IBM Security Access Manager for 
Enterprise S ingle Sign -On, and IBM Security zSecure.  
116  Commission decision of 26 January 2011 in case M.5984  Intel/McAfee . 
117  Commission decision of 26 January 2011 in case M.5984 Intel/McAfee , paragraph 55.  
118  See Form CO, paragraphs  804-807. 
 
29 (168)  The N otifying Party submits that, in line with line with Commission’s previous  
decisions concerning software , the relevant geographic market for Web Access 
Management Software  is global. Nevertheless, the Notifying Party also provided 
EEA -based market shares fo r completeness.119 
4.3.7.3.  Commission assessment  
(169)  In line with the Commission decision in  Intel/McAfee  and Gartner’s 
segmentation, a possible product market for Storage Management Mainframe 
Software  can be identified.  Nevertheless,t he Commission considers that for t he 
purpose of the present decision, the exact product market definition can be left 
open as the Transaction does not raise serious doubts as to its compatibility with 
the internal market under the narrowest possible product market definition for 
which ma rket shares data is available.  As no IDC segments would be affected by 
the Transaction, the Commission therefore carried out the competitive assessment 
in Section 5.3.7.3  on the basis of the segmentation put forward by the Notifying 
Party in accordance with Gartner’s segment for Web Access Management 
Software.  
(170)  The Commission considers that the relevant geographic market for Security 
Testing S oftware  is at least EEA -wide, if not global. For the purpose of the 
present decision, the exact geographic market defin ition can be left open as the 
Transaction does not raise serious doubts as to its compatibility with the internal 
market under any plausible geographic market definition.  
4.3.8.  Other IT Operations Management   
(171)  Gartner identifies IT Operations Management (“ITOM”) Mainframe Tools as a 
distinct subsegment within the Gartner macromarket IT Operations Management. 
Other ITOM is a catch -all category that includes any management tools and/or 
integrated functionality not specifically covered by one of the other Gartner 
subsegments within its IT Operations Management macromarket. This includes: 
output management software used to manage hardware peripherals (such as 
printers); database administration automation and support tools that automate 
routine administration of databas es; schema development and management; query 
analyzers; reorganization utilities; space tuners; and bulk data loading/unloading 
technologies.   
(172)  IBM's products falling within the category of Other ITOM are: IBM Netcool 
Operations Insight120 and IBM Operations Analytics121. Red Hat is not active in 
Other ITOM.  
                                                 
119  See Form CO, paragra ph 808. 
120  Netcool Operations Insight is an operations center which provides a consolidated view of the ale rts and 
alarms affecting an organization’s IT system and filters  out irrelevant or low -priority alerts.  
121  IBM Operations Ana lytics analyses operatio nal big data to create insights for quicker problem solving 
and better overall service . The product can learn and understand how applications and their 
infrastructure should normally behave and interact, establish baselines  for normal behavior, and issue 
alerts on detected anomalous behavior. It helps operational teams detect trends and forecast future 
problem prioritization a nd determination needs, thereby reducing repair times and improving 
operational efficiency . 
 
30 4.3.8.1.  Commission precedents  
(173)  There is no Commission precedent with regard to ITOM tools.  
4.3.8.2.  Notifying Party's view s 
(174)  The Notifying Party submits that the relevant product market with regard to its 
activities in Other I TOM is  IDC’s segment for ITOM software. However, as 
under this IDC segment, a non -horizontally affected market does not arise, the 
Notifying Party provides information needed to carry out the competitive 
assessment in Section 5.3.7.3  on the basis of Gartne r’s sub -segment  for Other 
ITOM Tools  (which is narrower  than the IDC segment). According to the 
Notifying Party, the Transaction does not raise any concerns on any of the 
possible segmentations, and the precise product market definition can be left 
open.122  
(175)  The Notifying Party submits that the relevant geographic market for Other ITOM 
is global. Nevertheless, the Notifying Party also provided EEA -based market 
shares for completeness.123 
4.3.8.3.  Commission ’s assessment  
(176)  In line with Gartner’s segmentation, a possible pr oduct market for Other ITOM 
can be identified. Nevertheless, t he Commission considers that for the purpose of 
the present decision, the exact product market definition can be left open as the 
Transaction does not raise serious doubts as to its compatibilit y with the internal 
market under the narrowest possible product market definition for which market 
shares data is available.  As no IDC segments would be affected by the 
Transaction, the Commission therefore carried out the competitive assessment in 
Section  5.3.7.3  on the basis of the segmentation put forward by the Notifying 
Party in accordance with Gartner’s segment for Other ITOM.  
(177)  The Commission considers that the relevant geographic market for Other ITOM 
is at least EEA -wide, if not global. For the purpo se of the present decision, the 
exact geographic market definition can be left open as the Transaction does not 
raise serious doubts as to its compatibility with the internal market under any 
plausible geographic market definition.  
4.3.9.  AD Mainframe Tools  
(178)  Application Development (“AD”) mainframe tools are used to develop and 
maintain applications that run on IBM’s pr oprietary System z mainframes.124 Red 
Hat is no t active in AD mainframe tools.  
                                                 
122  See Form CO, paragraphs  816-819. 
123  See Form CO, paragraph  819. 
124  IBM offers a wide range of AD Mainframe Tools: IBM Developer for System z, IBM Application 
Discovery and Delivery Intelligence, IBM Application Delivery Foundation, IBM Application 
Performance Analyzer for z/OS, IBM Fault Anal yzer for z/OS, IBM File Manager for z/OS, IBM Z 
Development and Test Environment, IBM Z Open Development, IBM Debug Tool, UrbanCode 
Deploy, IBM Rational Test Workbench, IBM Rational Integration Tester, Rational Team Concert, and 
IBM InfoSphere Optim Test D ata Management.  
 
31 4.3.9.1.  Commission precedents  
(179)  There is no Commission precedent with regard  to AD Mainframe Tools  but the 
Commission has considered the broader category of application development 
software in previous decisions. In these decisions, the Commission investigated 
different types of application development software constitute separate  product 
markets, but ultimately left the market definition open.125 
(180)  In its previous decisions considering application development software, the 
Commission considered whether the market was worldwide or at least EEA -wide, 
but ultimately left the exact scope of the relevant geographic market open.  
4.3.9.2.  Notifying Party's view s 
(181)  The Notifying Party submits that the relevant product market is Gartner’s 
segment for AD Mainframe Tools , which is not segmented further. IDC does not 
identify a distinct segment for AD mainframe tools, although they are likely to 
fall within the IDC secondary market of Application Development Software.  
(182)  According to the Notifying Party, w hile application development tools generally 
include multiple sets of products that enable application  discovery, management, 
development, testing, debugging, DevOps, and performance analysis for 
application developers, AD Mainframe Tools include specific capabilities to 
enhance, simplify and automate these activities for developers and operational 
enginee rs who are producing and maintaining applications targeting the 
mainframe.126 
(183)  In line with previous Commission decisions where different types of application 
development tools have tended to be considered distinct markets (discussed at 
paragraph  (179) above ), the Notifying Party considers AD mainframe tools as the 
relevant product market and provides shares of sales based on Gartner data for 
this segment.  
(184)  The Notifying Party submits that the relevant geographic market for AD 
Mainframe Tools is global. Nevert heless, the Notifying Party also provided EEA -
based market shares for completeness.127 
4.3.9.3.  Commission’s assessment  
(185)  In line with Gartner’s segmentation, a possible product market for AD Mainframe 
Tools can be identified. Nevertheless, t he Commission considers tha t for the 
purpose of the present decision, the exact product market definition can be left 
open as the Transaction does not raise serious doubts as to its compatibility with 
the internal market under the narrowest possible product market definition for 
which market shares data is available . The Commission therefore carried out the 
competitive assessment in Section 5.3.7.3  on the basis of the segmentation put 
                                                 
125  Commission decision of 8 March 2017 in case M.8223 Micro Focus/HPE Software Business , 
paragraph  32; Commission decision of 5 March 2008 in case M.4747 IBM/Telelogic , paragraph  122; 
Commission decision of 20 February 2003 in case M.3062 IBM/Rational , paragraphs  11, 16,  20, and 
23. 
126  See Form CO, paragraphs  833-836. 
127  See Form CO, paragraph 837. 
 
32 forward by the Notifying Party in accordance with Gartner’s segment for  AD 
Mainframe Tools . 
(186)  The Comm ission considers that the relevant geographic market for AD 
Mainframe Tools is at least EEA -wide, if not global. For the purpose of the 
present decision, the exact geographic market definition can be left open as the 
Transaction does not raise serious doub ts as to its compatibility with the internal 
market under any plausible geographic market definition.  
4.3.10.  Server Operating Systems   
(187)  Operating systems manage computer hardware (e.g., processing, memory, and 
storage) and all other programs in a computer. In the traditional IT stack,  
operating systems sit above hardware and below middleware and applications . 
Operating systems save application developers from tailoring their program to the 
specific hardware in each computer —instead, they write the program for an 
operating system which provides it with the necessary computer resources to run.  
(188)  The vast majority of servers today run Windows or Linux operating systems. 
Windows128 and Linux are estimated to account for more than [90-100]% of new 
server operating system deployments and more than [90-100]% of the installed 
base in 2017.129 The remainder  of deployments are either Unix130 or other 
proprietary server operating systems, both of  which have significantly declining 
sales and installed  bases.131 
(189)  Linux refers to a range of operating systems built on the Linux kernel, a free, 
open source operating system core developed by Linus Torvalds in the early 
1990s. Because the Linux kernel is open source, it can be modified and tailored to 
suit diff erent needs. As a result, a range of desktop, mobile, and server Linux 
distributions have emerged. Linux distributions can be maintained by the open 
source community, produced commercially —or both.132  
(190)  Red Hat offers Red Hat Enterprise Linux (“RHEL”) and IBM ’s operating systems 
are proprietary and based on either Unix or IBM’s own code base: z/OS, zVSE, 
zTPF, AIX, and IBM i. z/OS, zVSE, and zTPF run exclusively on IBM’s z 
                                                 
128  Microsoft started developing proprietary operating systems for  personal computers (“PC”) in the early 
1980s. Since 1993, Microsoft has also  produced Windows operating systems for servers. The latest 
edition is Windows  Server 2019, released in October 2018.  
129  IDC, Worldwide Server Operating Environments Market Shares, 2017: Linux Fuels Market Growth  
(2018) . 
130  Unix is a family of operating sys tems that emerged from the Unix  operating system developed by U.S. 
telecommunications provider AT&T in the  late 1960s. AT&T originally provided the Unix source 
code for free. This led to  diverse groups developing different versions of Unix, each tailored t o their 
needs.  Unix’s descendants ultimately coalesced into two broad groups —academic and  commercial.  
companies developed their own  versions of Unix. The most well -known is Oracle's (formerly Sun 
Microsystems’)  Solaris. HP and IBM continue to market Unix -based systems today.  
131  IDC, Worldwide Server Operating Environments Market Shares, 2017: Linux Fuels Market Growth            
(2018) . 
132  Canonical Ltd maintains  Ubuntu and provides commercial support for Ubuntu’s Server edition 
(Ubuntu is  also available unsupported for free) while SUSE sponsors free, community -based  
OpenSUSE and charges for SUSE Enterprise Linux. Oracle Corporation providesa commercially -
supported version of Linux called Oracle Enterprise Linux.  Other Linux -based operating systems 
include  Amazon Linux, Debian, and Fedora.  
 
33 processors, while AIX and IBM i run exclusively on IBM’s POWER processor 
architecture.  
4.3.10.1.  Commission precedents  
(191)  In Oracle/Sun , the Commission referred to its Microsoft antitrust decision133 
where it had identified a market for work group server operating systems, distinct 
from other software .134 It did not segment server operating systems by process or 
type, or operating system family (i.e., Windows, Linux, or Unix) , but ultimately  
left open t he precise product market definition . 
(192)  In Oracle/Sun , the Commission referred to its Microsoft antitrust decision where 
it identified a worldwide geographic market for server operating systems.  
4.3.10.2.  Notifying Party’s view  
(193)  The Notifying Party considers that the relevant product market for operating 
systems should encompass all server operating systems, i.e. Windows (server), 
Linux, Unix, including any “descendants”  thereof, such as Solaris, HP -UX and 
AIX, and other proprietary operating systems, such as IBM i, z/OS, and z/VSE. 
This product market definition is consistent with the IDC submarket for Core 
Operating Systems ( i.e. server operating systems). It submits th at further 
segmentation of the product market for server operating systems between 
paid/unpaid or depending on the family (Linux, Windows, etc.) is not warranted. 
According to the Notifying Party, s erver operating systems all perform the same 
basic functio n, regardless of which  “family” they are in.135 
(194)  The Notifying Party submits that, in line with the Commission d ecisions listed at 
paragraphs (191) -(192) , the relevant geographic market is global. Nevertheless, 
the Notifying Party also provided EEA -based mark et shares for completeness.136 
4.3.10.3.  Commission’s assessment  
(195)  RHEL is the most successful and widely used paid supported Linux distribution. 
The Commission therefore investigated whether the following categories of 
server operating systems can be considered part of  the same relevant product 
market as paid supported Linux distributions:  (1) free unsupported Linux 
distributions , (2) other free unsupported open -source operating systems, and (3) 
other paid supported operating systems from different families (e.g., Microsoft 
Windows, Unix -based operating systems such as IBM’s AIX, Oracle’s Solaris 
and HP -UX, and other proprietary operating systems) . 
(196)  As regards free unsupported Linux distributions, the Commission considers that 
demand -side substitution is most likely too limited to  constraint a hypothetical 
monopolist in paid supported Linux distribution. This is for the following reasons.  
(197)  First,  a large majority of competitors responding to the market investigation 
considered that competition between paid Linux distri bution s and free 
                                                 
133  Commission decision  of 24 April  2004 in case COMP/C -3/37.792 – Microsoft . 
134  Commission decision of 30 July 2009 in case M.5529 – Oracle/Sun Microsystems , recital  945. 
135  See Form CO, paragraphs  702-706. 
136  See Form CO , paragraph707 . 
 
34 unsupported Linux distribution s was either limited or very limited. Some 
competitors explain ed that free unsupported Linux distributions are not 
considered for mission -critical workloads. Within enterprises, free Linux 
distributions would mainly be used in testing and development efforts , but not in 
production.137 Rival Linux distributors explain ed that customers who choose to go 
for a paid Linux distribution do it because they need the support . The 
Commission therefore considers that custome rs using paid Linux operating 
systems would be unlikely to switch to unsupported Linux distributions , at least 
for mission -critical workloads .138   
(198)  Second, on the customers’ side, a  majority of them  do not consider free 
unsupported Linux distributions to be possible alternatives to paid supported 
Linux distribution s.139 Customers explain that  it is generally a company policy to 
opt for supported distributions , and unsupported alternatives would in any event 
not be considered.  
(199)  As regards other free unsupported open -source operating systems, the 
Commission considers that demand -side substitution is most likely too limited to 
constrain a hypothetical monopolist in paid supported Linux distribution, for the 
same reasons as for free unsupporte d Linux distributions, i.e. support is 
consider ed crucial for most customers. In addition, switching from a Linux 
operating system to another family of operating systems is more difficult than 
from a Linux distribution to another Linux distribution.140 This was confirmed by 
the market investigation. On the one hand, all  competitors responding to the 
market investigation and expressing an opinion on the issue considered that 
competition between paid Linux distribution and other free unsupported open -
source ope rating systems  was either limited or very limited .141 On the other hand, 
the vast majority of customers do not consider other free unsupported open -
source operating systems  to be possible alternatives to paid supported Linux 
distribution s.142 
(200)  As regards other paid supported operating systems from different families (e.g., 
Microsoft Windows, Unix -based operating systems such as IBM’s AIX, Oracle’s 
Solaris and HP -UX, and other proprietary operating systems ), the Commission 
also considers that demand -side substitution is most likely too limited to 
constraint a hypothetical monopolist in paid supported Linux distribution. This is 
for the following reasons.   
                                                 
137   For instance, Oracle explains “[w]hile unsupported Linux distribution may be used by individuals and 
hobbyists or customers with limited needs, an enterprise will almost always require some sort of Linux 
support. This reality is reflect ed in Red Hat’s (and Oracle’s) revenue model where Linux is typically 
available for free but customers are charged for associated Linux support. One exception (and the 
reason we mark “limited” instead of “very limited”) is the use of Linux in testing and d evelopment 
efforts. In these cases customers are likely to use free Oracle or CentOS distributions, since Red Hat 
does not provide RHEL for free for testing/development purposes.”  See replies to Questionnaire Q 1 to 
competitors , question  40. 
138  See replies to Questionnaire Q 1 to competitors , question  40. 
139  See replies to Questionnaire Q 2 to customers , question  39. 
140  See replies to Questionnaire Q 1 to competitors , question  40. 
141  See replies to Questionnaire Q 1 to competitors , question  40. 
142  See replies to  Questionnaire Q 2 to customers , question  39. 
 
35 (201)  First, although a  majority of customers replied that they consider other  operating 
system families  (e.g. Microsoft Windows  and Unix -based operating systems ) to 
be possible alternatives to paid supported Linux distributi ons, their explanations 
suggest that they currently use different families of operating systems  as 
complementary operating systems to manag e different tasks/applications . 
However , when it comes to the possibility of switching applications, middleware 
or tools running on Linux, several customers explain that while most of  those 
components could in principle run on Microsoft Windows  or even Uni x, 
switching  would require significant effort  and costs . As explained by one 
customer , “[i]n theory, Microsoft Windows could be an alternative to a paid 
supported Linux distribution, however, the migration cost, the time required and 
the acquisition of ski lls render this an unrealistic scenario ”.143 
(202)  Second, t his view is also supported by competitors who generally explain that 
substitution is limited between Linux and other families of operating  system s 
such as Windows  and Unix , even when supported . According to a competitor, f or 
application development, organisations tend to have most of their developers 
specialized in either the Linux environment or the Windows environment. 
Switching from one to the other is therefore unlikely. 144 
(203)  For third party software , although competitors generally explain that most 
software are compatible with both Linux and Windows, once they are running on 
Linux, switching to Windows would be very complex and expensive. The same is 
true for switching from Linux to Unix. For instance one customer explains that 
“[s]witching [between different families of] operating systems tends to be 
expensive and complex, requiring changes to the applications being run, as well 
as to the tools used to manage/operate the systems. Additionally, there can b e 
substantial performance differences requiring re -testing and re -tuning of 
applications ”. Windows , Linux , Unix and other families of operating systems 
would only be  considered  interchangeably  for new applications/services 
deployment, which are both Window s and Linux compatible .145 
(204)  In light of the above, the Commission considers that paid supported Linux server 
operating systems  may constitute a distinct product market  from (1) free 
unsupported Linux distributions, (2) other free unsupported open -source 
opera ting systems,  and (3) other paid supported operating systems from different 
families (e.g., Microsoft Windows, Unix -based operating systems such as IBM’s 
AIX, Oracle’s Solaris and HP -UX, and other proprietary operating systems) .In 
any event, for the purpo se of this decision, it can be left open whether RHEL 
belongs to a relevant product market defined as (i) paid supported Linux server 
operating systems, (ii) paid supported server operating systems (including 
different families), (iii) paid supported and u npaid unsupported Linux 
distributions or (iv) all server operating systems, as under each of these 
alternatives the Transaction does not raise serious doubts as to its compatibility 
with the internal market .  
(205)  As regards IBM’s operating systems which are based on either Unix (AIX) or on 
IBM’s own code base (e.g., z/OS), for the purpose of this decision, it can be left 
                                                 
143  See replies to Questionnaire Q 2 to customers , question  39. 
144  See replies to Questionnaire Q 1 to competitors , question  40. 
145  See replies to Questionnaire Q 1 to competitors , question  40. 
 
36 open whether IBM’s server operating systems belong to (i) a distinct market for 
paid Unix and other paid operati ng system (other than Microsoft and Linux) on 
which IBM’s market share is the highest, (ii) all paid supported operating systems 
or (iii) all server operating systems, as under each of these alternatives the 
Transaction does not raise serious doubts as to its compatibility with the internal 
market . 
(206)  In line with the Commission decisions listed at paragraphs (191) -(192) , the 
Commission considers that the relevant geographic market for Server Operating 
Systems is worldwide. Nevertheless, for completeness, the Commission carried 
out the competitive asse ssment in sections 5.2.10., 5.3.3. and 5.3.7.  also at the 
EEA -wide level.  
4.4. Servers  
4.4.1.  Commission precedents  
(207)  In past decisions, the Commission has focused on x86 servers and considered a 
segmentation by price band: (a) entry -level (below USD 100,000), (b) mid -range 
(USD 100,000 – USD 999,999), and (c) high -end (USD 1 million and above).146 
The Commission ultimately left the product market definition open.147 
(208)  The Commission found the market for servers to be at least  EEA -wide if not 
worldwide.148 
4.4.2.  Notifying Party’s view  
(209)  The Notifying Party considers that the relevant product market should encompass 
all servers.149  
(210)  First, t he Notifying Party submits that c ustomers are increasingly opting for a 
“scale out” model, where their computing requirements are performed by 
networks of lower -priced servers, instead of one or two high capacity servers. 
This model affords customers greater flexibility to scale their server requirements 
according to predicted growth and usage, reduce idle server capacity, and manage 
overall cape x for IT hardware. The capabilities of such horizontal server 
architectures ( i.e., networks of servers) were previously limited by the capability 
of software to exploit network computer resources, and the complexities of 
managing multiple hardware clusters. However, advances in network technology 
and virtualization technology now enab le distributed server systems to deliver 
comparable levels of security, reliability, and performance to single large -
capacity servers. The emergence of software -defined storage products now 
                                                 
146  Commission decision of 29  February 2016  in case M.7861 – Dell/EMC , para graphs  38-42;                                      
Commission decision of 21 January  2010  in case M.5529 – Oracle/Sun Microsystems , recital  941; 
Commission decision of 29 February 2016  in case M.7861 – Dell/EMC , paragraphs  19-22. 
147  Ibid, para graph  45. 
148  Commission decision of 29  February 2016  in case M.7861 – Dell/ EMC , paragraph  44; Commission 
decision of 21 January  2010  in case M.5529 – Oracle/Sun Microsystems , recital  950;  
Commission decision of 31 January  2002  in case M.2609 – HP/Compaq , para graph  23. 
149  See Form CO, paragraph 257.  
 
37 enables enterprises to unify multiple servers, consolidating them  into a single 
“virtual pool” that can be centrally managed and provisioned. 150 
(211)  Second, a ccording to the Notifying Party, c ustomers are also migrating increasing 
volumes of  workload to public cloud.  Public cloud vendors predominantly 
provision their data  center infrastructure with lower -priced servers. They rely on 
large numbers of  inexpensive servers across networks of data centers to build in 
significant redundancy,  ensure high availability, and guarantee their ability to 
elastically meet customer cloud  computing needs .151 
(212)  Finally, and in line with the above explanation, the Notifying Party submits that 
IDC and Gartner data also indicate a consistent increase in the share of revenues 
accounted for by lower -priced servers and a consistent decline in the share o f 
revenues accounted for by mid -range and high -end servers year on year, which 
may suggest an increased competition from, and a general shift of  workloads 
towards, lower -priced servers.152 
(213)  The Notifying Party  submit s that the relevant geographic market for s ervers is 
worldwide.  According to the Notifying Party,  suppliers of servers are global 
enterprises and are active worldwide, there are no significant transport costs 
associated with servers, and customer preferences and product specifications do 
not tend t o vary by  geography.  
4.4.3.  Commission’s assessment  
(214)  The Commission considers that for the purpose of this decision, it can be left 
open whether the market for servers would have to be further segmented 
according to the price band, because the Transaction does not raise serious doubts 
as to its compatibility with the internal market even in a plausible high -end server 
market where IBM’s position would the strongest.  
(215)  The Commission considers that for the purpose of  the present decision, the e xact 
geographic market definition can be left open as the Transaction does not raise 
serious doubts as to its compatibility with the internal market whether the 
geographic market is EEA -wide or worldwide . 
4.5. IT services  
(216)  IBM  markets IT Services to enterprises under the IBM Services brand. IBM 
Services includes two operationally distinct businesses, Global Business Services 
(“GBS”) and Global Technology Services (“GTS”), each with a different focus: 
GBS mainly provides strategy and architecture consulting servic es, while GTS 
generally provides outsourcing services.  
                                                 
150  See the Notifying Party’s response to the Commission’s RFI 16.  
151  See the Notifying Party’s response to the Commission’s RFI 16.  
152  According to Gartner , between 2015 and 2018, the proportion of low -end servers grew from [80-90]% 
to [90-100]% of the worldwide market by value. The proportion of mid -range and high -end servers 
both declined in  the same period, from [5-10]% and [5-10]% to [0-5]% and [5-10]%, respectively. 
According to IDC, between 2015 and  2018, low -end servers grew from [80-90]% to [90-100]% of the 
worldwide market by value, while the proportionof mid -range and high -end servers shrunk from [5-
10]% and [5-10]% to [5-10]% and [0-5]%, respective ly. See the Notifying Party’s response to the 
Commission’s RFI 16.  
 
38 4.5.1.  Commission precedents  
(217)  In its most recent decisions, the Commission has considered segmenting IT 
services  on the basis of (i) the functionality of the service and (ii) industry sector, 
but ultimately le ft the precise product market definition open.153 In these 
decisions, the Commission relied on market data and the segments published by 
Gartner.  
(218)  In previous decisions, the Commission, while considering that IT services are  
provided on a national basis, also pointed that the market could have a broader  
geographic scope, as major providers of IT  services operate on a worldwide basis 
and customers frequently issue worldwide/EEA -wide tenders.154 
4.5.2.  Notifying Party’s view  
(219)  The Notifying Party submits that, for the purposes of the present case, the 
relevant market comprises all IT Services, and that this market should not be 
further sub -segmented because of a high degree of supply side substitutability, as 
well as the fact that many suppliers are active across variou s service categories, 
industries or customer groups.  
(220)  From a geographic standpoint, the Notifying Party considers the relevant market 
to be worldwide in scope given the worldwide activities of providers of IT 
Services as well as developers and vendors of t hese software products, common 
customer preferences across the globe, negligible transport costs, maintenance 
and support services (commonly provided via the Internet), and limited trade 
barriers.   
4.5.3.   Commission’s assessment   
(221)  The Commission considers that , for the purpose of this decision, it can be left 
open whether the market for IT services would have to be further segmented 
according  to (i) the functionality of the service and (ii) industry sector , because 
the Transaction does not raise serious doubts as  to its compatibility with the 
internal market irrespective of the exact market definition. The Commission also 
considers that, for the purpose of this decision, it can be left open whether IT 
services  markets are national, EEA -wide or worldwide, because the Transaction 
does not raise serious doubts as to its compatibility with the internal market 
irrespective of the exact geographic market definition.  
                                                 
153  Commission decision of 15 December  2014  in case M.7458 – IBM/INF Business of Deutsche 
Lufthansa , para graphs 16-29 and 33; Commission decision of 19 June 2013  in case M.6921 – IBM 
Italia/ UBIS , para graphs  12-24 and 25; Commission decision of  18 November  2004  in case M. 3571 – 
IBM/Maerskdata/DM data , para graphs  9-14; Commission decision of  23 September  2002  in case 
M.2946  – IBM/PWC Consulting , para graph s 9-13.  
154  Case M.6237 – Computer Sciences Corporation / iSoft Group, Commission decision of 20 June 2011, 
paragraphs . 17-18.  
 
39 5. COMPETITIVE ASSESSMENT  
5.1. Analytical framework  
(222)  Articl e 2 of the Merger Regulation provides  that: “[a] concentration which would 
significantly impede effective competition, in the common market or in a 
substantial part of it, in particular as a result of the creation or strengthening of a 
dominant position, s hall be declared incompatible with the common market ”. 
Under Article 2(2) and (3) of the Merger Regulation, the Commission must thus 
assess whether a proposed concentration would significantly impede effective 
competition in the internal market or in a sub stantial part of it, in particular 
through the creation or strengthening of a dominant position.  
(223)  In this respect, a concentration may entail horizontal and/or non -horizontal 
effects. Horizontal effects are those deriving from a concentration where the 
undertakings concerned are actual or potential competitors of each other in one or 
more of the relevant markets concerned. Non -horizontal effects are those deriving 
from a concentration where the undertakings concerned are active in different 
relevant mark ets. 
(224)  As regards non -horizontal concentrations , two broad types of such concentrations 
can be distinguished: vertical concentrations and conglomerate concentrations .155 
Vertical concentrations  involve companies operating at different levels of the 
supply  chain.156 Conglomerate concentrations  are concentrations  between firms 
that are in a relationship which is neither horizontal (as competitors in the same 
relevant market) nor vertical (as suppliers or customers) .157 
(225)  A concentration  may entail both horizontal and n on-horizontal effects . This  may 
for instance be the case when the merging  firms are not only in a vertical or 
conglomerate relationship, but are also actual or potential competitors of each 
other in one or more of the relevant markets concerned. In such a case, the 
Commission will appraise horizontal, vertical and/or conglomerate effects in 
accordance with the guidance set out in the relevant notices.158 
(226)  The Commission appraises horizontal effects in accordance with the guidance set 
out in the relevant notice, that is to say the Horizontal Merger Guidelines.159 
Additionally, the Commission appraises non -horizontal effects in accordance with 
the guidance set out in the relevant notice, that is to say the Non -Horizontal 
Merger Guidelines.  Finally, the Commis sion appraises innovation competition in 
accordance with the analytical framework for the assessment of horizontal non -
coordinated effects in the Horizontal Merger Guidelines which is also largely 
applicable to innovation.  
                                                 
155  Guidelines on the assessment of non -horizontal mergers under the Council Regulation on the control 
of concentrations between undertakings ("Non -Horizon tal Merger Guidelines"), OJ C 265, 18.10.2008, 
recital 3.  
156  Non-Horizontal Merger Guidelines, recital 4.  
157  Non-Horizontal Merger Guidelines, recital 5.  
158  Non-Horizontal Merger Guidelines, recital 7.  
159 Guidelines on the assessment of horizontal mergers u nder the Council Regulation on the control of 
concentrations between undertakings ("Horizontal Merger Guidelines"), OJ C 31, 05.02.2004.  
 
40 5.1.1.  Horizontal effects  
(227)  In addition to  the creation or strengthening of a dominant position, the Horizontal 
Merger Guidelines distinguish between two other  ways in which concentrations 
between actual or potential competitors on the same relevant market may 
significantly impede effective compet ition, namely non -coordinated and 
coordinated effects.  
(228)  Recital 25 of the Preamble to the Merger Regulation clarifies that " under certain 
circumstances, concentrations involving the elimination of important competitive 
constraints that the merging parties h ad exerted upon each other, as well as a 
reduction of competitive pressure on the remaining competitors, may, even in the 
absence of a likelihood of coordination between the members of the oligopoly, 
result in a significant impediment to effective competit ion".160 It further clarifies 
that the notion of significant impediment to effective competition “ should be 
interpreted as extending, beyond the concept of dominance, only to the 
anticompetitive effects of a concentration resulting from the non -coordinated 
behaviour of undertakings which would not have a dominant position on the 
market concerned ”.161 
(229)  The Horizontal Merger Guidelines list a number of factors which may influence 
whether or not significant horizontal non -coordinated effects are likely to result 
from a concentration , such as the large market shares of the merging firms, the 
fact that the merging firms are close competitors, the limited possibilities for 
customers to switch suppliers, or the fact that the merger would eliminate an 
important competiti ve force. That list of factors applies equally regardless of 
whether a concentration would create or strengthen a dominant position, or would 
otherwise significantly impede effective competition due to non -coordinated 
effects. Furthermore, not all of these  factors need to be present to make 
significant non -coordinated effects likely and it is not an exhaustive list.162 
Finally, the Horizontal Merger Guidelines describe a number of factors, which 
could counteract the harmful effects of a merger on competition,  including the 
likelihood of buyer power, entry and efficiencies.  
5.1.2.  Vertical effects  
(230)  The Non -horizontal Merger Guidelines recognises that non -horizontal 
concentrations are generally less likely to significantly impede effective 
competition than horizontal co ncentrations.163  
(231)  Vertical n on-coordinated effects may principally arise when non -horizontal 
concentrations give rise to foreclosure.164 A concentration is said to result in 
foreclosure where actual or potential rivals' access to supplies or markets is 
hampere d or eliminated as a result of the merger, thereby reducing these 
                                                 
160 Merger Regulation, recital 25. Similar wording is also found in paragraph 25 of the Horizontal Merger 
Guidelines.  
161  Merger Regulation, recital 25.  
162 Horizontal Merger Guidelines, paragraph 26.  
163  Non-horizontal Merger Guidelines, paragraph 11.  
164  Non-horizontal Merger Guidelines, paragraph 18.  
 
41 companies' ability and/or incentive to compete.165 Such foreclosure may 
discourage entry or expansion of rivals or encourage their exit. Such foreclosure 
is regarded as anti -competitive where the merged entity — and, possibly, some of 
its competitors as well — are as a result able to profitably increase the price 
charged to consumers.166 
(232)  Two forms of vertical foreclosure can be distinguished.167 The first is where the 
concentration is likely to rai se the costs of downstream rivals by restricting their 
access to an important input (input foreclosure). The second is where the merger 
is likely to result in foreclosure of upstream rivals by restricting their access to a 
sufficiently large customer base (customer foreclosure).  
5.1.3.  Conglomerate effects  
(233)  In the majority of circumstances, conglomerate concentrations do not lead to any 
competition problems but in certain specific cases there may be harm to 
competition.168 The main concern in the context of conglomer ate effects is that of 
foreclosure.169 Conglomerate concentrations may allow the merged entity to 
combine products in related markets and this may confer on the merged entity the 
ability and incentive to leverage a strong market position from one market to 
another by means of tying or bundling, or other exclusionary practices.170 
(234)  In assessing the likelihood of conglomerate effects, the Commission examines, 
first, whether the merged firm would have the ability to foreclose its rivals, 
second, whether it would ha ve the economic incentive to do so and, third, whether 
a foreclosure strategy would have a significant detrimental effect on competition, 
thus causing harm to consumers. In practice, these factors are often examined 
together as they are closely intertwined .171 
5.1.4.  Effects on innovation  competition  
(235)  The Merger Regulation establishes a  legal framework that is not limited to the 
assessment of price effects, but may also be based on the likelihood of the impact 
of other factors such as innovation, quality and choice. In that respect, the Union 
Courts have clarified that the prospective analysis consists of an examination of 
how a concentration might alter the factors which determine the state of 
competition on a gi ven market in order to establish whether it would give rise to a 
significant  impediment to effective competition.172 
(236)  The Commission considers that i nnovation is an important criterion on the basis 
of which the appraisal of a concentration should be  conducted . Paragraph  8 of the 
                                                 
165  Non-horizontal Merger Guidelines, paragraph 29.  
166  Non-horizontal Merger Guidelines, paragraph 29.  
167  Non-horizontal Merger Guidelines, paragraph 30.  
168  Non-horizontal Merger Guidelines, paragraph 92.  
169  Non-horizontal Merger Guidelines, paragraph 93.  
170  Non-horizontal Merger Guidelines, paragraph 93.  
171  Non-horizontal Merger Guidelines, paragraph 94.  
172 Judgment of 15 February 2005 , Commission v Tetra Laval , C-12/03 P, EU:C:2005:87, paragraph  43; 
Judgment of 10 July 2008, Bertelsmann and Sony v. Impala and Commission , C-413/06  P, 
EU:C:2008:392, paragraph  47. See also Judgment o f 9 March 2015, Deutsche Börse v Commission , 
T-175/12, EU:T:2015:148, in particular paragraph  177. 
 
42 Horizontal Merger Guidelines clarifies that the merger control system established 
by the Merger Regulation aims at preventing mergers which would be likely to 
deprive customers of some  of the benefits of effective competition, which ar e not 
only low prices, but also include high quality products, a wide selection of goods 
and services , and innovation (in the form of more, better and improved products).  
(237)  A merger may deprive consumers of these benefits through an increase of market 
power,  which in the same paragraph  is defined as the ability of one or more firms 
to profitably increase prices, reduce output, choice or quality of goods and 
services, diminish innovation or otherwise influence parameters of competition.173 
(238)  Therefore, in accordan ce with  the Merger Regulation and the Horizontal Merger 
Guidelines , the Commission is required to prevent significant impediments to 
effective competition without limiting its assessment to either price effects or 
product and price competition between exis ting products. It is also part of the 
Commission ’s tasks to determine whether a transaction is likely to lead to 
diminished innovation competition and innovation.  
(239)  Finally, The Commission considers that the framework set out in the Horizontal 
Merger Guidelines for the assessment of non -coordinated effects is not 
exclusively restricted to the appraisal of price competition between existing 
products but i t is also largely appli cable to innovation .174 
5.2. Horizontal  non-coordinated effects175 
5.2.1.  Horizontally Affected M arkets  
(240)  Based on 2018 data, the Notifying Party has identified 9 IDC or Gartner market 
segments176 in which the Parties' combined market shares exceed 20% at the 
worldwide or EEA level as demonstrated in Table 1 below. Six of these segments 
are also non -horizontally affected. They are indicated in Italics in Table 1. 
                                                 
173 Paragraph  8 identifies innovation as one of the benefits that mergers may deprive customers of: 
“[e]ffective competition brings benefits to consumers, such  as low prices, high quality products, a wide 
selection of goods and services, and innovation ”. Increased market power may consist in the ability of 
one or more firms to profitably diminish innovation. Pursuant to paragraph  25, “mergers in 
oligopolistic ma rkets involving the elimination of important competitive constraints that the merging 
parties previously exerted upon each other together with a reduction of competitive pressure on the 
remaining competitors may, even where there is little likelihood of co ordination between the members 
of the oligopoly, also result in a significant impediment to competition. ” 
174  See reasons as set out in case M.79 32 – Dow/DuPont, paragraphs 1994  to 1999 and M.8084 – 
Bayer/Monsan to, 21 March 2018, paragraphs 68  to 74.  
175  The Commission does not consider that the change brought about by the Transaction is likely to  lead 
to any horizontal coordinated effects in the product markets discussed at Section 5.2.  In all 
horizontally affected markets, the demand is highly fragmented and there is limited  transparency . The 
Transaction does not diminish these market characteristics which make coordination difficult . 
Furthermore, the Transaction does not significantly  increase symmetry in these markets. Based on the 
market share figures presented in Tables 2 -16, the markets will remain relatively asymmetrical post -
Transaction . Therefore, horizontal coordinated effects are not discussed further in the following 
Sections .  
176  In some cases both the IDC and the broadly corresponding Gartner segments are affected. In these 
cases, the Commission relies on the IDC denomination.  

 
44 (242)  Based on the Gartner  segment Application Platform Software (which broadly 
corresponds to the IDC segment for DCAPs ), the combined market share of the 
Parties at the EEA level is [40-50]%: IBM ( [30-40]%), Red Hat ( [5-10]%).177  
5.2.2.1.  Notifying Party’s view s 
(243)  In the Notifying Party’s view, the Transaction is unlikely to raise any unilateral 
effects concerns in the possible market  for DCAP s for the reasons set out 
below.178  
(244)  First, the Notifying Party submits that the Parties’ revenue -based market shares 
are moderate, and the increment brought by the Transaction is very small. 
According to the Parties, in any event, their revenue -based market shares are 
overestimated as the IDC/Gartner methodology fails to capture the competitive 
strength of (i) Microsoft’s .NET framework179 and (ii) numerous free open -source 
alternatives.180 The Notifying Party argues that the most widely used applicatio n 
servers are in fact free open source products  with IBM’s WAS and Red Hat’s 
JBoss constituting a small percentage of the application servers in use.   
(245)  Second, according to the Notifying Party, WAS and JBoss are not close 
competitors . The Notifying Party su bmits that both Parties’ application servers 
are Java EE -compliant  but their offerings are significantly differentiated and 
target different use cases:  
(a) WAS is heavyweight and JBoss is lightweight;181 
(b) WAS is a “sophisticated” system of records, JBoss EAP only  has basic 
system of records capabilities;182 
(c) WAS and JBoss have different technical characteristics;  
(d) WAS and JBoss do not have the same closest competitors .183 
                                                 
177  Using the Parties’ best estimates, WAS’ market share in 2018 is [20 -30]% in value and [20 -30]% i n 
volume, while JBoss’ market share is [5 -10]% in value and [5 -10]% in volume.  
178  Form CO, paragraphs 345 -414. 
179  IDC’s share data do not accurately capture Microsoft’s application server software offered as part of 
Microsoft’s pervasive .NET framework, while Gartner does not track Microsoft’s .NET at all. This is 
because .NET is not a separate product but a framework  built into Microsoft Windows.  
180  Free open source alternatives are e.g. Apache Tomcat, Spring on Tomcat, GlassFish application 
servers and their derivatives . Since these offerings do not generate revenues, their competitive position 
is better reflected i n volume based market shares.  
181  According to the Notifying Party, WAS is a proprietary, “heavyweight” solution that is more suited to 
traditional, large on -premises workloads that require gr eater functionality and customis ation. JBoss 
EAP is a highly -modu lar, open source solution that is designed for transitioning workloads to the 
cloud.  
182  The Notifying Party identified 3 different use cases  to which DCAPs can cater: (i) workloads which 
require extensive and sophisticated back -end capabilities (high avai lability and cluster management, 
legacy integration, performance and optimisation, standards support), (ii) workloads which do not 
require one or more of these four back -end capabilities, and (iii) front end workloads. In the Notifying 
Party’s view, […]. The Notifying Party considers that there is competitive interaction between WAS 
and JBoss possibly only with regard to […].  
183  The Notifying Party submits that WAS’ closest competitors are […].  JBoss competes primarily 
against other open source options, s uch as […], as well as offers from public cloud providers (e.g., 
 
 
45 (246)  According  to the Notifying Party, this is reflected in IBM’s and Red Hat’s win -
loss data, which sho ws that WAS and JBoss EAP rarely compete.184 
(247)  Third, in the Notifying Party's view, unpaid open source application servers pose 
a significant competitive constraint . The Notifying Party considers that customers 
of DCAPs are sophisticated companies and open so urce enables them to self -
support (thus removing the need to procure commercial support).  The Notifying 
Party further submits that customers also have the possibility to procure 
commercial support for free open source DCAPs from third parties.185 
(248)  Fourth, the Notifying Party argues  that traditional application servers, and in 
particular Java EE application servers of the kind offered by IBM, are rapidly 
becoming obsolete, as the trend is away from “heavy” on -premises application 
servers toward light er weight, open source options and, increasingly, middleware -
as-a-service provided directly by public cloud providers (e.g. AWS , Microsoft, 
Google).  In addition, the Notifying Party argues  that frameworks alternative to 
Java are increasingly important (e.g ., PHP -, Python -, and Ruby -based application 
servers and platforms).  According to the Notifying Party, customers enjoy a 
considerable range of application server options, including alternative 
frameworks and cloud -based (S ofware as a Service (S aaS)/Platfor m as a Service 
(SaaS)) offerings, whereby the choice of application server and vendor is based 
on the application’s needs.  
5.2.2.2.  Commission’s assessment  
(249)  The Commission considers that, for the reasons set out below, the Transaction 
does not raise serious doubts a s to its compatibility with the i nternal market on the 
potential market for DCAPs as a result of horizontal non -coordinated effects . 
(250)  First, the increment brought by the Transaction is small . Based on IDC, the 
Transaction will result in a small global incre ment of [0-5]% in the possible 
worldwide market for DCAPs (and [0-5]% in the EEA). Based on Gartner, the 
increment of the Transaction is [5-10]%, while based on Parties’ own estimates of 
their market shares, the increment is [5-10]%.186  
(251)  Second, the market i nvestigation provided mixed results as to whether WAS and 
JBoss compete closely for the same use cases/types of applications.  
                                                                                                                                                 
[…]), as well as offers from […], and custom options that can be created by forking open source 
middleware (including Red Hat’s free, community -based application server, WildFly.  
184  According  to the Notifying Party, JBoss EAP competed with WebSphere for only […]% of 
WebSphere opportunities in 2017 and […]% of the WebSphere opportunities in 2018.  
185  The Notifying Party submits that a significant number of third parties provide support for open  source 
application platforms. Rogue Wave, MuleSoft and Tomitribe, for example, provide support for Tomcat 
in a similar way to Red Hat and Dell EMC’s Pivotal Tomcat offerings. Many other third parties 
provide up to date distributions and assistance, withou t necessarily providing full patch level support. 
Those third -party providers that offer support for Do -It-Yourself software add further competitive 
pressure on Red Hat and its competitors.  
186  The Commission attempted to carry out a market reconstruction i n order to confirm the market shares 
in the possible market for DCAPs given the discrepancies between the market shares based on 
IDC/Gartner and the Parties' own estimates. However, the Commission did get sufficient replies to 
have meaningful results becau se certain third parties could not provide the data as requested. The 
reason is that certain third parties do not separately track their revenues derived from DCAPs (when 
they are sold as part of other offerings).  
 
46 (252)  The market results indicate that there is a wide range of fu nctionalities and use 
cases which DCAPs can support , depending on customers’ needs and preference . 
A competitor expressed the view that customers do not distinguish between back -
end workloads and front -end workloads but “ in general customers are looking for 
an application server platform that supports the Java EE APIs an d that is 
generally applicable to the wide range of workloads found typically in a large 
organisation ”.187 Customers responding to the market investigation confirm that 
their DCAPs choice depends on their technology decisions and needs when 
customers define the application stack.  
(253)  Against that background, a  number of market participants indicated that 
WebSphere and JBoss closely compete be cause both products are Java EE -
compliant.188 According to customers: “Both  platforms [WAS and JBoss] 
provide Java EE compli ant hosting environments for both front and back -end 
applications ”.189  
(254)  However, s ome respondents nevertheless point out that there are some technical 
differences between WebSphere and JBoss (and other Java EE complaint 
DCA Ps). One customer explained that “[they] continue to use Websphere for  
applications […] where high availability and extremely heavy load” . 190 A 
competitor explained that “Red Hat is more suited for modern architecture (e.g. 
cloud and microservices), while WAS is more [suited for] traditional on -premise 
workloads”.191 
(255)  Furthermore, the win -loss data of the  Parties indicates that IBM and Red Hat  
rarely compete for the same opportunities  with regard to DCAPs . In 2017, JBoss 
competed with WAS for […]% of WAS opportunities and in 2018 for […]% of 
WAS opportunities.192  
(256)  Third , the results  of the market investigation strongly indicate that there will 
remain sufficient alternative providers post -Transaction  to maintain the same 
level of competition on the market for DCAPs. Even within the narrow  Java EE 
space, there are a number of credibl e alternatives to W AS and JBoss  which are 
well suited to support a range of use cases . According to competitors and 
customers, the most prominent alternatives are Weblogic (Oracle), Tomcat and 
Glassfish. Competi tors and customers also mention Pivotal tc Server Jetty, 
Wilfdly, OpenLiberty and a large number of smaller alternatives (e.g. Apache 
Geronimo, Jonas, Resin, Blazix etc.).193 The majority of customers which replied 
to the market investigation already today u se in parallel more than one DCAP 
(some customers have more than three or four DCAPs).194 
                                                 
187  See replies to Questionnair e Q1 to competitors, question 14.1.  
188  See replies to Questionnair e Q2 to customers, question 6.  
189  See replies to Questionnair e Q2 to customers, question 6.1.  
190  See replies to Questionnair e Q1 to competitors, question 14.1.  
191  See replies to Questionnair e Q1 to competitors, question 6.  
192  This is in line with the Commission’s analysis of the win -loss data of the Parties, according to which in 
2018, JBoss competed with WAS for […]% of WAS’ opportunities and OpenShift (Red Hat’s 
Container Infrastructure Software) i n […]% of WAS’ opportunities. In 2018, […] competed for […]% 
of WAS’ opportunities, while […] competed for […]% of the opportunities.   
193  See replies to Questionnair e Q2 to customers, question 6.2.  
194  See replies to Questionnair e Q2 to customers, question  4. 
 
47 (257)  Fifth , the market investigation generally confirms that Java EE DCAPs such as 
WAS and JBoss are facing increasing competition from alternative platforms. 
Java EE (and i n particular DCAPs such as W AS and Weblogic which are more 
suited for legacy applications) are becoming less relevant as customers move to 
newer technologies or application architectures (e.g. DCAPS for applications 
built as a system of micro -services, con tainer infrastructure software  etc.). There 
are also alternative platforms which are gaining in prominence (e.g. Springboot). 
According to a competitor: “Java app server market is effectively a legacy market 
which is slowly declining. Java apps servers are  rarely used for new workloads” 
195. Oracle  explained that “ it is a fast -moving area with many alternative 
offerings, whereby developers are often attracted to the new “flavour of the day”  
platforms such as e.g. Node.js ”.196 
(258)  Sixth, c ustomers consider that “ this is a well populated market segment” and that  
“there will remain a rich, competitive marketplace that will include proprietary 
and open source solutions outside of IBM and Red Hat” . Furthermore, t he 
majority of customers which responded to the market i nvestigation consider that 
the impact of the Transaction on the level and intensity of competition on the 
DCAPs market is neutral.197  
(259)  In addition to the many remaining proprietary and supported open source DCAPs, 
it can also be noted there are a number of free and unsupported open source 
DCAPs although, as explained in paragraph (37) above, the market investigation 
indicated that such free and unsupported open source D CAPs are considered as 
credible alternatives to proprietary or supported open -source DCAPs only for 
low-risk use cases  but not for mission -critical appications .198  However, based on 
the Notifying Party's submission and as confirmed by the market investigati on, 
customers using open source DCAPs can and do procure commercial support 
either directly from vendors or from third parties specialised in providing 
commercial support for open source software  such as Rogue Wave .199 According 
to a competitor, commercial s upport is available for every open source DCAP.200  
(260)  Therefore, the Commission considers that the merged entity will continue to face 
strong competitive constraints from alternative providers post -Transaction and 
competition on the possible market for DCAPs will not decrease as a result of the 
Transaction.  
5.2.3.  Business Process Management Suites  
(261)  The market shares of the Parties and their competitors in the Gartner segment for 
BMP Suites are presented in Table s 4-5.  
                                                 
195  See replies to Questionnair e Q1 to competitors, question 13.  
196  Minutes of call with Oracle, 9 April 2018.  
197  See replies to Questionnair e Q2 to customers, question 60.  
198  See replies to Questionnair e Q2 to customers, question 15.  
199  See replies to Questionnair e Q2 to customers, question 16.  
200  See replies to Questionnair e Q2 to customers, question 15.1.  

 
49 lightweight, very flexible, and more technically oriented model driven 
environment.  
(265)  With respect to the ir target audience, in the Notifying Party’s view, IBM BPM is 
considered to be […], while Red Hat Process Automation Manager is considered 
to be […]. This is because Red Hat Process Automation Manager  requires […].202  
(266)  The Notifying Party submits that in ter ms of feature set, IBM BPM includes a 
wider set of functionality to support business process creation and execution 
across a large organization, including: reusable templates, collaborative authoring 
up to unlimited process authors and end -users, and real -time reporting and 
analytics features to help refine business processes For these reasons, IBM BPM 
is better -positioned to cater to large -scale deployments compared to Red Hat 
Process Automation Manager . 
(267)  In the Notifying Party’s view, Red Hat views […] as its strongest competitors, as 
they are leading providers of business process management suites, rated highly in 
analyst reports, and their products are often together on the shortlist when 
potential customers are considering to procure these products, even  though their 
functionalities may be more closely comparable to IBM BPM. Red Hat does not 
view IBM as a close competitor, due to increasing customer emphasis on […]. 
IBM considers its main competitors to be […]. 
(268)  Third, the Notifying Party submits that a wi de range of competitors will remain 
post-Transaction such as Oracle ( [5-10]%), OpenText ( [5-10]%), Pegasystems 
([5-10]%), Software AG ( [0-5]%), and K2 ( [0-5]%). According to the Notifying 
Party, recent entrants in BPM offerings include Amazon, Aurea, Axon,  
BonitaSoft, BPM'online, Ultimus as well as Whitestein. Bizagi and BonitaSoft are 
significantly expanding […].  
5.2.3.2.  Commission’s assessment  
(269)  The Commission considers that, for the reasons set out below, the Transaction 
does not raise serious doubts as to its c ompatibility with the i nternal market  on the 
potential market for BPM Suites  as a result of horizontal non -coordinated effects .  
(270)  First, the increment brought by the Transaction is very small. As shown in Table s 
4-5 above, the Transaction results in an increment of [0-5]% at the worldwide and 
[0-5]% at the EEA -wide level.  
(271)  Second, a majority of customers  responding to the market investigation  consider 
that the Parties are not close competitiors with regard to BPM Suit es and there 
will remain  sufficient alternative providers  post-Transaction  such as Appian, 
PegaSystems, Oracle, OpenText, TIBCO and others.203 Furthermore, a majority 
of customers and competitors that responded to the market investigation 
                                                 
202  To deliver an application solution using Red Hat Process Automation Manager, custom Java 
development is typically required to connect the application to other systems, to create end -user 
interfaces and to perform common customizations.  
203  See replies to Questionnaire Q 2 to customers , questions 20, 21, 22.  


 
52 5.2.4.2.  Comm ission’s assessment  
(278)  The Commission considers that, for the reasons set out below, the Transaction 
does not raise serious doubts as to its compatibility with the i nternal market on the 
potential market for Integration Software  as a result of horizontal non -coordinated 
effects.  
(279)  First, the increment brought by the Transaction is very small. As shown in Table s 
6-8 above, the Transaction results in an increment of [0-5]% at the worldwide and 
[0-5]% at the EEA -wide level . The increm ent on the possible sub -segment for 
API Management is [5-10]% at the worldwide level for 2017 . 
(280)  Second, a majority of customers responding to the market investigation consider 
that the Parties are not close competitiors with regard to Integration Software  and 
API Management Software  and there will remain sufficient alternative providers 
post-Transaction such as Oracle, MuleSoft, Apigee, TIBCO, Dell Boomi, WSO2, 
CA Technologie, Software AG and others.206 According to a customer, there are 
“many vendors in this dynamic market, and plenty of alternatives” .207 
(281)  Furthermore, a majority of customers and competitors that responded to the 
market investigation expressed the view that the Transaction will have a neutral 
impact on competition in the possible market  for Integ ration Software  and its 
possible sub-segment for API Management Software .208  
(282)  Therefore, the Commission considers that the merged entity will continue to face 
strong competitive constraints from alternative providers post -Transaction and 
competition on the p ossible market for Integration Software will not decrease as a 
result of the Transaction.  
5.2.5.  Event -Driven Middleware  
(283)  The market shares of the Parties and their competitors in the IDC segment for 
Event -Driven Middleware  are presented in Table s 9-10.  
  
                                                 
206  See replies to Questionnaire Q 2 to customers , questions 23 , 24, 25. 
207  See replies to Questionnaire Q 2 to customers , question 23.  
208  See replies to Questionnaire Q 2 to customers , question 60; replies to Questionnaire Q1 to competitors, 
question 67.  


 
55 on top of Kafka.  According to the Notifying Party, […]. The Notifying Party 
submits that i n comparison to Red Hat AMQ, IBM MQ comprises key technical 
differentiations including encryption at rest, support for XA transactions, once 
and once only delivery of messages, and both proven scalability and high 
availability, beyond any comparison with A MQ. In addition IBM MQ is 
supported on a wider variety of platforms including as a physical appliance.  
(288)  The Notifying Party considers that the rapid growth in real -time use cases is a 
recent development and has the potential to be highly disruptive to the w ay 
customers approach and build their event -driven middleware solutions: they now 
have a wider range of technology choices from which to select the best fit for 
their requirements, depending on the relative importance of guaranteed delivery 
or real -time ev ent streaming. This is likely to drive a shift in technology choices 
as customers review their use cases against the offerings available from different 
vendors  (such as Microsoft (Event Hubs), TIBCO (Messaging Apache Kafka 
Distribution), and Stream.io, as well as the Apache Kafka open source project).  
(289)  Third, the Notifying Party submits that a wide range of competitors will remain 
post-Transaction such as  Amazon ( [20-30]%), TIBCO ( [10-20]%), Openet ( [0-
5]%), and Unicom Systems ( [0-5]%). In addition, in the N otifying Party’s view, 
barriers to entry are low, as evidenced by the high number of new market 
entrants, e.g. Apache Kafka Streaming, Amazon Kinesis Analytics, and eBay 
Pulsar.  
5.2.5.2.  Commission’s assessment  
(290)  The Commission considers that, for the reasons set out  below, the Transaction 
does not raise serious doubts as to its compatibility with the i nternal market on the 
potential market for Event -Driven Middleware  as a result of horizontal non -
coordinated effects.  
(291)  First, the increment brought by the Transaction i s very small. As shown in Table s 
9-10 above, the Transact ion results in an increment of [0-5]% at the worldwide 
and [0-5]% at the EEA -wide level.  Under the Gartner segment for Message -
Oriented Middleware, the increment brought by the Transaction is still n eglible 
([0-5]% at the worldwide and [0-5]% at the EEA level). In addition, even though 
under the Gartner segment, the Parties’ combined market shares are [50-60]% at 
the worldwide and [50-60]% at the EEA level, the market shares of IBM have 
been substanti ally declining over the period 2016 -2018  ([60-70]% in 2016 to [50 -
60]% in 2018 in the EEA) . Over the same period, the market shares of 
competitors (e.g. AWS) have been increasing  substantially (from [0-5]% in 2016 
to [10-20]% in 2018 in the EEA) . 
(292)  Second, a majority of customers responding to the market investigation consider 
that the Parties are not close competitiors with regard to Event -Driven 
Middleware and there will remain sufficient alternative providers post -
Transaction such as Amazon Web Se rvices (“AWS”), TIBCO, Oracle, Apache 
Kafka, Microsoft and others.210 According to a customer, “ there are sufficient 
alternative credible providers which offer event driven middleware with event 
                                                 
210  See replies to Questionnaire Q 2 to customers , questions 26 , 27, 28. 




 
60 5.2.7.2.  Commission’s assessment  
(311)  The Commission considers that, for the reasons set out below, the Transaction 
does not raise s erious doubts as to its compatibility with the i nternal market on the 
potential market for Software -Defined Storage Controller  Software  (and any 
possible sub -segment thereof)  as a result of horizontal non -coordinated effects.  
(312)  First, the increment brought by the Transaction is very small. As shown in Table s 
15-16 above, the Transact ion results in an increment of [0-5]% at the worldwide 
level  and [0-5]% at the EEA -wide level .  
(313)  Second, a majority of customers responding to the market investigation consider 
that the Parties are not close competitiors with regard to Software -Defined 
Storage Controller  Software . Furthermore, the Parties’ activities do not overlap 
according to Gartner’s segmentation (IBM’s products fall within the Management 
Software -Defined Storage subsegment, and Red Hat’s SDS products fall within 
the Infrastructure Software -Defined Storage subsegment).219Based on the market 
investigation results, there will remain sufficient alternative providers post -
Transaction such as  VMware, Dell/EMC, HPE , NetApp, Nutanix, SUSE, Hitachi, 
AWS, Microsoft  and others.220 According to a customer, “ there’s a healthy 
competition in the SDS market” .221 
(314)  Furthermore, a majority of customers and competitors that responded to the 
market investigation expressed the view th at the Transaction will have a neutral 
impact on competition in the possible market  for Software -Defined Storage 
Controller  Software  (and any possible sub -segment thereof) .222  
(315)  Therefore, the Commission considers that the merged entity will continue to face 
strong competitive constraints from alternative providers post -Transaction and 
competition on the possible market for Software -Defined Storage Controller  
Software  (and any possible sub -segment thereof)  will not decrease as a result of 
the Transaction.  
5.2.8.  Cont ainer Infrastructure Software  
(316)  The market shares of the Parties and their competitors in the IDC segment for 
Container Infrastructure  Software are presented in Table 1 7. 
 
Table 17 – Container Infrastructur e Software (Worldwide, 2015 -2017 )223  
                                                 
219  See Form CO, paragraph 561.  
220  See replies to Questionnaire Q 2 to customers , questions 32 , 33, 34. 
221  See replies to Questionnaire Q 2 to customers , question 32 . 
222  See replies to Questionnaire Q 2 to customers , question 60; replies to Questionnaire Q1 to competitors, 
question 67.  
223  The Notifying Party explained that IDC does not systematically report submarket -level data . The 
Notifyng Party sourced w orldwide shares of sales for 2015 – 2017 for the Container Infrastructure  
Software submarket from an ad -hoc IDC repo rt, published in December 2018. The Notifying Party 
submits that a similar report containing 2018 data is not currently available . See Notifying Party’s  
response to the Commission’s RFI 22 of 18 June.  

 
62 significant rate.226 These competing offerings, as well as those of recent and new 
entrants to the market, such as  Microsoft, in the Notifying Party’s view, will 
provide an increasingly strong competitive constraint on the combined entity 
post-Transaction . 
(322)  Fourth, according to the Notifying Party, the Parties’ offerings do not compete 
closely  as they address different  customer needs and use cases.227 The Notifying 
Party submits that Red Hat’s OpenShift is a robust platform for application 
development and deployment in any cloud environment and is positioned for use 
as a “run anywhere” container platform. By contrast, IBM ’s Cloud Private is 
primarily focused on […]. 
(323)  Fifth, the Notifying Party considers that the container technology and the 
Container Infrastructure Software segment are nascent, evolving areas with 
constant new entry and a large number of players across a va riety of technologies. 
While Kubernetes is recogni sed as the industry leader for orchestration, there is 
nonetheless still competitive pressure from non -Kubernetes services such as 
Docker Swarm or Dell/EMC’s Pivotal Cloud Foundry.  
(324)  Sixth, given the open sou rce nature of container management infrastructure 
software, including Kubernetes, Docker Swarm, and Apache Mesos, “DIY” 
options whereby enterprises can download and develop/manage their own 
Kubernetes based container management solutions also provide a com petitive 
constraint on paid -for container management providers.  
5.2.8.2.  Commission’s assessment  
(325)  The Commission considers that, for the reasons set out below, the Transaction 
does not raise serious doubts as to its compatibility with the i nternal market on the 
potential market for Container Infrastructure Software as a result of horizontal 
non-coordinated effects.  
(326)  First, the Commission considers that even on the basis of the market shar es 
reported by IDC (see Table 17), the increment brought by the Transaction is small 
([0-5]%). Furthermore, the Parties’ market shares have been declining over the 
past three years, while the market for Container Infrastructure Software has been 
growing expodentially  as evidenced by industry reports (see paragraph (321)).  
(327)  The results  of the market investigation also confirm that IBM’s role in the 
Container Infrastructure  Software space is small. Accor ding to customer s: “IBM’s 
products in this space are not credible alternatives and do not represent 
                                                 
226  According to the Notifying Party, In 2016, AWS’ revenues grew by […]%, Google by […]%, Docker 
by […]% and VMware by […]%. See also IDC, Worldwide Container Infrastructure Software Market 
Shares, 2017: Containers Poised for Growth . 
227  The Notifying Party argues also that IBM Cloud Kubernetes Service does not directly compete against 
Red Hat OpenShift.  IBM views its Kubernetes Service’s main competitors as […]. In those public 
cloud hosted services, the Kubernetes Service is usually deeply integrated with the cloud services but 
limiting the customer’s portability of applications outside of the specific cloud. Red Hat’s OpenShift 
offering, whether run by the customers or by Red Hat as a managed service, focuses on providing 
portability of the applications across the cloud providers. While both utilize the same core technology, 
the value provided to the cu stomer is significantly differentiated. Red Hat’s largest competitors in this 
area are companies that provide that same abstraction such as […]. 
 
63 meaningful competition ” and “IBM tod ay is not a major / largely relevant 
Kubernetes / Container Platform provider in the broader industry ”.228 
(328)  Second, the results of the market investigation confirm that the Parties are not 
close competitors with regard to Container Infrastructure Software  and there will 
remain sufficient alternative providers post -Transaction  such as Docker, 
Dell/EMC’s Pivotal/VMware, Rancher, and Canonical, SUSE, AWS, Microsoft, 
Google .229 As demonstrated at Table 1 7 above, these competitors entered the 
market for Container Inf rastructure Software in 2016 and their market shares have 
been expondentially growing.  
(329)  Customers and competitors expressed the view that this is a nascent market with 
many new competing offerings. This is confirmed by the market shares data set 
out in Table 17 above. Over the period 2016 -2017, a number of strong 
competitors entered the market with their own Container Infrastructure Software 
offerings such as Docker, AWS, Google, VMware and their market shares have 
been consistently increasing. Therefore, t hese new entrants will continue to exert 
growing competitive pressure on the merged entity post -Transaction.  
(330)  During the market investigation, customers expressed the views that  “this market 
is very active. New products and versions are coming from differe nt providers” ; 
“[the] market is developing, new alternatives are on the horizon” . Customers 
also state that “Container orchestration is a growing segment and there are more 
options in the market. Most of these options are based in Kubernetes” . 230 
Accoridng to a customer , “[the company ] has experienced this as an emerging 
and rapidly evolving market with a significant amount of competitors (with and 
without paid solutions/support )”.231  
(331)  With regard to Kubernetes -based Contrainer Infrastructure Software, a custo mer 
considers that “Red Hat OpenShift is one of the Kubernetes distributions. There 
will be a number Kubernetes distributions available in the market post -
Transaction” . Another customer stated that “Container technology is quickly 
evolving. Multiple vendor s offer specific products in this area, both on premise 
and in the public cloud. Although there is dominant technology (Kubernetes) 
there is no dominant vendor” .232 A number of respondents to the market 
investigation also consider that technologies other tha n Kubernetes (such as 
Docker or Cloud Foundry) play an important role in the market for Container 
Infrastructure Software.233  
(332)  Furthermore, a majority of customers and competitors that responded to the 
market investigation expressed the view that the Transac tion will have a neutral 
impact on competition in the possible market  for Container Infrastructure 
                                                 
228  See replies to Questionnaire Q 2 to customers , question 35.  
229  See replies to Questionnaire Q 2 to customers , questions 35 , 36, 37. 
230  See replies to Questionnaire Q 2 to customers , question 35.  
231  See replies to Questionnaire Q 2 to customers , question 35.  
232  See replies to Questionnaire Q 2 to customers , question 35.  
233  See replies to Questionnaire Q 2 to customers , questions 35 , 36, 37. 


 
66 (341)  First, the increment brought by the Transaction is very small. As shown in Table s 
19-20 above, the Transact ion results in an increment of [0-5]% at the EEA -wide  
level.   
(342)  Second, based on the Notifying Party’s submission, the Commission considers 
that the Parties are not close competitiors with regard to Network Management 
Software  and there will remain sufficient alternative providers post -Transaction 
such as  CA T echnologies, HPE, Nokia and others.  
(343)  Therefore, the Commission considers that the merged entity will continue to face 
strong competitive constraints from alternative providers post -Transaction and 
competition on the possible market for Network Management S oftware  (and any 
possible sub -segment thereof) will not decrease as a result of the Transaction.  
5.2.10.  Server Operating Systems  
(344)  Red Hat offers Red Hat Enterprise Linux (“RHEL”), a Linux distribution that 
accounts for some […]% of Red Hat’s overall revenues (in F Y 2018). The RHEL 
source code is open source and therefore freely available; Red Hat instead charges 
for annual subscriptions that include technical support, updates, security, and IP 
protection. In FY 2018, Red Hat’s RHEL revenues were USD […] (EUR […]), of 
which approximately USD […] (EUR […]) were generated in the EEA.  
(345)  Red Hat also contributes to the CentOS community, which distributes a Linux 
distribution for developers based on RHEL and to the Fedora community which 
distributes a Linux distribution based on the latest technology from the Linux 
kernel community. Red Hat does not sell support subscriptions for CentOS or 
Fedora and derives no revenue from these activities.  
(346)  IBM is a minor player in server operating systems. Its operating systems are 
proprietary and based on either Unix or IBM’s own code base: z/OS, zVSE, 
zTPF, AIX, and IBM i. z/OS, zVSE, and zTPF run exclusively on IBM’s z 
processors, while AIX and IBM i run exclusively on IBM’s POWER processor 
architecture. Note however that IBM’s System  z and POWER System servers are 
also capable of running a variety of Linux distributions. Canonical, SUSE, and 
Red Hat have certified their operating  systems ( i.e., Ubuntu, SUSE Enterprise 
Linux, and RHEL) for IBM’s servers.  
(347)  The market shares of the Partie s and their competitors in the Gartner  segment for 
All Operating Systems  (paid only)  are presented in Tables 20-21.237  
  
                                                 
237 There is no horizontally affected market on the basis of a possible market including both paid and 
unpaid Server Operating Systems. On such a market, the combined market shares of the Parties are 
[10-20]% for 2018 at the worldwide level (IBM: [0-5]%; Red Hat: [10-20]%).  

 
68 (350)  Second, t he No tifying Party also refers to Gartner which reports separate 
segments for IBM’s proprietary operating systems . According to the Notifying 
Party, this  reflects the absence of overlap between the Parties’ operating systems 
products.  
5.2.10.2.  Commission’s assessment  
(351)  The Commission considers that the Transaction does not raise serious doubts as to 
its compatibility with the internal market in the market for Server Operating 
Systems (and any sub -segment thereof)  as a result of horizontal non -coordinated 
effects . 
(352)  The Commission considers that IBM’s proprietary OS and Red Hat’s Linux 
distribution, i.e. RHEL, address different u se cases and do not compete in any 
meaningful way. Based on the Notifying Party’s submission, IBM is a de minimis 
vendor of proprietary server op erating systems that run exclusively on IBM’s z 
processors and IBM’s POWER processor architecture. IBM’s proprietary servers 
are also capable of running Linux distributions, which are nevertheless deployed 
for use with different applications. Therefore, ev en if only considering IBM’s 
installed customer base, there does not appear to be any significant competitive 
interaction between Red Hat and IBM.  
5.3. Vertical and conglomerate  non-coordinated effects  
5.3.1.  Affected markets  
(353)  Based  on 2018 data, the re are 18 IDC and/or Gartner market segments239 in which 
the individual and/or combined market shares of the Parties  exceed 30%  at the 
worldwide and/or EEA level as described in Table 22 below.240 Actually, in each 
market segment where the combined market shares exceed 30%, it i s mainly due 
to a strong position of one of the Parties, which already pre -Transaction holds a 
market share above 30%.  As indicated in this Table, in 15 of these segments it is 
IBM which has an individual market share in excess of 30%, and in 3 segments i t 
is Red Hat.  
  
                                                 
239  In some cases both the IDC and the broadly corresponding Gartner segments are affected. In these 
cases we have kept the IDC denomination.  
240  Six of these 1 8 segments  are also horizontally affected. They are indicated in italic in Table 17. The 
horizontal overlaps between the Parties on these segments are assessed in section 5.2 above . 

 
70 (356)  Given the potentially very high number of related neighbouring markets  in the IT 
stack, it would be unrealistic to assess each non -horizontal link between any 
potential product market listed in Table 22 above  and any neighboring market 
where one of the  Parties is active.   
(357)  Instead, in this decision, the Commission undertakes an overall ass essment , first,  
whether the merged entity would have the ability to leverage a strong position in 
any of the potential markets listed in Table 22 into any other market(s) where one 
of the Parties is active , second, whether it would have the incentive to do  so, and 
third, whether such a foreclosure strategy would have a significant detrimental 
effect on competition in those latter markets , thereby significantly impeding 
effective competition .243 All three factors will be examined together as they are 
closely i ntertwined.244 This assessment is done in turn for each market listed in 
Table 22.  
(358)  Section 5.3.3  first looks  at whether the merged entity would have the ability and 
incentive to leverage the potentially strong position of Red Hat Enterprise Linux 
in a market for server operating systems i nto neighbouring markets where IBM is 
active  and thereby foreclose competitors . Section 5.3.4  carries out a similar 
assessment looking at the potentially strong posit ion of Red Hat OpenShift in a 
market for container infrastructure.  
(359)  Section 5.3.5  then looks at the server markets and evaluates whether the merged 
entity would have the ability and incentive to leverage the potentially strong 
position of IBM’s Mainframe and Power servers into neighbouring markets where 
Red Hat is active. As the Commission heard concerns  that IBM (through its role 
as global leader in IT services and IT  consultancy) may substantially influence 
end customers’ purchasing decisions for software products in favour of Red Hat 
products and to the detriment of competing vendors’ products post -transaction, 
Section 5.3.6  assesses whether the merged entity would have the ability and 
incentive to leverage a potentially strong position of IBM in any IT services 
market into neighbouring markets where Red Hat is active. And finall y, section 
5.3.7  covers all the other non -horizontally affected markets where IBM has a 
market share in excess of 30% and evaluates whether the merged entity would 
have the ability and incentive to leverage the potentially strong position of IBM 
into neighbouring markets where Red Hat is active.  
(360)  Before delving into the assessment for each potential market, s ection 5.3.2  first 
briefly describe s the potential practices in the IT sector  by way of which the 
Commission considered that the merged entity could potentially leverage its 
position in one market into another one .  
5.3.2.  Potential t heories of harm  
(361)  The Non -horizontal Merger Guidelines recognise that the main concern in the 
context of non -horizontal concentrations is that of foreclosure. In particular, the 
combination of products in related markets may confer on the merged entity the 
                                                 
243 Non-horizontal Merger Guidelines, p aragraph 32.  
244 Non-horizontal Merger Guidelines, paragraph 32.  
 
71 ability and incentive to leverage a strong market position from one market to 
another by means of tying or bundling or other exclusionary practices.245 
(362)  In assessing the likelihood of conglomerate effects, the Commission examines, 
first, whether the merged firm would have the ability to foreclose its rivals, 
second, whether it would have the economic incentive to do so and, third, whether 
a foreclosure strategy would have a significant detrimental effect on competition. 
In practice, these factors are often e xamined together as they are closely 
intertwined.246 
(363)  Mixed bundling refers to situations where the products are also available 
separately, but the sum of the stand -alone prices is higher than the bundled 
prices.247 Tying refers to situations where customers th at purchase one good (the 
tying good) are required also to purchase another good from the producer (the tied 
good). Tying can take place on a technical or contractual basis.248 Tying and 
bundling as such are common practices that often have no anticompetitiv e 
consequences. Nevertheless, in certain circumstances, these practices may lead to 
a reduction in actual or potential rivals’ ability or incentive to compete. 
Foreclosure may also take more subtle forms, such as the degradation of the 
quality of the stand alone product.249 This may reduce the competitive pressure on 
the merged entity allowing it to increase prices.250 
(364)  In order to be able to foreclose competitors, the merged entity must have a 
significant degree of market power, which does not necessarily amount  to 
dominance, in one of the markets concerned. The effects of bundling or tying can 
only be expected to be substantial when at least one of the merging parties’ 
products is viewed by many customers as particularly important and there are few 
relevant alte rnative for that product.251 Further, for foreclosure to be a potential 
concern, it must be the case that there is a large common pool of customers, 
which is more likely to be the case when the products are complementary.252  
(365)  The incentive to foreclose rivals through bundling or tying depends on the degree 
to which this strategy is profitable.253 Bundling and tying may entail losses or 
foregone revenues for the merged entity.254 It may also increase profits by gaining 
market power in the tied goods market, protecti ng market power in the tying good 
market, or a combination of the two.255  
(366)  It is only when a sufficiently large fraction of market output is affected by 
foreclosure resulting from the concentration that the concentration may 
significantly impede effective co mpetition. If there remain effective single -
                                                 
245  Non-horizontal Merger Guidelines, paragraph 93.  
246  Non-horizontal Merger Guidelines, paragraph 94.  
247  Non-horizontal Merger Guidelines, paragraph 96.  
248  Non-horizontal Merger Guidelines, paragraph 97.  
249  Non-horizontal Merger Guidelines, paragraph 33.  
250  Non-horizontal Merger Guidelines, paragraph 93.  
251 Non-horizontal Merger Guidelines, paragraph 99.  
252 Non-horizontal Merger Guidelines, paragraph 100.  
253 Non-horizontal Merger Guidelines, par agraph 105.  
254 Non-horizontal Merger Guidelines, paragraph 106.  
255 Non-horizontal Merger Guidelines, paragraph 108.  
 
72 product players in either market, competition is unlikely to deteriorate following a 
conglomerate concentration.256 The effect on competition needs to be assessed in 
light of countervailing factors such as the pres ence of countervailing buyer power 
or the likelihood that entry would maintain effective competit ion in the upstream 
or downstream markets.257  
(367)  The Commission considered in particular two practices by way of which the 
merged entity could potentially leverage  a strong market position in one market 
into another one and foreclose competitors in the latter.  
(368)  Anticompetitive (mixed) bund ling or tying . The merged entity could for instance 
attempt to reduce its competitors’ ability to compete by offering a strong IBM  or 
Red Hat product in one of the markets listed in Table 22, combined with one of 
the other Party’s products at a bundled price lower than the sum of the standalone 
prices. This could potentially lead to the anticompetitive marginalization of rivals 
selling stand -alone components ( i.e., nonintegrated rivals) competing with the 
other Party’s product and to consumer harm, if the bundled offer was not 
replicable and the bundling strategy diverted sufficient demand from non -
integrated rivals to make them unabl e to compete effectively .Degradation of 
interoperability . The merged entity  could in theory selectively improve the 
interoperability  between  IBM and Red Hat  products, while  degrading the 
interoperability of the merged entity’s products with third party products . This 
relative degradation of interoperability could for instance take the form of a 
refusal by the merged entity to certify one of its strong products in one of the 
markets listed in Table 22 when combined with third party hardware or software, 
whereas it would be certified to run with the competing IBM/Red Hat product. 
Certification is a common practice by which a vendor certifies its ability and 
willingness to fully support its product when combined with another product. 
Non-certification does n ot mean that the products will not be interoperable, just 
that full support would not be guaranteed unconditionally, in particular when the 
non-certified product is suspected to be the cause of the issue. If the merged entity 
has a significant degree of ma rket power with the product that it selectively 
refuses to certify with a third party product, if there is a large common pool of 
customers for the individual products, and if cross -certification is an important 
consideration for customers, then such selec tive refusal to certify may potentially 
allow the merged entity to foreclose competitors.258 
5.3.3.  Server Operating Systems – Leveraging the potentially strong position of Red Hat 
Enterprise Linux into neighbouring markets where IBM is active  
5.3.3.1.  Potential concern  
(369)  The Commission has assessed a potential competition concern whereby the 
merged entity would leverage RHEL’ s potentially strong position in a plausible 
market for paid Linux server operating systems, into any other market(s) where 
                                                 
256 Non-horizontal Merger Guidelines, paragraph 113.  
257 Non-horizontal Merger Guidelines, paragraph 114.  
258  During the pre -notification phase the Commission received two complaints based on such a scenario. 
However, as these complaints relate to a current refusal to certify Red Hat Enterprise Linux (“RHEL”) 
when combined with third party products competing with Red Hat, these complaints largely relate to 
ongoing commercial disputes rather than to merger specific concerns.  
 
73 IBM is active and thereby for eclose competitors, by means of one of the practices 
described in section 5.3.2 . 
(370)  In particular, some competitors have suggest ed that the merged entity may try to 
leverage RHEL into (1) IBM’s servers, (2) IBM’s application software and  (3) 
IBM’s cloud solutions (including public and private cloud).259,260 
(371)  In addition, Nutanix – a cloud computing software company  – put forward a 
related  complaint. According to Nutanix, Red Hat is already attempting to 
leverage the strong position of RHEL, by refusing to certify competing open 
source hypervisors such as Nutanix’ s AHV and by denying support to RHEL 
customers who operate non -certified hyper visors. According to Nutanix, 
Nutanix’s open -source KVM -based Acropolis Hypervisor (“AHV”) competes 
directly with Red Hat’s open source KVM -based hypervisor solution (“RHV”  or 
Red Hat Virtualization ). 
(372)  Nutanix however acknowledged that this foreclosure stra tegy has so far only been 
partially implemented since powerful customers have been able to compel Red 
Hat to certify Nutanix’ s products to run on RHEL on an ad hoc basis.  
(373)  According to Nutanix, the Transaction will increase the merged entity’s ability 
and i ncentive to foreclose its competitors in a market for open source  hypervisors. 
This is because, post -Transaction, the merged entity will not only leverage its 
control over the certification process of Nutanix’s hypervisor (in combination 
with RHEL), but wi ll also leverage its allegedly strong position in the provision 
of IT services and hardware, to steer customers to Red Hat’s own hypervisor, and 
away from non -certified open source hypervisors.261 However, the core of 
Nutanix ’s complaint is about Red Hat refusing to certify competing open source 
hypervisors such as Nutanix’ s AHV  and denying support to RHEL customers 
who operate non -certified hypervisors . The claim by Nutanix that the merged 
entity would also leverage its allegedly strong position in the pr ovision of IT 
services and hardware  was added  by Nutanix in a second stage in an effort to 
make its complaint merger specific.262 
5.3.3.2.  Notifying Party’s view  
(374)  The Notifying Party submits that the merged entity will not have the ability and 
incentive to leverage RHEL’s potentially strong market  position to boost IBM’s 
sales and foreclose IBM’s competitors in neighbouring markets, for the following 
reasons.  
                                                 
259  See replies to Questionnaire Q 1 to competitors , question s 41 and 42. See also further submission by 
Oracle, dated 5 June 2019, in which it claims that the Transaction will increase both the ability and 
incentive of the merged entity to leverage Red Hat’s position in the enterprise Linux market to 
strengthen the merged entity’s position in the cloud infrastructure space.  
260  Only IBM has meanin gful cloud service activities and its corresponding  share of sales are very small 
(<[5-10]% for Infrastructure -as-a-Service (“IaaS”), < [0-5]% for  Platform -as-a-Service (“PaaS”), and 
<[0-5]% for Software -as-a-Service (“SaaS”)). IaaS  can comprise either a pu blic or private cloud 
infrastructure provided as a service (on a  pay-as-you-go model).  See Form CO, paragraph 296.  
261  See Submission of Nutanix, Inc. dated 3 April 2019 and Responses from Nutanix dated 24 April 2019  
to Commission’s questions of 9 April 201 9. 
262  This is also apparent from the fact that the remedy advocated by Nutanix is that the merged entity 
commits to certify Nutanix’s AHV for use with RHEL.  
 
74 As regards a bility  
(375)  The Notifying Party argues that the merged entity will not have the ability to 
foreclose r ivals by leveraging Red Hat’s position in server operating systems 
because  Red Hat does not have sufficient market power in the market for server 
operating system, for the following reasons.  
(376)  In the first place, as explained in section 4.3.10  above,  the Notifying Party 
considers that the relevant product market for operating systems should 
encompass all server operating systems, i.e., Windows (server),  Linux, Unix, 
including any “descendants” thereof, such as Solaris, HP -UX and AIX, and other 
proprietary operating systems, such as IBM i, z/OS, and z/VSE. This product 
market definition is consistent with the IDC submarket for Core Operating 
Systems ( i.e., server  operating systems) as well as the Commission’s decisional 
practice.263 In such market, RHEL only represented  [10-20]% of new server OS 
deployments  in 2017 (i.e. volume market shares),  Windows Server [30-40]%, 
unpaid Linux [30-40]%, SUSE [5-10]%.264 Even when excluding unpaid 
deployments, Red Hat had a market share of only [30-40]% in 2017. In terms of 
revenue (and therefore excluding free unsupported operating systems), based on 
Gartner, Red Hat had a market share of [10-20]% in 2018, whereas Microsoft  had 
a market share of [50-60]%, Oracle [0-5]%, HPE [0-5]%, etc.  
(377)  In the second place, the Notifying Party argues, that even when considering only 
paid Linux distributions, RHEL faces strong competition from SUSE, Canonical 
(Ubuntu), Oracle Linux, and Amazo n Linux.265 
(378)  In the third  place, according to the Notifying Party, credible alternatives are 
particularly numerous in case of cloud deployments, as each public cloud 
platform offers several different (free and paid) alternatives to RHEL.  Amazon 
and Oracle actually offer and support their own Linux distributions. These 
alternatives are close and supported substitutes to RHEL, as they are based on 
RHEL, and are generally offered at no additional cost to customers beyond 
computing time. Existing customers woul d likely switch to these native offerings 
in the event of practices unduly favoring IBM products in combination with 
RHEL, thus denying IBM the ability to foreclose competitors. For example, a 
customer that currently runs RHEL on an IBM rival’s public clou d could start 
using one of the many available alternatives to RHEL if IBM were to increase the 
price of RHEL sold  through that IBM rival’s public cloud  to try and favor its own 
public cloud offering . 
(379)  In the fourth place,  the Notifying Party claims that Red  Hat’s market power is 
further limited by the fact that RHEL is  open source and therefore can be forked, 
i.e., a company may choose to take the open source code and develop it with 
community support under a different distribution.266 
  
                                                 
263  See Form CO, paragraph 704.  
264  IDC, Worldwide Server Operating Environments Market Shares, 2017:  Linux Fuels Market Growth  
(2018)  
265  See Form CO, paragraph 885 . 
266  See Form CO, paragraph 847.  
 
75 As regards incentives   
(380)  According to the Notifying Party, the merged entity would also not have the 
incentive to degrade RHEL’s interoperability (whether by changing RHEL’s 
source code or by refusing to certify RHEL) or to raise RHEL’s relative price 
when combined with third par ty products competing with IBM.  
(381)  First, according to the Notifying Party, this is because customers value choice and 
the ability to mix and match capabilities at each level of the IT stack that best 
match the compute and functional requirements of specific workloads (which 
very much diverges from one customer to another). As, according to the 
Notifying Party, there are credible competing alternatives to RHEL to which 
customers may turn, the merged entity would be more likely to lose sales of 
RHEL than to gai n additional sales of the other product. This is even more so that 
often system integrators are involved to help satisfying the heterogenous needs of 
their customers.267  
(382)  Second, the incentive to engage in any anticompetitive exclusionary practices 
would be further reduced because, according to the Notifying Party, such 
practices would be perceived as hostile by Red  Hat’s customers, developer 
community, and ecosystem partners , and would therefore alienate them . As Red 
Hat’s success relies both on the support of developers and the ecosystem partners 
(to be able to sell in a wide ecosystem), […].268 
As regards the Nutanix complaint in particular  
(383)  The merged entity argues that neither Red Hat nor the merged entity has or wi ll 
have  the ability or the incentive to fo reclose third -party hypervisors, for the 
following reasons.269 
(384)  First, the Notifying Party argues that c ertification is not a prerequisite or 
requirement for interoperability, and as a result cannot be used to foreclose 
competitors. Certification is just an expression by a commercial vendor that it is 
willing to support its products when used in combination with certain, identified 
other products  
(385)  Second, the Notifying Party argues that its pre -merger choice not to certify certain 
third parties hypervisors, in cluding Nutanix’s AHV is not motivated by an 
anticompetitive objective to foreclose competitors but is driven by legitimate 
business considerations. In particular, Red Hat has so far decided not to certify 
Nutanix because […].  
                                                 
267  In particular, the Notifying Party explains that it would have no incentive to degrade RHEL’s 
interoperability with, or raise the relative price of RHEL sold  through its public cloud rivals, to boost 
its own public cloud offering because diversion at the cloud environment level would likely be small 
relative to diversion between operating systems within the same cloud environment. This is because 
switching bet ween Linux distributions within the same cloud environment is easier than switching  
cloud environments . See Form CO, paragraphs 886 -888. 
268  See Form CO, paragraph 848.  
269  See Notifying Party’s response to sub mission by Nutanix, Inc. to the European Commission, 3 May 
2019.  
 
76 (386)  Third, the Notifying Party a rgues that Red Hat does not have the ability to 
foreclose third -party hypervisors, as it has no market power in server operating 
systems (see above).  
(387)  Fourth, the Notifying Party argues that the mere fact that Red Hat’s market share 
in an overall market for  virtualisation software is below [0-5]%, shows that Red 
Hat has neither the ability nor the incentive to foreclose competition in 
hypervisors.270 The Notifying Party further argues that it is not appropriate to 
further segment virtualisation software into p roprietary and supported open 
source virtualisation software, as argued by Nutanix.  
(388)  In fact, the Notifying Party explains that Red Hat c ertifies all the most important 
competing hypervisors VMware ESX and ESXi, Microsoft Hyper -V, and 
Google’s and AWS’s enc losed KVM -based hypervisors, showing that it has no 
incentive to foreclose competing hypervisors. According to the Notifying Party, 
together Microsoft Hyper -V and VMware ESX and ESXi account for more t han 
[90-100]% of the hypervisors used. In contrast, AHV has a very small presence 
on premises or in clouds (estimated to less than [0-5]% by Red Hat), and given 
[…], Red Hat has so far decided not to certify AHV.   
(389)  Fifth, the Notifying Party claims that just as Red Ha t lacks the ability to use 
RHEL as a lever to foreclose competitors today, IBM will lack such ab ility to do 
so post -Transaction, as IBM has less than [10-20]% market share in any possible 
IT services market.  
5.3.3.3.  Commission’s assessment  
As regards the general theory of harm   
(390)  The Commission considers that  the merged entity will most  likely not have the 
ability to foreclose competition  in other markets by leveraging RHEL’ s 
potentially strong position in a plausible market for paid Linux server operating 
systems,  into any other market(s) where IBM is active and thereby foreclose 
competitors, by means of one of the practices described in section 5.3.2 .. 
Moreover the Commissio n considers that the merged entity will also most likely 
not have the incentive to engage in any exclusionary practice. Therefore, it is 
unnecessary to assess in more detail whether such foreclosure strategy would 
have a significant detrimental effect on c ompetition . 
As regards ability  
(391)  First, the Commission considers that Red Hat most likely does not have a 
sufficient degree of market power to leverage its position with RHEL to foreclose 
competitors in other markets. Although it can be left open whether the market for 
server operating system would have to be further segmented between paid 
supported and unpaid unsupported and between families, the Commission 
                                                 
270  See Form CO, paragraphs 269 -294. The Notifying Party explained that hypervisors only refer to the 
core technology enabling virtualization, and software vendors today no longer sell hypervisors alone 
but virtualization solutions that include host OS and man agement functions. Therefore, the Parties 
refer to virtualization software instead of hypervisors. For market shares, see IDC Worldwide Virtual 
Machine Software Market Shares, 2017: Virtualization Still Showing Positive Growth and Gartner 
Enterprise Infras tructure Software Market Share Tracker (Worldwide 2017).   


 
79 very large common pool of customers between Red Hat other products and RHEL 
(most likely larger in terms of proportion than between IBM products and 
RHEL), which increases the potential for mixed bundling or degradation of 
interoperability to affect the demand for individual products.   
(396)  According to IDC, with the  exception of the plausible market for paid Linux 
server operating system, Red Hat’s market share is the highest in container 
infrastructure software. However, even in this plausible market , Red Hat only had 
a market share of [30-40]% in 2017, in decline f rom its 2015 level of [60-70]%.  
This is despite the fact that according to a number of competitors, Red Hat 
already attempts to leverage its position with RHEL to advantage its own 
container infrastructure software, i.e. OpenShift. For instance Oracle exp lains that 
Red Hat “limits support when customers do not run RHEL with OpenShift in 
order to favour its own container technology ”.276 The Commission considers that 
the strongly declining market share of OpenShift and the very low market shares 
of Red Hat’s o ther products is indicative of Red Hat’s lack of market power in 
operating  systems to influence demand in neighbouring markets in favour of its 
own products . 
(397)  Second, the results of the market investigation show that only very few customers 
representing a very small minority considered that the merged entity may have the 
ability to leverage RHEL’s market position into another market where IBM is 
active .277 
(398)  Third, as regards specifically the potential concern that the merged entity may 
want to leverage the strong position of RHEL in paid Linux distributions into 
IBM’s cloud solutions (including public and private cloud) , by degrading RHEL’s 
interoperability with, or  raise the relative price of RHEL sold through its cloud 
rivals, the Commission considers that the merged entity would not have the 
ability to significantly foreclose competitors in any cloud services market.  
(399)  In the first place, cloud customers would have the option to use alternative Linux 
distributions with their preferred cloud providers as each public cloud platform 
offers several different (free and paid) alternatives to RHEL.  For instance, 
Microsoft offers eight supported Linux distributions on Azure,  but customers can 
also build or upload other Linux versions;278  AWS offers seven supported Linux 
distributions;279 Google Cloud platform offers seven supported Linux 
distributions .280 This includes their own free alternatives (offered at no additional 
cost to customers beyond computing time), which are increasingly being adopted. 
Amazon and Oracle offer and support their own Linux distributions based on 
RHEL. Google is known for using a derivative of Debian Linux. Azure uses an 
Ubuntu derivative. Red Hat expect s that […], and with that will come the further 
growth of the public clouds' own free Linux distributions.  The Commission 
therefore considers that existing cloud customers would  have sufficient 
alternatives to switch to  in the event of a relative price inc rease of RHEL  on their 
cloud platform , a refusal to certify RHEL or any other degradation of 
                                                 
276  See Minutes of the call with Oracle of 9 April 2019.  
277  See replies to Questionnaire Q 2 to customers , question  42. 
278  https://docs.microsoft.com/en -us/azure/virtual -machines/linux/endorsed -distros   
279  https://aws.amazon.com/fr/mp/linux/   
280  https://cloud.google.com/compute/docs/images#os -details   
 
80 interoperability. This would significantly limit the ability of the merged entity to 
foreclose competitors.  
(400)  In the second place, the Commission notes that switching between cloud 
environments can be difficult, limiting further the ability of the merged entity to 
leverage RHEL to foreclose its cloud competitors. For example, many public 
cloud providers impose large switching costs, such as by charging for dat a 
mobility.281 
As regards incentives 
(401)  First, the Commission acknowledges that IBM has made firm, public 
commitments to maintain and continue Red Hat’s open source business model 
and its neutral “Switzerland” strategy in working with third parties . Virginia 
Rometty, IBM’s Chairman and Chief Executive Officer, made clear her view that 
IBM must “preserve absolutely” Red Hat’s position as a neutral Switzerland with 
respect to third party partners.282 IBM expressly included this commitment in the 
Agreement and Plan o f Merger (the “Agreement”). In the Recitals of the 
Agreement, IBM agreed to operate Red Hat as a distinct business unit and that 
Red Hat would “ remain an open and neutral platform, partnering broadly with 
information technology participants […] and continu ing to support the open 
source community .”283 And this is actually in line with IBM’s intent as stated in 
its internal documents. As reflected in IBM’s internal documents, IBM’s business 
case for the Transaction assumes that RHEL’s sales will grow. This requ ires 
maintenance of Red Hat’s neutral and open status, and its existing business 
model .284  
(402)  Second,  although the Commission acknowledges that efforts are required to 
switch from one Linux OS to another one, the Commission considers that 
switching is feasible  . This view is confirmed by the results of the market 
investigation. E ven if most customers consider that switching from one Linux OS 
to another would not be easy  or may even be very difficult , many customers 
                                                 
281  See study carried out for the European Commission by IDC and Arthur’s Legal  entitled “ 
  Switching of Cloud Services Providers ” available at  https://publications.europa.eu/en/publication-
detail/-/publication/898aeca7- 647e -11e8-ab9c-01aa75ed71a1. Note that as stated in its 
Communication on ICT standardisation priorities for the Digital Single Market ( “DSM”, April 2016) , 
it is the Commission’s  intention to promote the interoperability and data porta bility among cloud 
providers through facilitating the use of open source and the promotion of new cloud standards. 
Furthermore, s ince December 2017, the Commission established the DSM cloud stakeholders platform 
in order to facilitate the discussion among cloud stakeholders on technical and policy related aspects. 
Currently, in the context of the Regulation on th e free flow of non -personal data (see https://eur -
lex.europa.eu/legal -content/EN/TXT/?uri=CELEX:32018R1807 ), the DSM cloud stakeholders 
working gro up on data porting and switching of providers (SWIPO) is developing Codes of Conduct 
on data porting, with the purpose of facilitating the switching between cloud service providers.  
 
282  See e.g. , Seeking Alpha, International Business Machines Corp. (IBM) C EO Ginni Rometty on 
Acquisition of Red Hat (Transcript) , October 29, 2018,  https://seekingalpha.com/article/4215572 -
international -business -machines- corp-ibm-ceo-ginni -romettyacquisition -red-hat-transcript  . See also 
see also CNBC, IBM CEO Ginni Rometty insists the 63% premium the tech giant is  paying for Red 
Hat is a ‘fair price’ , October 29, 2018, https://www.cnbc.com/2018/10/29/ibm -ceo-ginnirometty-
63percent -premium- for-red-hat-is-a-fair-price html   
283  See the Agreement and Plan of Merger by and among International Business Machines Corporation, 
Socrates Acquisition Corp. and Red Hat, Inc. dated October 28, 2018. 
284  See e.g. […] 
 
81 however explain that it is feasible and some  state that they would consider it on a 
case by case basis assessing costs and benefits of doing so.285  
(403)  As explained by the Notifying Party, “ for enterprise -grade workloads, any 
change of server OS requires retesting of applications in full, and may require  the 
reinstallation of applications, including potential modifications, as well as 
potential recertification. […] changing between different versions of Linux is 
simpler than changing between Windows and Linux, but some adjustments are 
required . This is al so true for Oracle Linux, which is based on RHEL, but is not 
an exact clone of it. ”286  However, as explained by the Notifying Party, “ [w]hile 
switching existing workloads from one Linux OS to another always requires some 
level of effort in terms of applicat ion reinstallation and testing, switching does 
routinely occur” . According to the Notifying Party, examples of customers 
switching existing and new workloads  from RHEL to SUSE  include […]. 
Similarly, several customers including […] have migrated from RHEL to a 
Canonical OpenStack environment and have decided to run OpenStack on top of 
Ubuntu. 287 
(404)  Actually, when asked how they would react if as a result of the Transaction the 
merged entity were to non longer certify RHEL in combination with competing 
products at the infrastructure layer of the stack, only a small minority of 
customers claimed that t hey would continue using RHEL, but switch to the 
IBM/Red Hat alternative that is fully supported.  A larger proportion of customers 
declared that they would switch to an alternative Linux distribution. A large 
customer   for instance explains  that “[t]here a re viable alternatives to Red Hat 
Linux, including Debian and Ubuntu, that would enab le us to reduce our 
dependency on IBM/Red Hat ”. Some customers even indicated that they already 
switched in the past to alternative Linux OS because Red Hat did not certif y 
elements of the IT stack for which they had a strong preference. Another large 
customer  for instance  explains: “ We have already switched our Linux OS where 
necessary to provide a fully supported stack, e.g., Oracle DB on Oracle Linux 
hosted on Oracle VM hypervisor ” 288 
(405)  Third , in line with the Parties argument, the Commission acknowledges that the 
merged entity will at least to some extent continue to be disciplined by the open 
source community of developers and by Red Hat’s ecosystem of partners. 
Significan tly reducing the neutrality of RHEL would most likely be perceived as 
hostile by Red Hat’s developer community, and ecosystem partners. As Red Hat’s 
success relies both on the support of developers and the ecosystem partners (to be 
able to sell in a wide e cosystem), such practices may undermine one of the very 
rationale of the Transaction which is to grow Red Hat’s business . Since many of 
Red Hat’s key employees have chosen to work there precisely because of Red 
Hat’s neutral open source approach, any pract ice that would reduce the neutrality 
of Red Hat in favour of IBM product may  also risk an exodus of key leadership, 
talent, and skills.  The risks of […]. 
                                                 
285  See replies to Questionnaire Q 2 to customers , question s 41 and 44.  
286  See the Notifying Party’s response to the Commission’ s RFI 19, question 2.  
287  Ibid. 
288  See replies to Questionnaire Q 2 to customers , question  46 
 
82 (406)  This is also confirmed by some customers. Although certification of RHEL is 
acknowledged by many customers to be an important factor when considering the 
purchase of software/hardware/cloud services at other levels of the IT stack,  only 
very few customers consider that the merged entity may have the incentive to 
limit certification of third party soft ware, hardware, services and/or cloud service 
providers to perform with RHEL.  According to some customers, this would 
alienate the open source community. As explained by a customer, “ One of the 
major benefits that IBM can expect from this acquisition is th e position of Red 
Hat in the open source community. Adopting such a behaviour would generate 
very negative reactions from the open source community, and from other 
commercial editors who develop solutions which will be deployed on RHEL ”.289 
According to some  others, this would reduce the attractiveness of RHEL, leading 
to customers eventually switching to alternative Linux distributions.   
(407)  Fourth, and more generally , the vast majority of customers that responded to the 
market investigation indicated that the merged entity would not  have the incentive  
to leverage RHEL’s market position into another market where IBM is active .290 
(408)  Fifth, as regards specifically the potential concern that the merged entity may 
want to leverage the strong position of RHEL in paid Linu x distributions into 
IBM’s cloud solutions (including public and private cloud) , the Commission 
considers that the merged entity would not have the incentive to restrict RHEL’s 
availability to its own cloud, to refuse certification of third party cloud ser vice 
providers or to disadvantage third party cloud providers commercially, for the 
following reasons.  
(409)  In the first place, the wide choice of Linux distributions on competing cloud 
platforms and the difficulty to switch between cloud environments (see abov e) 
would limit the merged entity’s incentive to disadvantage RHEL’s deployment on 
third party cloud platforms . 
(410)  In the second place, none of IBM’s three main competitors in public cloud 
services ( […]) raised any such concern. Only a fourth competitor , […], raised the 
concern that the Transaction will increase both the ability and incentive of the 
merged entity to leverage Red Hat’s position in the enterprise Linux market to 
strengthen the merged entity’s position in the cloud infrastructure space.291  
(411)  In fact,  according to Microsoft , “IBM likely does not have the incentive to 
materially restrict RHEL’s availably to its own cloud, IBM Cloud. Red Hat is an 
open source company with a very strong reputation in the open source 
community. If IBM were to restrict RHEL  to IBM Cloud, it would materially harm 
Red Hat’s reputation as an open source software provider, which would make 
customers less likely to use RHEL and other Red Hat products, harming the value 
of the transaction. And because RHEL is an open source soluti on, aggrieved open 
source community members could fork RHEL and create their own version. ”292  
                                                 
289  See replies to Questionnaire Q 2 to customers , question  43-45 
290  See replies to Questionnaire Q 2 to customers , question  42 
291  See further submission by Oracle, dated 5 June 2019  
292  Microsoft’s further information responsive to Questionnaire Q1 to competitors, submitted on 24 May 
2019.  
 
83 (412)  In the third place, […]. Actually, the Notifying Party explained to the 
Commission that […].293  
(413)  The Notifying Party further explained that the Agreement and Plan of  Merger 
between IBM and Red Hat provides that IBM’s consent is needed for amendment 
of Material Contracts. […]. 294 
As regards the Nutanix complaint in particular 
(414)  Overall, t he Commission considers that  the merged entity will most  likely not 
have the ability and incentive to foreclose  competing hypervisor or virtual isation 
software for the following reasons.295 
(415)  First, as regards Red Hat’s motivation for not certifying Nutanix’s AHV, the 
Commission notes that Red Hat is not the only Linux distributor which has not 
certified AHV to run their Linux operating system. For instance, Oracle explained 
that “ Nutanix’s hypervisor AHV is not formally certified by Oracle to run Oracle 
Linux, though […] Oracle supports other third party open source hypervisors, 
e.g. Ubuntu ”.296 This suggests that as explained by the Notifying Party, the re may 
be legitimate business considerations for both Oracle and Red Hat not certifying 
AHV.  
(416)  The Commission also notes that Red Hat c ertifies the most widely used  
competing hypervisors , includin g VMware ESX and ESXi and  Microsoft Hyper -
V, which account for [90-100]% of hypervisors used.297 This strongly suggests 
that Red Hat is not motivated by a desire to foreclose competition, but rather by 
legitimate commercial considerations, unless proprietary hypervisors were not 
part of the same relevant market as open source hypervisors . If propriet ary 
hypervisors are part of the same relevant market as Red Hat’s open -source 
hypervisor  RHV, then Red Hat would anyway still continue to face competition 
from its largest competitors representing around [90-100]% of the market.    
                                                 
293  See Notifying Party’s response to question 1 of Commission RFI 21  
294  Ibid. 
295  The Commission however does not agree with the Notifying Party that a refusal to certify cannot be 
used to foreclose competitors . Although the Commission acknowledges that non -certification does not 
equate to non -interoperability, the Commission considers that, at least in certain cases where 
certification is an important factor in the choice of customers, a refusal to certify is equivalent to a 
degradation of interoperability which may potentially in certain conditions be used to foreclose 
competitors. As regards hypervisors, the market investigation shows that the vast majority of 
customers would not consider purchasing a  hypervisor to run RHEL if it is not certified by Red Hat  
(See replies to Questionnaire Q 2 to customers , question  52). Customers generall y explain that they 
need support and that it is too risky to run uncertified hypervisors. Even Red Hat itself recommends 
not to use uncertified hypervisors, as this “ introduces significant risk to customer environments ”. See 
also https://access redhat.com/ third -party -software -support where Red Hat states: “Using Red Hat 
products on uncertified hardware,  hypervisors, or providers is unsupported. Using Red Hat software in 
an unsupported configuration introduces significant risk to customer  environ ments and should be 
avoided […] ”. Therefore, i f customers were not willing to switch to alternative Linux distributions (or 
other operating systems), the Commission considers that a refusal to certify would potentially 
constitute an effective way to foreclose compet ing hypervisors.  
296  See Minutes of the call wi th Oracle of 7 June 2019.  
297  See Notifying Party’s response to sub mission by Nutanix, Inc. to the European Commission, 3 May 
2019.  
 
84 (417)  On this point, the resul ts of the market investigation strongly suggest that 
proprietary and open source hypervisors are part of the same market. The vast 
majority of competitors considered that competition between proprietary 
hypervisors and open source hypervisors is either str ong or very strong.298 The 
majority  of customers  expressing a view on the question also indicated that when 
considering the purchase of a hypervisor for running virtual machines, they 
typically consider both proprietary and open source alternatives.299 However , the 
question can ultimately be left open, as even within a market for open source 
hypervisors, the Commission considers that the Transaction does not raise serious 
doubts as to its compatibility with the internal market  (for the reasons stated 
below).  
(418)  Second , as regards Red Hat’s potential market power in server operating systems, 
as explained above, the Commission considers that Red Hat most likely does not 
have a sufficient degree of market power to leverage its position with RHEL to 
foreclose competito rs in other markets .  
(419)  Third , as regards IBM’s alleged ability to use its position in IT services and/or in 
hardware markets as a lever to foreclose hypervisor competitors, the Commission 
considers it very unlikely. As such, even if ( quod non ) the current practice of Red 
Hat had an anti -competitive motive and an anti -competitive effect, this would not 
be merger specific. The reasons are twofolds.  
(420)  In the first place, the Commission considers that IBM has no strong market 
position in any plausible IT services  markets that it could leverage into another 
market , and this would not change post -merger, as Red Hat is not active in IT 
services .300 Considering all segmentations of IT services markets considered by 
the Commission in the past  (see section 4.5 ), there is no plausible IT services 
market where IBM’s market share would equal or exceed 30%.  Available data 
show that IBM’s shares (both at EEA - and at worldwide level) remain below [5-
10]% in the Gartner market for all “IT Services”, as well as in IDC’s “IT 
Servi ces” and “Business Services” overall categor ies. Even on the basis of a 
narrow segmentation of the IT Services market, IBM’s share does not exceed [20-
30]% in any hypothetical market segmentations according to IDC and Gartner 
data. 301 
(421)  In the second place, a s regards hardware, IBM’s estimated market share of sales 
only exceeds 30% in two sub -segments of the server market (which may 
potentially constitute separate relevant markets  although as explained in section 
4.4 this can be left open ), i.e. in mid -range ( USD 100,000 – USD 999,999), and 
high-end server (USD 1 million and above).  According to IDC, IBM’s revenue 
share in the high -end segment is [70-80]% at the worldwide level and [50-60]% at 
the EEA level. It is [50-60]% and [60-70]% in the mid -range segment 
respectively at the worldwide level and at the EEA level. However, IBM’s share 
in an overall market for servers is less than [0-5]% and is declinin g. As a result, 
the vast majority of hypervisors are not deployed on IBM servers, but in other 
                                                 
298  See replies to Questionnaire Q 1 to competitors , question  54 
299  See replies t o Questionnaire Q 2 to customers , question  51 
300  See Form CO, paragraph 305.  
301  Section 5.3.6 below  assesses more in detai ls whether the merged entity would have the ability to 
leverage its position in IT services into neighbouring markets where Red Hat is active.  
 
85 environments. Any leveraging of IBM’s position  in a plausible market for  high-
end and mid -range servers would not be capable of significantly affecting the 
overa ll demand for hypervisors , which is in its vast majority independent from 
IBM’s servers.302 
5.3.4.  Container Infrastructure Software - Leveraging the  potentially  strong position of 
Red Hat OpenShift into neighbouring markets  where IBM is active  
5.3.4.1.  Potential concern  
(422)  The second potential relevant market in which Red Hat has a market share in 
excess of 30% is the market for container infrastructure software (see section 
5.2.8 ), in w hich Red Hat offers its OpenShift product. The Commission has 
assessed a potential competition concern whereby the merged entity would 
leverage Red Hat OpenShift’s potentially strong position in a plausible market for 
container infrastructure software, int o any other market(s) where IBM is active, 
by means of one of the practices described in section 5.3.2 . 
5.3.4.2.  Notifying Party’s view  
(423)  Red Hat’s OpenShift, is probably the b est example of a Red Hat product that is 
compatible with the products offered by IBM’s competitors in different public 
clouds, private clouds and traditional enterprise stack environments, as 
OpenShift’s objective is to facilitate the movement of workloads  between these 
three  environments . 
(424)  The Notifying Party submits that the merged entity will not have the ability and 
incentive to leverage OpenShift’s potentially strong market  position to boost 
IBM’s sales and foreclose IBM’s competitors in neighbouring markets, for the 
following reasons.  
As regards ability  
(425)  The Notifying Party argues that the merged entity will not have the ability to 
foreclose rivals by leveraging Red Hat’s position in container infrastructure 
software because  Red Hat does not have suffi cient market power in the market for 
container infrastructure software, for the following reasons.  
(426)  First, as explained in section 5.2.8 , the Notifying Party submits t hat the possible 
market for container infrastructure software is fragmented and highly competitive. 
This potential market is nascent and developing rapidly, while Red Hat’s market 
share is declining due to the significant competitive pressure from major pu blic 
clouds’ Kubernetes offerings ( e.g., Amazon, Microsoft, and Google), other 
commercial platforms ( e.g., Docker,Dell/EMC’s Pivotal/VMware, Rancher, and 
Canonical), and DIY open source products.  In 2018,  Red Hat only had a market 
share of [30-40]%. 
(427)  Second , the Notifying Party claims that Red Hat’s market power is further limited 
by the fact that OpenShift is  open source and therefore can be forked, i.e., a 
                                                 
302  Section 5.3.5 below  assesses more in detai ls whether the merged entity would have the ability and 
incentive to leverage its potentially strong position in servers into neighbouring markets where Red 
Hat is active.  
 
86 company may choose to take the open source code and develop it with 
community support under a differe nt distribution.303 
As regards incentives  
(428)  According to the Notifying Party, the merged entity would also not have the 
incentive to degrade OpenShift’s interoperability (whether by changing 
OpenShift’s source code or by refusing to certify OpenShift) or to en gage in an 
anticompetitive mixed bundling strategy involving OpenShift, because such 
strategies would not be profitable.  
(429)  This is because there are many alternatives to OpenShift and customers are 
unlikely to switch to IBM platforms as a result of any strat egy which would make 
the combination of OpenShift with third party platforms less competitive.  
5.3.4.3.  Commission’s assessment  
(430)  The Commission considers that the merged entity will not have the ability to 
foreclose rivals by leveraging Red Hat’s position in contain er infrastructure 
software because  Red Hat does not have sufficient market power in the market for 
container infrastructure software, in particular given its relatively low market 
share ( [30-40]%) and the fact that Red Hat faces many strong competitors in that 
potential market.  
(431)  Furthermore, as explained in section 5.2.8 , and as acknowledged by the Parties’ 
customers and competitors, the market for container infrastructure software is a 
nascent market with many new competing offerings. Over the period 2015 -2017, 
Red Hat’s market share declined from [60-70]% to [30-40]%, while a number of 
strong competitors entered the market (AWS, Google, VMware) or expanded 
(Docker).  
(432)  The Commission also considers that the merged entity is unlikely to have the 
incentive to engage in any foreclosure strategy by leveraging its position with 
OpenShift. This is because OpenShift’s business proposition in the nascent hybrid 
cloud environment  is to use container technology  precisely  in order to allow 
applications to run anywhere, in any type of environment, including different 
public clouds, private clouds and traditional enterprise systems. Any attempt by 
the Parties to alter OpenShift’s plat form neutrality in favour of IBM’s cloud 
products would move IBM into the same model as its cloud competitors, which 
are much larger and more successful than IBM itself. With this Transaction, IBM 
has the opportunity to offer a differentiated and attractiv e hybrid cloud 
proposition. This valuable opportunity  would be sacrificed at a cost if IBM 
engaged in the types of  foreclosure strategies discussed above.  
(433)  The results of the market investigation confirm this view. The vast majority of 
customers consider th at IBM will not have an incentive to alter OpenShit’s 
platform neutrality.304 They consider that Red Hat faces competition from strong 
alternatives, and that most customers would switch to these alternatives if 
                                                 
303  See Form CO, paragraph 847.  
304  See e.g. replies to Questionnaire Q 2 to customers , question  48. 
 
87 OpenShift’s platform neutrality was altered.305 To the question as to what their 
reaction would be if post -Transaction the merged entity were to no longer certify 
OpenShift in combination with third party products and only with products  from 
the merged IBM/Red Hat entity , the majority of customers who ar e currently 
using OpenShift and who expressed an opinion on the question explained that 
they would switch to an alternative container infrastructure software.306 
(434)  Therefore, it is unnecessary to assess in more detail whether such foreclosure 
strategy would ha ve a significant detrimental effect on competition.  
5.3.5.  Server markets - Leveraging the potentially strong position of IBM into 
neighbouring markets where Red Hat is active  
5.3.5.1.  Potential concern  
(435)  A limited number of Red Hat competitors raised the concern that the m erged 
entity may leverage IBM’s market power in server markets, in particular with its 
IBM Power servers and its z System servers (also referred to as “Mainframe”)  to 
promote Red Hat products and in particular RHEL  and foreclose competing 
products  and in p articular competing Linux distributions , through various 
practices which would effectively degrade the interoperability of these competing 
products with Mainframe and Power servers or through commercial practices 
equivalent to mix bundling that would advan tage Red Hat products over 
competing products.  
5.3.5.2.  Notifying Party’s arguments  
(436)  As explained in section 4.4 above,  the Notifying Party views the relevant product 
market as comprising all servers. IBM’s share in an overall market for servers is 
less than [0-5]% and is  declining .307  
(437)  However, even if th e Commission were to consider unduly narrow segments 
limited by price band (for mid -range and high -end servers), where IBM’s 
estimated share of sales may exceed 30%, the Notifying Party submits that these 
estimated shares do not give rise to any credible n on-horizontal concerns for the 
following reasons.  
(438)  First, the Notifying Party notes that IBM is already active in both servers and the 
neighboring market of operating systems, but continues to offer its servers 
independently and to ensure their compatibili ty with non -IBM operatin g systems.  
                                                 
305  For instance, a large customer  explain s: “[t]he success of Red Hat OpenShift is largely linked to the 
ecosystem Red Hat has struggled to build over these past few years, it is also what makes them 
successful. As there are other alternative solutions to their offer, they would kill their ecosystem by 
discriminating, reducing their reach and pushing customers and partners to other solutions ”. Another 
large customer  further explains “ The com petition in this area is very aggressive. If the merged entity 
does not offer a wide compatibility, its products will be out of the market in some time ”. Another large 
customer also states: “ [i]t is in the interest of OpenShift development to be as open as  possible ”. See 
replies to Questionnaire Q 2 to customers , question  48. 
306  See replies to Questionnaire Q 2 to customers , question  49. 
307  See Form CO, paragraph 258.  
 
88 (439)  Second, given the significantly higher value of IBM’s servers relative to a RHEL 
subscription, it would not be profitable to pursue a strategy that would attempt to 
foreclose competing Linux distributions from IBM’s serve rs, because the trade -
off between lost sales of servers and gained sales of RHEL subscriptions would 
necessarily be negative. The Parties roughly estimate that the revenues derived by 
IBM from its server business associated with non -RHEL Linux distribution s is 
multiple times more valuable than the revenues derived by the vendors of non -
RHEL Linux distributions used on IBM servers. Therefore IBM would risk losing 
significant revenues by foreclosing rivals’ Linux distributors – and in particular 
[…] – for a n egligible potential gain.308  
(440)  Third, the Notifying Party also submits that such strategy would not be profitable 
as customers are more likely to change platform than to change Linux distribution  
because it is easier to move workload running on a Linux distri bution from IBM  
servers to other servers rather than to move the workload from one Linux 
distribution to another one.309 
(441)  Fourth, the Notifying Party submits that any action to foreclose […] on System z 
or POWER would cast doubts  on IBM’s commitment to open source, and could 
have an indirect negative effect on IBM’s reputation in the open source 
community, threatening the achievement of the goals of the proposed 
Transaction .310 
(442)  Finally, even if the merged entity  had the ability or i ncentive to bundle its servers 
with RHEL or to degrade the interoperability of its servers with competing Linux 
distributions , the Notifying Party submits that this is unlikely to have any actual 
foreclosure effect on rival operating systems, given the sma ll market opportunity 
represented by IBM servers. According to IDC, IBM’s servers only represent [0-
5]% and less than [0-5]% of all servers running Linux, by revenue and units, 
respectively.  This also holds for other Red Hat products.311 
5.3.5.3.  Commission’s assessm ent 
(443)  The Commission considers that IBM could only potentially have market power 
and therefore the ability to leverage that market power into neighbouring markets, 
if the relevant product market is defined narrowly. On an overall market for 
servers, IBM has a market share below [10-20]% in terms of revenue and below 
[0-5]% in terms of units both at the EEA level and at the worldwide level 
according to Gartner and IDC.312  
(444)  IBM’s market share exceeds however 30% in both the high -end (USD 1 million 
and above) and mid-range (USD 100,000 – USD 999,999) server segments. As 
shown in Table below , in the potential market for high -end servers, IBM has a 
market share of [70-80]% in terms of revenue at a worldwide level in 2018, 
                                                 
308  SUSE claims to have a share of around [80-90]% of Li nux deployments on IBM System z […]. 
309  See Notifying Party’s response to the Commission’s RFI 21.  
310  See Notifying Party’s response to the Commission’s RFI 21.  
311  See Form CO, paragraph 266.  
312  See Annex to Notifying Party’s response to the Commission’s  RFI 9 , question 4(iii)  

 
90 As rega rds ability  
(447)  The Commission considers that even if the merged entity had the incentive to 
leverage its position in servers to boost its sales of RHEL (and other Red Hat 
products) to the detriment of competing Linux distributions (and other competing 
product s), it would anyway not have the ability to foreclose  rival Linux 
distributions or other rival products of Red Hat, given the small market 
opportunity represented by IBM servers.  
(448)  A large majority of the workloads of most companies do not run on IBM server s, 
but rather on competing x86 servers or in the cloud. As such most middleware or 
system infrastructure software of third parties that are competing with Red Hat do 
not run on IBM’s servers. A large majority of the demand for these software 
would therefor e be unaffected by any hypothetical exclusionary practice of the 
merged entity leveraging its position in servers.  
(449)  As regards competing Linux distributions in particular, according to IDC, IBM’s 
servers only represent [0-5]% and less than [0-5]% of all ser vers running Linux, 
by revenue and units, respectively. The Commission therefore considers that even 
if the merged entity had the incentive to foreclose competing Linux distributions 
from its server footprint, this would leave the vast majority of the dema nd for 
competing Linux distributions unaffected.  
(450)  As for other infrastructure software and middleware competing with Red Hat, the 
Commission asked the Parties to estimate, for each Red Hat product, the 
proportion of customers that installed the Red Hat soft ware/middleware on an 
IBM server, whether newly purchased or already installed.  
(451)  The Parties estimated, for each Red Hat product, the overlap between Red Hat 
customers and IBM server customers in 2018 (purchases carried out in 2018). The 
Parties even estim ated  for each Red Hat product, the overlap between Red Hat 
customers in 2018 and the full installed base of IBM server customers 
(irrespective of when the server was purchased), by comparing the list of Red Hat 
customers in 2018 with the installed base of  IBM server customers . These 
estimates shows that for most Red Hat products, there is minimal overlap between 
Red Hat’s customers and IBM’s server customer base. In fact, for most Red Hat 
products, this analysis shows that more than [90-100]% of Red Hat customers do 
not have an IBM server. There are only four products where the share of common 
customers exceeds […]%: Red Hat Data Grid ( […]%), Red Hat Ansible Network 
Automation ( […]%), Red Hat Quay ( […]%), and Red Hat Hyperconverged 
Infrastruc ture for Cloud (“RHHI for Cloud”) ( […]%)315. However, the Notifying 
Party confirmed that although there is a significant overlap in the customer base 
for these products, these Red Hat products are not typically used for the same use 
cases as IBM servers , or in other words even in cases where there is customer 
overlap, IBM servers and these Red Hat products are used for different purposes  
(i.e. the Red Hat product will most of the  time be installed on competing servers 
rather than on the IBM servers).316 
  
                                                 
315  […]. 
316  See Parties’ response to Commission’s RFIs 16 and 18, including Annex RFI 18 Q.2(a).  
 
91 As re gards incentives  
(452)  The Commission has doubts whether the merged entity would have the incentive 
to anticompetitively bundle its servers only with RHEL or to degrade 
interoperability of its servers with third party Linux distributions, for the 
following reaso ns. 
(453)  First, the Commission notes that IBM competes against other server platforms 
(including x86), public cloud, and SaaS, all of which offer multi -vendor Linux 
support. This is true although some of them have their own Linux distribution (e.g 
AWS, Microsof t Azure, Google Cloud Platform). This suggests that customers 
expect to be able to run their workload on their favourite Linux distribution 
irrespective of the platform chosen.  
(454)  Second, the Commission notes that doing so would likely be seen as a hostile 
move by IBM going against its general commitment to open source, and could 
have an indirect negative effect on IBM’s reputation in the open source 
community.  
(455)  Third, the Commission takes note that the potential gains from any such 
foreclosure strategy would be rather limited as opposed to the potential risk , given 
the relative value of IBM servers compared to  RHEL . However, the Commission 
has not been able to confirm the Notifying Party’s view according to which it is 
easier for a client to move workloads on a Linux distribution from an IBM server 
to another server than to move workloads from one Linux distribution  to another. 
If the merged entity were to cut SUSE off from its IBM servers, it is therefore 
unclear to the Commission how customers would react, i.e. whether they would 
move their SUSE workloads to other environments running SUSE or instead 
whether they w ould move their workloads to RHEL to keep them on IBM servers. 
On balance, therefore, the Commission cannot take a position on whether 
engaging in such foreclosure strategy would be immediately profitable or not 
(ignoring the indirect negative effect on th e merged entity’s reputation).  
(456)  Fourth, irrespective of whether this would be profitable or not, the Commission 
has not found […] that IBM is counting on any synergy from the Transaction that 
would involve leveraging IBM’s position in hardware to sell more RHEL  or any 
other Red Hat products . 
(457)  In any event, the Commission notes that IBM and SUSE […].317 The Commission 
also notes that in an email to all addressees of the June edition of the  “Partner for 
Growth with IBM Server Solutions ” newsletter distributed by  IBM’s Systems 
Middle East and Africa team, IBM makes clear that “ today IBM supports multiple 
variants of Linux – including Canonical (Ubuntu), SUSE, and Red Hat – on IBM 
servers, and that will not change upon the expected closing of IBM’s acquisition 
of R ed Hat. IBM will not have a default or preferred variant of the Linux 
operating system for IBM servers. IBM will continue to work with different Linux 
distributors in an effort to provide clients with the flexibility and choice they 
expect from IBM ”.318 
                                                 
317  See […]. 
318  See the Notifying Party’s response to a Commission’s request for information of 21 June 2019.  
 
92 (458)  As regards Canonical  which also has a partnership agreement with IBM, to have 
its Linux distribution “Ubuntu”  supported on IBM Power and z servers, the 
Commission assumes that the merged entity would have the same incentive to 
continue its partnership agre ement. In any event, […].319 As such, even if the 
merged entity were to take Ubuntu off from its servers, this would have no 
significant impact on Ubuntu’s  ability to continue competing with RHEL in other 
environments. Moreover, it would also have a negligib le impact on customers’ 
choice and competition in the IBM servers footprint, as SUSE and RHEL together 
account for close to 100% of all Linux deployments on IBM servers.  
As regards effects  
(459)  Finally, even if IBM had the ability or incentive to bundle its ser vers with RHEL 
or other Red Hat products or to degrade the interoperability of its servers with 
rival operating systems or other rival products, the Commission considers that this 
is unlikely to have any actual foreclosure effect on rival operating systems  or 
other rival products and therefore any harm to consumers, given the small market 
opportunity represented by IBM servers (see paragraphs 449-451 above)  
5.3.6.  IT services markets – Leveraging the potentially strong position of IBM into 
neighbouring markets whe re Red Hat is active  
5.3.6.1.  Potential concern  
(460)  A small number  of market participants expressed concerns that through its role as 
alleged global leader  in IT services and IT consultancy, IBM would be able to 
substantially influence end customers’ purchasing decisions for software products 
in favour of Red Hat products and to the detriment of competing vendors’ 
products post -transaction , thereby potentially foreclosing competitors .  
5.3.6.2.  Notifying Party’s view  
As regards ability  
(461)  The Notifying Party submits that IBM does not currently have, and will not gain 
as a result of the Transaction, the ability to influence customers’ purchasing 
decisions in favour of Red Hat products and to the detriment of competing 
vendors’ products , for the following reasons.  
(462)  First, IBM, through its IT Services business  (Global Business Services (“GBS”) 
and Global Technology Services (“GTS”) ),320 does not have market power under 
any plausible market segmentation. IBM’s shares (both at EEA - and at worldwide 
level) remain below [5-10]% in the Gartner market for all “IT Services”, as well 
as in IDC’s “IT Services” and “Business Services” overall categories. Even on the 
basis of a narrow segmentation of the IT Services market, IBM’s share does not 
exceed [20-30]% in any hypot hetical market segmentations according to IDC and 
                                                 
319  See Notifying Party’s response to Commission’s RFI 21  
320  IBM markets IT Services to enterprises under the IBM Services brand. IBM Services includes two 
operationally distinct businesses, Global Business Services (“GBS”) and Global Technology Services 
(“GTS”), each with a different focus: G BS mainly provides strategy and architecture consulting 
services, while GTS generally provides outsourcing services.  
 
 
93 Gartner data. IBM also faces strong rivals in IT Services, including Accenture, 
McKinsey, Deloitte, E&Y, PWC, Oracle, SAP, and others, who enjoy market 
positions equivalent to IBM’s.  
(463)  Second, IBM’s GTS321 has to deal with  customers’  existing IT architecture 
constraints and would not in any event be able to impose its own products on the 
customer.  
(464)  Third, both GBS’322 and GTS’ customers are usually large and sophisticated 
customers with their own IT departments wh o often have precise ideas about what 
solutions they need before they even involve IBM as an advisor. Therefore, 
IBM’s role essentially involves implementing the clients’ choices rather than 
influencing these choices.  
As regards incentives  
(465)  The Notifying Party also submits that IBM  will not have the incentive to 
foreclose competitors’ solutions by leveraging IBM Services in order to push Red 
Hat software to the detriment of competing vendors’ products that are more 
suitab le to meet the customers’ needs.  
(466)  According to the Notifying Party, doing so (i) would damage its credibility as a 
neutral advisor and result in diverting sales to the many other vendors that 
provide the same services as GBS and GTS, (ii) be at odds with IBM’s past 
practices in IT services,  and (iii) not result in any significant increase of Red Hat 
products’ sales  
5.3.6.3.   Commission’s assessment  
(467)  The Commission considers that the merged entity will not have the ability to 
significantly influence customers’ purchasing decisions in favour of Red Hat  
products and to the detriment of competing vendors’ products, let alone 
significantly foreclose access to a sufficient customer base to Red Hat’s 
competitors, for the reasons set out below. Therefore, it is unnecessary to assess 
in more detail whether the merged entity would have an incentive to engage in 
such practice and whether  such foreclosure strategy would have a significant 
detrimental effect on competition . 
As regards ability  
(468)  First, the Commission considers that IBM has no strong market position in  any 
plausible IT services markets that it could leverage into another market, and this 
would not change post -merger, as Red Hat is not active in IT services.323 As 
submitted by the Notifying Party, and c onsidering all segmentations of IT 
services markets co nsidered by the Commission in past decisions  (see section 
4.5), there is no plausible IT services market where IBM’s market share would 
                                                 
321  The focus of GTS is to provide implementation, outsourcing and support (maintenance) for enterprise 
IT infrastructure environments comprised of hardware, middleware software, networking, mobile 
devices, etc.  
322  GBS provides three broad categories of servi ces: (i) IT Consulting, (ii) Application Management, and 
(iii) Cognitive Process services.  
323  See Form CO, paragraph 305.  
 
94 equal or exceed 30% , with the exception of two narrowly defined product markets 
only when looking at data on a narrow country -level324 – i.e. the potential markets 
for Managed Services and Cloud Infrastructure Services in the wholesale trade 
sector, in Austria ( [30-40]%) and Denmark ( [30-40]%).325 In addition, IBM faces 
strong global rivals in all potential markets for IT ser vices, including Accenture, 
Amazon, Atos, Capgemini (which recently announced that it will acquire Altran), 
Cisco, Cognizant, Dell -EMC, Deloitte, DXC, EY, Fujitsu, HPE, Infosys, 
Microsoft, NTT Data, Oracle, PwC, SAP, Tata, and many others. This is also tru e 
for the potential markets for Managed Services and Cloud Infrastructure Services 
in the wholesale trade sector in Austria and Denmark, where Capgemini, 
Accenture, DXC, Cisco and Ricoh are particularly active.326 
(469)  Second, customers responding to our market i nvestigation indicated in their vast 
majority that IBM’s influence on their company’s purchasing decisions for 
hardware or software  is either “limited” or “very limited”.327  
(470)  Third , even assuming  that demand for IBM IT services is not contestable, and 
theref ore that IBM could steer customers’ choice towards Red Hat products to the 
detriment of equally or more suitable competing third party products without 
risking to lose their client, the Commission considers that the merged entity 
would not have the ability  to foreclose access to a sufficient customer base . The 
market investigation has shown that IBM’s  GBS and GTS  business units (all IT 
services included) do not constitute  a sufficiently important ‘route to market ’ to 
                                                 
324  Based on IDC data, IBM’s share is consistently below 30% in all segme nts, even at the national level.  
 Based on Gartner data, IBM’ s share is consistently below 30% both when segmenting by functionality 
and when segmenting by indus try, even at the national level. Only when combining Gartner’s 
functionality and industry segments, AND  looking at data on a narrow country -level, IBM’s share 
exceptionally exceeds 30% in a mere two combinations of (i) “Service 2” level functionality segments 
and (ii) industry sectors, out of 880 possible combinations in total ( i.e., less than 0.3% ), which both 
concern Managed Services and Cloud Infrastruc ture Services in the wholesale trade sector, in Aust ria 
([30-40]%) and Denmark ( [30-40]%). See the Notifying Party’s response to the Commission’s RFI 23.  
325  Even assuming that IBM could leverage its position in these two narrowly defined markets to push f or 
the adoption of Red Hat products instead of equally or more suitable competing third party products 
without the risk of losing IT services customers to competitors ( quod non ), the Commission considers 
that the  merged entity will not have the ability to  significantly foreclose access to a sufficient customer 
base to Red Hat’s competitors. This is because the middleware and system infrastructure software 
markets in which Red Hat is active are either EEA -wide or worldwide. As a result, as confirmed by the 
Notifying Party , the customers of IBM’s GBS and GTS in the potential markets for Managed Services 
and Cloud Infrastructure Services in the wholesale trade sector in Austria and Denmark only represent, 
at most, a very small proportion of Red Hat’s customer b ase for any of its products at the EEA and 
worldwide level . 
326  In this respect, the Commission notes that recently, IBM decided to withdraw its notification in Case 
B7-50/19 – IBM/T -Systems, notified to the German Federal Cartel Office (“FCO”), following t he 
opening of an in -depth investigation by the FCO. In a press release, the FCO set out its provisional 
view that mainframe services (i.e. IT outsourcing of aftermarket services for mainframe systems) 
could constitute a distinct product market and that IBM  might hold a dominant position in the EEA. 
The Notifying Party strongly disagrees with this provisional view of the FCO. In particular, even if 
such market existed, the Notifying Party argues that its market share on such market would only be 
[20-30]%, ta king into account both internally supplied services as well as outsourced services. 
However, even if there was a relevant market for mainframe services in the EEA and even if IBM 
were to be considered dominant on such market, the Commission considers that the merged entity 
would have no ability to use its position in mainframe services to exclude competitors of Red Hat’s 
products. This is because mainframe servers (to which mainframe services relate) represent only a tiny 
fraction of overall deployments for  the software categories where Red Hat is active (see section 5.3.5).  
327  See replies to Questionnaire Q 2 to customers , question  56. 
 
95 significantly limit access of Red Hat rivals  to customers.  Indeed, t he vast majority 
of Red Hat ’s competitors have indicated that they have less than 10% of their 
software sales for which IBM is involved as an intermediary (e.g. system 
integrator), as an IT consultant or as an other type of IT  service provider.328 Even 
if for these sales they were entirely dependent on IBM ( quod non ), this would not 
be sufficient to foreclose access of Red Hat’s rivals to a sufficient customer base . 
5.3.7.  Other non -horizontally affected markets – Leveraging the potenti ally strong 
position of IBM into neighbouring markets where Red Hat is active  
5.3.7.1.  Potential concern  
(471)  Sections 5.3.3  and 5.3.4  assessed whether the merged entity would have the 
ability and incentive to leverage Red Hat’s position in the two markets where Red 
Hat has an individual market share in excess of 30%  at the worldwide and EEA 
level – i.e. paid operating systems (and paid Linux operating systems in 
particular) and container infrastructure s oftware  – into neighbouring markets 
where IBM is active. Section 5.3.5  assessed whether the merged entity would 
have the ability and incentive to leverage IBM’s market position in the potential 
markets for high -end and mid -range servers in which IBM has a market share in 
excess of 30% into neighbouring markets where Red Hat is active.  
(472)  As shown in section 5.3.1 , there are  13 additional IDC and/or Gartner market 
segments where IBM has an individual market share in excess of 30%  at the 
worldwide and/or EEA level. Although, no market participant raised 
conglomerate or non -horizontal concern with respect to those markets, the 
Commission assesses in this section whether the merged entity would have the 
ability and incentive to leverage IBM’s p osition in those potential markets to 
boost Red Hat’s sales in neighbouring markets and foreclose Red Hat’s 
competitors.  
5.3.7.2.  Notififying Party’s view  
(473)  The Notifying Party submits that the Transaction will not enable IBM to leverage 
any of its potentially strong  market positions in any of the market segments where 
it has more than 30% market  into any of the segments where Red Hat is active . 
The reasons are the following.329 
(474)  First, IBM’s worldwide or EEA -wide share exceeds 40% only in the following 
segments: Transac tion Processing Monitors (IDC and Gartner), Paid Unix and 
Other OS (Gartner), Message -Oriented Middleware (Gartner), Storage 
Management Mainframe Software (Gartner), and WEB Access Management 
(Gartner).330 The Notifying Party therefore considers that only in  relation to these 
segments, could IBM potentially have sufficient market power.  
(475)  Second, there are no major Red Hat products that are interoperable with IBM’s 
Storage Management Mainframe Software products. This is sufficient to discard 
                                                 
328  See replies to Questionnaire Q 1 to competitor s, question 5 8. 
 
329  See the Notifying Party’s response to  the Commission’s RFI 16.  
330  See section 5.3.7.3  below.  
 
96 any risk that IBM would leverage its position on Storage Management  Mainframe 
Software to push Red Hat’s products . 
(476)  With respect to the other four segments, the Notifying Party submits that Red Hat 
has few main products that are supported and interoperable with IBM’s offerin gs. 
With respect to all four of these segments, the Notifying Party submits that the 
merged entity  will however not have the ability  to engage in anticompetitive 
bundling or tying, or in  interoperability degradation, post -Transaction for the 
following reasons . 
(477)  In the first place, there are many rivals with similar offerings and there is no 
bundle of functionalities that IBM/Red Hat’s products could offer in combination 
that is not already offered  or could not be offered by one or more of the major 
rivals. 
(478)  In the second place, in the software markets where Red Hat is active, these IBM 
offerings are not critical complementary products without which competing 
software vendors  could not develop or effectively sell their software on the 
market . 
(479)  In the third p lace, the Notifying Party submits that t here is no large common pool 
of customers for Red Hat’s software products and  IBM’s offerings in the above -
listed segments . 
(480)  The Notifying Party also submits that the merged entity will not have the 
incentive  to engag e in anticompetitive leveraging post -Transaction. Such a 
strategy would not be profitable because customers would rather move away from 
IBM’s proprietary software than adopt Red Hat’s software offering if it is not its 
preferred solution, for at least the  following reasons . 
(481)  In the first place, c ustomers’ preferences across combinations of IT products are 
heterogeneous . 
(482)  In the second place, customers’ preferences across IT products change over time 
and technology continuously evolves, many customers prefer t o mix and match 
complementary software and service offerings from different vendors and avoid  
being locked into a particular vendor . 
(483)  In the third place, system integrators and resellers offer customers mix -and-match  
solutions integrating products and funct ionality from different vendors.  
5.3.7.3.  Market shares  
Deployment -Centric Application Platform  
(484)  The Parties activities overlap in this IDC segment and their combined market 
share exceeds 20%. The market shares are therefore presented under section 5.2.2   
above.  
Business Process Management Suites  
(485)  The Parties activities overlap in this Gartner segment and their combined market 
share exceeds 20%. The market shares are therefore presented under section 5.2.3  
abov e. 










 
107 between 30% and 40%, the Commission consi ders that there are a number of 
credible alternatives available , as there are at least three significant competitors in 
each of those market segments . This is confirmed by the results of the market 
investigation for all but one market segment, as , with the  exception of the 
segment for Transaction Processing Monitors, the vast majority of customers 
consider that in each segment listed in section 5.3.7.3 , there are sufficient credible 
alternatives to IBM’s products .332 
(499)  Second, there is only a limited overlap between Red Hat’s and IBM’s customer 
bases. T he Commission asked the Parties to estimate, for each Red Hat product, 
the proportion of Red Hat customers that are also customers of one of the IBM 
products in any of the market segments in which IBM has an individual market 
share above 40% at the worldwide or EEA level in 2018 (Transaction Processing 
Monitors (IDC and Gartner), Paid Unix and Other OS (Gartner), Message -
Oriented Middleware (Gartner), Storage Management Mainframe Software 
(Gartner), and WEB Access  Management (Gartner) ).333  
(500)  The analysis of the Parties covered IBM customers with revenues for the relevant 
software segments in 2018, and this included revenues from  the purchase of new 
(perpetual or fixed term) licenses as well as annual subscription and support 
(“S&S”) revenue.334 Taken together, these customers materially cover the entire 
installed base for the relevant IBM software products.335 
(501)  The analysis of the Par ties shows that there is a limited  overlap between Red 
Hat’s customers and IBM’s customer base of IBM products that belong to any of 
the market segments in which IBM has an individual market share above 40% at 
the worldwide or EEA level in 2018. It shows t hat the vast majority of Red Hat’s 
customers overall (more than […]%) was not also a customer of IBM products in 
any one of the relevant segments. Actually, there is not a single Red Hat product 
for which more than […]% of the customers are also customer s of any of the IBM 
products in any of the above -mentioned segments. As regards in particular the 
segment for Transaction Processing Monitors for which just more than half of the 
customers considered that there were not sufficient credible alternatives to IB M’s 
products , there is not a single Red Hat product for which more than […]% of the 
customers are also customer s of IBM ’s product s belonging to the segment 
Transaction Processing Monitors.336 
(502)  Moreover, even where a customer overlaps between a Red Hat product  and an 
IBM product, these products are often not used together for the same use cases, 
and therefore a degr adation of interoperability would have at most an 
insignificant  effect on demand for competing products of Red Hat. The 
Commission therefore conside rs that IBM will have limited ability to affect the 
demand for Red Hat’s and its competitors’ offerings through bundling/tying or 
relative degradation of interoperability.  
                                                 
332  See replies to Questionnaire Q 2 to customers , question  53. 
333  See Notifying Party’s respo nse to Commission’s RFI 16 and RFI 18.  
334  IBM Software Subscription and Support (“S&S”) entitles customers to product updates, bug fixes and 
technical support for their software. For more information, please see 
https://www.ibm.com/software/passportadvanta ge/software_subscription_support_ov.html.   
335  […]. 
336 See Notifying Party’s response to question 3.b of RFI 16 and to question 2.b of RFI 18.  
 
108 (503)  As regards the merged entity’s potential incentive  to leverage strong IBM market 
positions into Red Hat positions, the Commission notes that it has not found a 
single internal document indicating that this was one of the synergies considered 
by the Notifying Party. Moreover, not a single competitor of Red Hat expressed 
any such concern.  
5.3.8.  Potential input foreclosure of RHEL competitors by withholding access to 
RHEL’s source code  
5.3.8.1.  Potential concern  
(504)  Red Hat’s business is based on open source technologies and, as a matter of 
principle, the source code of all of the software that Red Hat develo ps is licensed 
under terms that permit any recipient to access, use, change or share this source 
code.337 With respect specifically to RHEL ’s source code , Red Hat’s practice has 
so far enabled competitors  (including Oracle338) to access and use this source 
code in order to offer clones of RHEL  (“RHEL clones”  or replicates  of RHEL ). 
The main RHEL clone is Oracle Linux which was launched in 2006.339  
(505)  Based on feedback from the market investigation and in particular on a co ncern 
raised by Oracle, t he Commission has assessed a potential competitive concern , 
whereby  the Merged E ntity would have the ability and the incentive to  foreclose  
access to RHEL’s source code  which is a key input  in order to enable competitors 
to offer replicates of RHEL.  
(506)  According in particular to Oracle, such a foreclosure strategy would prevent 
RHEL’s competitors from continuing to offer alternative Linux distribution which 
are fully compatible with RHEL.340 Oracle claims that this would in turn results in 
a significant in crease of the costs and efforts that customers have to incur in order  
to switch away from RHEL. In particular, Oracle explains  that, while switching 
from RHEL to a RHEL c lone would be  “seamless ”, switching from RHEL to any 
other Linux distribution would re quire customers to  recertify, retest and reinstall 
applications in full in a process, which would also require potential application 
modifications.341 Oracle  therefore claims that  the competitive pressure currently 
exercised by RHE L clones and in particular by Oracle  Linux  would be 
undermined .342  
(507)  Based on the above, such a strategy aimed at foreclosing RHEL clones by 
preventing access to RHEL’s source code could potentially result in an increase 
of Red Hat’s market power  on a market for paid Linux -based server  operating 
systems  where, as explain ed in more details at the above paragraph  (392) , Red 
Hat’s current market share exceeds 70% . Such an  increased market power could 
in turn  potentiall y result in a higher priced RHEL  or in a decrease in the quality  of 
                                                 
337  See Form CO,  paragraphs 19 and 227. For example at paragraph 227, the Notifying Party states: “ In 
addition, Red  Hat makes the source code for its products available for download under open source 
licenses ”. 
338  On Oracle’s current access to RHEL’s source code see paragraph (522)  below.  
339  The Notifying Party also mentions the following RHEL clones: Scientific Linux , Red Hat sponsored 
CentOS project and Amazon Linux 2 . See Form CO, paragraph 227.  
340  See Oracle’s reply to Questionnaire Q1 to competitors, question 41.  
341  See Oracle’s reply to Questionnaire Q1 to competitors, question 41.  
342  See Oracle’ s reply to Ques tionnaire Q1 to competitors, question 41.  
 
109 this product . It could also potentially be leveraged in a wide range of hardware 
and software markets  which interact with RHEL .   
5.3.8.2.  Notifying Party’s view  
(508)  The Notifying Party submits th at, after the Transaction, the M erged Entity will 
have the same constraints o n its ability to interfere with Oracle or any other 
competitors’ access to RHEL source code, and if anything less incentive than Red 
Hat may have to do so.343 The Notifying Party ’s view is based  inter alia  on the 
following  arguments :344 345  
(509)  First, u nder the General Public Licence (“GPL”) , Red Hat’s distributees, 
including its customers and developers, are free to distribute RHEL open source 
code under the GPL and could do so easily and promptly in response to any 
foreclosure attempt.   
(510)  Second, even if Red Hat cou ld interfere with Oracle’s access to RHEL source 
code under the GPL, it has not done so pre -merger because of its dependency on 
the community of open source developers, which will continue post -merger.  
(511)  Third , the Notifying Party disagrees with Oracle’s cl aim that Oracle Linux is an 
exact substitute for RHEL  and that switching  between RHEL and Oracle Linux  is 
seamless . Indeed, t he Notifying Party claims that, as for any change of server 
operating systems, a switch from RHEL to Oracle Linux would require to retest 
applications in full and may require the reinstallation of applications, including 
potential modifications, as well as potential recertification.  
(512)  Fourth , the Notifing Party argues that m igrating workloads between RHEL and 
other Linux distributions,  including SUSE and Ubuntu, does not present 
significant barriers and regularly occurs in practice.   
(513)  Fifth, the Notifying Par ty argues that the Merged  Entity would have little to gain 
in additional RHEL revenues from trying to divert RHEL clones’ customers to 
RHEL given that RHEL clones’ sales are extremely small.  
(514)  Sixth, the Notifying Party argues that IBM will not be incentivized, post -
Transaction, to di vert sales from Oracle Linux to increase IBM’s sales in other 
product areas where IBM competes with Oracle because, in particular, given 
Oracle Linux’s negligible market share, the amount of Oracle products that might 
compete with IBM offerings sold togeth er with Oracle Linux is limited. 
Therefore, IBM would not make any material gain from trying to divert 
customers from Oracle to win customers on other types of software for which it 
competes with Oracle, such as databases and application servers.  
(515)  Seventh , the Notifying Party argues that  RHEL clones represent only a very small 
share of server operating systems (and even of Linux server operating systems). 
                                                 
343  See the Notifying Party’s response to the Commission’s RFI 19. 
344  A number of other arguments put forward by the Notifying Party are described in the below section 
5.3.8.3  (“Commission’s assessment”).  
345  See the Notifying Party’s response to the Commission’s RFI 19, question s 1, 2 and 3 . 
 
110 Even if RHEL clones were to be foreclosed, customers would still have a number 
of other Linux options to  which they could easily switch . 
5.3.8.3.  Commission’s assessment  
(516)  Overall, t he Commission considers that , post -Transaction, the Merged Entity will 
not have the ability and incentive to foreclose  the competitive pressure exercised 
by RHEL clones, either (i) directly  by restricting third party’s access to RHEL’s 
source code  or (ii) indirectly by degrading access to releases of updates and 
patches for RHEL’s source code  in such a way that it would effectively become 
impossible to continue marketing RHEL clones , or (iii ) by implementing a 
combination of (i) and (ii),  for the reasons set out below. In any event, the 
Commission considers that such  foreclosure strategy would not have a significant 
detrimental effect on competition . 
Oracle’s claim  
(517)  The vast majority of the software packages in RHEL are licensed under 
“copyleft” open source licen ces that require the distributor of a binary to make the 
source code of the binary available.346 Most of these copyleft packages are 
specifically licensed under  the GPL , which contains a detailed requirement that 
distributors of binary versions provide the complete corresponding  source code of 
the binary.  
(518)  Oracle does not claim that the Merged Entity would have the ability and incentive 
to infringe the terms of RH EL’s open source licences. Instead, Oracle claims that 
the GPL that governs the use of the Linux kernel and according to which any 
derivative works of the Linux kernel code has to be made availab le does not 
preclude the Merged E ntity from  effectively forec losing Oracle ’s access to the 
RHEL source code .347  
(519)  More specifically, Oracle explains that in order to be able to offer a RHEL clone, 
as it currently does, it is dependant on full and timely access to RHEL’s source 
code.348 In this respect, Oracle claims that  the Merged Entity will have the 
technical ability to  delay or degrad e access to RHEL’s source code in such a way 
that it would effectively become impossible to continue marketing RHEL clones.  
(520)  Oracle further explains that this could be achieved without in fringing the GPL by 
a combination of (i) not making available the source code to third party other than 
the direct recipients of the binary and /or (ii) degrading access to releases of 
updates and pa tches for RHEL’s source code , i.e, by changing the method and/or 
timing for such releas es. With respect to the former, Oracle explains that the GPL 
requires the distributor to provide complete corresponding source code to all 
direct recipients of the binary, but not necessarily to the public at large . In this 
respect, Oracle claims that Red Hat’s current contract terms “ restrict the 
customer’s ability to share the source code with others ” and that, while so far Red 
Hat has not done so, the Merged Entity could seek to enforce these contractual 
                                                 
346  See the Notifying Party’s response to the Commission’s RFI 19, question 1 . 
347  See minutes of a call with Oracle dated 9 April 2019, paragraph 14.  
348  See minutes of a ca ll with Oracle dated 9 April 2019, paragraph 14.  
 
111 terms in order to pre vent Oracle from accessing RHEL’s source code.349 With 
respect to the latter, Oracle explains that such behaviours  would not infringe the 
GPL since this open source licence  does not provide any specific obligations 
around the method and timing of sharing updates and patches to the source code.  
As regards the Merged Entity’s ability  to restrict third party’s access to RHEL’s source 
code  
(521)  The Commission considers that it is un likely that the  Merged Entity would have 
the technical ability to completely foreclose its competitors’ access to RHEL’s 
source code through contractual restrictions  without infringing the GPL . This is 
based on the following reasons.  
(522)  First,  the Commission notes  that Red Hat’s current practice is to make available 
the source code for RHEL in two ways: first, Red Hat makes source code 
available for download to all RHEL distribute es (including to enterprise paid 
customers and to developers, partners and potent ial customers irrespective of 
whether such user has a paid subscription ), and second Red Hat publishes the 
RHEL’s source code on the publically accessible CentOS project website.350 
Currently, Oracle or any other third party can therefore directly access RHE L’s 
source code on the CentOS project website.   
(523)  Second, even if Red Hat was to change its current practice of making RHEL’s 
source code available to the public (as it cou ld do without infringing the GPL ), 
the Commission consider s that Red Hat’s current con tractual terms for the 
distribution of RHEL would not give Red Hat the ability to restrict third party’s 
access to RHEL’s source code since, currently, the only condition for a third party 
to be contractually allowed to share RHEL’s source code with Oracle or any other 
third party is that all occurrence of Red Hat trademarks  should be removed.351 
Oracle or any third party could therefore gain access to RHEL’s source code by 
asking one of the many Red Hat distribute es352 to pass on the RHEL source code, 
as long as they strip out the Red Hat trademark. In this respect , the Notifying 
Party  states that “ Red Hat’s cont ract terms do not restrict the customer’s ability 
to share the source code with others ”353 and also specifies that […].354 
(524)  Third, the Commission notes that another potential alternative way for Oracle or 
any other third party to gain access to RHEL’s source co de in the event where it 
would not be publicly available any more, could be for Oracle or any other third 
party to indirectly become a RHEL distributee. In this respect, the Notifying Party 
explains that “ Oracle or the third party itself, or any of its dev elopers employees, 
could become a Red Hat customer or developer ” in which case the GPL would 
                                                 
349  See minutes of a call with Oracle dated 9 April 2019, paragraph 14.  
350  See the Notifying Party’s response to the Commission’s RFI 19, question 1 . 
351  See the Notifying Party’s response to the Commission’s RFI 19, question 1 . 
352  According to the Notifying Party (see the Notifying Party’s response to the Commission’s RFI 19,  
question 1 ), there are “ millions of RHEL users, including not only thousands of enterprise customers 
worldwide who purchase a RHEL suppo rt subscription in return for a fee, but also over 1.4 milion 
developers, who are entitled to a self -supported, development -only subscription that comes with full 
access to the code ”.  
353  See the Notifying Party’s response to the Commission’s RFI 19, quest ion 1 . 
354  See the Notifying Party’s response to the Commission’s RFI 19, question 1 . 
 
112 require that it be provided with the complete RHEL source code.355 For example, 
an Oracle employee (or someone acting on behalf of Oracle although not an 
employee) c ould potentially become part of the community of 1.4 million 
developers, who are entitled to a self -supported, development only RHEL 
subscription that comes with full access to the code.356  
(525)  Fourth , the Commission notes that the Transaction does not increase  Red Hat’s 
pre-existing ability to restrict third party’s access to RHEL’s source code.  
(526)  In any case, as explained in the below section, the Commission considers that the 
Merged Entity will not have the ability and incentive to foreclose the competitive 
pressure exercised by RHEL clones by withholding or degrading ac cess to 
RHEL’s source code . 
As regards the Merged Entity’s ability to foreclose the competitive pressure exercised by 
RHEL clones by withholding or degrading access to RHEL’s source code  
(527)  The Commission considers that the Merged E ntity will face similar constraints as 
Red Hat pre-Transaction in its ability to for eclose access to RHEL’s source 
code .357 The Commission therefore considers that , post -Transaction, the Merged 
Entity will not  have th e ability to foreclose RHEL clones by withholding or 
degrad ing acess  to RHEL’s source code  for the reasons set out below .358 
(528)  First, the Commission considers that it is unclear whether the Merged Entity will 
have the technical capacity to foreclose RHEL clone s by degrading access to 
RHEL’s source code. This is in particular based on the fact that, as reported by 
several market respondents ,359 Red Hat has already undertaken certain actions in 
the past in order to make access to RHEL’s source code more difficult. However, 
as confirmed by Oracle, these actions have so far not prevented it from offering a 
RHEL clone.360  
(529)  More specifically, according to Oracle , in 2009, Red Hat has changed the way in 
which updates to RHEL’s source code were packaged in order to make it more 
difficult to understand what had changed between subsequent versions of 
RHEL.361 However, with respect to this specific Red Hat behaviour, Oracle 
                                                 
355  See the Notifying Party’s response to the Commission’s RFI 19, question 1 . 
356  See the Notifying Party’s response to the Commission’s RFI 19, question 1.  
357  The Commission notes that the analyses of the incentive and the ability to foreclose cannot be easily 
separated. The considerations discussed below at paragraphs (527)  to (542)  therefore do not only 
constraint the Merger Entity’s ability to foreclose but a lso its incentive to do so. Conversely, the 
considerations discussed at paragraphs (543)  and (559)  below, do not only constraint the Merged 
Entity’s incentive to foreclose but also its ability to do so.   
358  The Commission considers that the same line of a rguments as set out at paragraphs (531)  to (559)  
would similarily apply to any potential concern relating to the foreclosure of the source code of any 
other open source products of either Red Hat or IBM. The Commission therefore considers that the 
Merged E ntity is unlikely to have the ability and the incentive to significantly harm competition 
through the foreclosure of the source code of any other open source products of either Red Hat or 
IBM .   
359  See for example Oracle’s email to the case team dated 11 J une 2019 and replies to Questionnaire Q1 to 
competitors , question 65.  
360  See Oracle’s email to the case team dated 11 June 2019.  
361  See for example minutes of a call with Oracle dated 9 April 2019, paragraph 13; Oracle’s email dated 
11 June 2019 and replie s to Questionnaire Q1 to competitors, question 64 . More specifically, while 
 
 
113 explains that, while this was more time consuming, it was able to “ separate 
patches in a timely enough mann er” without it having a negative impact on its 
customers.362 Based on this example, t he Commission considers that it is unclear 
at which point Oracle would lose the technical ability to accommodate changes in 
the method and /or timing for the release of upda tes and patches for RHEL’s 
source code.  
(530)  However, since the GPL does not provide for any specific obligations  with 
respect  to the method and/or timing  for the release of RHEL’s source code, the 
Commission also notes that  the Merged Entity could in theory d ecide to impose 
even more drastic changes in order to effectively prevent Oracle or any other 
competitors from offering RHEL clones.  In particular , Oracle notes that a delay in 
its access to updates and patches for RHEL’s source code could expose its 
custo mers to “ catastrophic security issues ”. Oracle further explains that such a 
delay  would prevent it from  continu ing to offer its RHEL clone.363 However, 
Oracle does not provide further  details (i) on the concrete actions  that the Merged 
Entity c ould potential ly carry out in order to delay access to RHEL’s source code , 
and (ii) on the reasons why Oracle would not have the technical ability to 
accommodate such actions in a way that would make it possible for Oracle to 
continue offering its RHEL clone.       
(531)  Seco nd, even if the Merged Entity could deteriorate access to RHEL’s source 
code to the extent where it would become impossible to offer a RHEL clone, the 
Commission considers that the  Merged Entity would not have the ability to drive 
competitors currently rel ying on a RHEL clone out of the market for  paid Linux -
based server operating systems  since these competitors could always continue 
competing with a forked Linux distribution based on RHEL.  
(532)  In this respect, Oracle indicates  that, in the event where it would  not get  full and 
timely access to RHEL’s source code any more, it would react by developing its 
own forked version of RHEL.364 Any other vendors relying on a RHEL clone 
could therefore likely also decide to no longer rely on RHEL updates, patches, and 
fixes , and develop its own technical solutions.  
(533)  Oracle however claims that the constraint it would be able to exercise on RHEL 
would be significantly reduced since the switching costs that customers would 
have to incur for switching from RHEL to such a forked L inux distribution would 
be significantly higher.  
(534)  As explained above at paragraph  (402) , on the issue of switching, the 
Commission acknowledges that efforts are required to switch from one Linux OS 
to another one . However,  based on its market investigation  (see above paragraph s 
(402)  and (404) ), the Commission considers that switching is feasible and that the 
threat of customers switching away from RHEL to alternative Linux distributions 
would most likely make any type of exclusionary practice leveraging RH EL not 
profitable and in any even t ineffective in foreclosing rivals.  
                                                                                                                                                 
Red Hat had previously released updates in clearly identifiable individual fixes/patches, in 2009, Red 
Hat allegedly changed this method and started to provide fixes/patches in an undifferentiated mass.  
362  See Oracle’s email to the case team dated 11 June 2019.  
363  See minutes of a call with Oracle dated 9 April 2019, paragraph 14.  
364 See for example reply  to Questionnaire Q1 to competitors,  question 61.  
 
114 (535)  This view is shared by the Notifying Party , which  explains that  “even if Oracle or 
another vendor relying on a RHEL clone had to create its own forked distribution 
of RHEL (which it does  not have to do), it would in no way affect customers' 
ability to switch to Oracle Linux or to another forked distribution of RHEL as a 
competitive alternative ”.365 In particular, the Notifying Party argues that, contrary 
to Oracle’s allegation, while it is true that Oracle Linux is based on RHEL, 
already today Oracle Linux is not a perfect clone of RHEL and switching from 
RHEL to Oracle Linux would require some adjustements. In addition, the 
Notifying Party confirms that , while switching existing workloads f rom one 
Linux OS to another always requires some level of effort in terms of application 
reinstallation and testing, switching does routinely occur .366 In the same vein, the 
Notifying Party states that  “entreprise customers can and do switch among Linux 
distributions without significant difficulty ”367 and it identifies a number of 
examples of large companies having  performed a complete switch from RHEL to 
SUSE  including for existing and new workloads . These companies  include  
[…].368 
(536)  In line with the Notifying Party’s view, the Commission notes that, as explained 
above at paragraph s (402)  to (404 ), even if most customers having responded to 
the Commission’s market investigation consider that switching from one Linux 
OS to another would  not be easy or may even be very difficult, many customers 
however explain that it is feasible and some state that they would consider it on a 
case by case basis assessing costs and benefits of doing so .369 In particular, with 
respect more specifically to sw itching away from a RHEL clone, a large customer 
which is also a competitor of the Parties on certain markets,  has indicated that, 
while it is currently using a RHEL clone for its servers (i.e., CentOS which is the 
community, free version of RHEL), if foll owing the Transaction, this RHEL 
clone  was to become unavailable, it would be able to switch to a different Linux 
distribution. This customer/competitor  however indicates that such a switch 
would be costly.370   
(537)  Third , in any event, in addition to the potent ial new forked versions of RHEL, 
there are several alternative paid Linux  distributions which do not depend on 
RHEL’s source code in the same extent as Oracle Linux currently  does and which 
could continue being credible alternatives to RHEL even in the event where the 
Merged Entity would attempt to foreclose access to RHEL’s source code .  
(538)  As explained above at paragraph  (392) , this is in particular the case for SUSE’s 
SLES which has a [10-20]% market share on the paid Linux -based server 
operating systems market and Canonical’s Ubuntu  whose market share is 
equivalent to Oracle’s market share  at a level of  around [5-10]%. Indeed, a s also 
explained at paragraph s (402)  to (404) , a number of customers see these paid 
Linux distribution as credible alternatives to RHEL and there are regular  
examples of customers switching fr om RHEL to these alternative distributions. In 
addition, as explained by one competitor in its response to the Commission’s 
                                                 
365  See the Notifying Party’s r esponse to the Commission’s RFI 19 , question 3.  
366  See the Notifying Party’s response to the Commission’s RFI 19, question 3.  
367  See the Notifying Party’s response to the Commission’s RFI 19, question 3 . 
368 See the Notifying Party’s response to the Commission’s RFI 19, question 2 . 
369  See replies to Questionnaire Q2 to customers, questions 41 and 44.  
370  See replies  to Questionnaire Q1 to competitors, question 62. 
 
115 market investigation, by contrast with Oracle Linux which is described as a 
“RHEL derivatives ”, SUSE’s SLES and Canonical’s Ubuntu are described as 
“more independent of RHEL ”.371 
(539)  With respect specifically to SUSE, the Commission notes that while, SUSE offers 
a service (i.e. SUSE Linux Enterpri se Server with Expanded S upport ) based to  a 
certain extent on RHEL’s source code, this service is only an ancillary service 
aimed at facilitating the migration towards SUSE’s own SLES Linux distribution. 
With respect to this specific service, the Notifying Party explains that it 
essentially consists in SUSE ’s marketing updates and fixes to its customers that 
are compatible with both SUSE and RHEL so that customers can “ purchase a 
one-stop-shop Linux OS support subscription and keep access to full commercial 
support for both RHEL an d SUSE ”.372 In this regard, the Notifying Party 
considers that SUSE’s ability to offer such a service for its customers using both 
RHEL and SLES does not depend on the availability of RHEL’s source code . 
Indeed, the Notifying Party states: “the availability of the RHEL source code is in 
no way a requirement for SUSE to provide this one -stop-shop service to 
customers ”.  
(540)  With respect specifically to Canonical, while Canonical’s own Linux distribution 
relies to some extent on RHEL’s source code, by contrast with  Oracle Linux , it 
cannot be considered as a RHEL clone since Ubuntu is largely based on 
Canonical’s own technology.373 In addition, while Canonical considers that any 
delay or deterioration in accessing RHEL’s source code would represent a 
challenge that it would need to overcome, in response t o the Commission’s 
market investigation, Canonical also indicates that it expects that , as a result of  
the Transaction , certain RHEL customers may be more willing to consider 
alternative Linux distributions and that this may create additional business 
opportunities for Ubuntu .374 
(541)  In any event, if SUSE and Canonical’s access to RHEL’s source code was to 
become more difficult post -Transaction, the Commission considers likely that, 
similar to Oracle  (see above paragraphs (531) to (536) ), SUSE and Canonical 
could  fork the specific component of RHEL’s source code that they currently use 
for their own Linux distribution in order to stop relying on  RHEL’s input.     
(542)  Overall, t he Commission therefore considers that, even if the Merged Entity was 
to engage in a strategy aimed at foreclosing to a certaint extent access to RHEL’s 
source code, there would still be sufficient credible alternatives for customers 
willing to  switch  away from RHEL  since (i) even if Oracle or another vendo r 
relying on a RHEL clone had to create its own forked distribution of RHEL, the se 
vendors would still constitute credible alternatives for customers willing to  switch  
away from RHEL (see above pa ragraphs (531)  to (536) ) and (ii) several 
alternative paid L inux distributions which do not depend on RHEL’s source code 
                                                 
371  See replies  to Questionnaire Q1 to competito rs, question 41.  
372  See the Notifying Party’s response to the Commission’s R FI 19, question 3.  
373  See the Notifying Party’s response to the Commission’s RFI 19, question 2. See also replies to 
Questionnaire Q1 to competitors, question 41.  
374  See Canonical’s response to question 67: “ However, some enterprise will be more inclined to look for 
an alternative to RHEL given the association with IBM ”. 
 
116 in the same extent as Oracle Linux currently does would continue being credible 
alternatives to RHEL.  
As regards the Merged Entity’s incentive  to foreclose the competitive pressure exercised 
by RHEL clones by withholding or degrading access to RHEL’s source code  
(543)  The Commission considers that the Merged E ntity will face similar constraints as 
Red Hat pre -Transaction in its incentive  to for eclose access to RHEL’s source 
code . The Commission therefore considers that , post -Transaction, the Merged 
Entity will not have the incentive  to foreclose RHEL clones by withholding or 
degrad ing acess  to RHEL’s source code  for the reasons set out below . 
(544)  First, the Commission considers that  the current constraint exercised  by the risk 
that any attempt from Red Hat to foreclose RHEL’s source code would trigger a 
negative reaction from the developer community and/or RHEL’s clients resulting 
in a significant detriment al impact on Red Hat’s business will continue to apply to 
the Merged Entity post -Transaction. This is based on  the following reasons.  
(545)  In the first place, Oracle and other competitors have indicated in response to the 
Commission’s market investigation that,  in 2009, Red Hat has already undertaken 
concrete steps in order to make access to RHEL’s source code more difficult (see 
above paragraph  (529) ). However, as also explained at paragraph  (529) , this 
strategy has not prevented RHEL’s competitors from offering RHEL clones. 
According to Oracle, the main reason why Red Hat has been unable to foreclose 
access to RHEL’s source code  is that such behaviour has been “ so far tempered 
by severe reactions from the open source community ”.375  
(546)  In the second place , all competitors  having expressed their view confirm  that, if 
the Merged E ntity were to change Red Hat’s current commitment towards open 
source this would trigger a reaction from the open source commun ity. In 
particular a number of competitors consider that the adverse effect on the Merged 
Entity’s business would be very significant or significant.376 One of them  (which 
is also a large customer) , for example, states “ IBM appears to be chasing the 
open -source community with this planned acquisition, and Red Hat’s business 
depends on the open -source community in order to function. Losing their support 
would be incredibly detrimental ”377 while another one  states “ Red Hat would 
become another proprietary vendor and lose the power with the community, who 
they depend on for contributions back to the open source code. Innovation within 
                                                 
375  See Oracle’s replies  to Questionnaire Q1 to competitors,  questions 39 and 66.  See also minutes of a 
call dated 9 April 2019 with Oracle, paragraph 13. See also the also the following similar statement 
from the Notifying Party: “ even if Red Hat could interfere with Oracle’s access to RHEL source code 
under the GPL, it has not done so pre -merger because of  its dependency on the community of open 
source developers, which will continue post -merger ” (see Notifying Pa rty’s reply to RFI 19,  question 
1). 
376  While certain  competitors (e.g. Oracle) consider that the detrimental effect on the Merged Entity 
would be “limited”, these responses seem to be mainly based on the large scale of IBM which would 
enable to Merged Entity to better weather any negative reaction from the open source community. 
With respect to this argument, the reasoning sets out at paragraphs (557) to (559)  in relation to 
Oracle’s specific claim applies mutatis mutandis .  
377  See replies  to Questionnaire Q1 to competitors, question 65.  
 
117 the merged entity would slow and other open source vendors would gain 
marketshare. ”378  
(547)  In addition, in line with the above competitor s’ feedback, all the open source 
foundation that have responded to the Commission’s market investigation 
consider that, if the Merged E ntity were to change Red Hat’s current commitment 
towards open source this would trigger  a reaction from the open source 
commun ity.379 As explained in more details below at paragra ph (568) , open 
source foundation s host key open source projects and the Commission therefore  
considers that they are  likely to have a broad insight on how the open source 
community could be expected to  react .  
(548)  As apparent from their responses to the Commission’s market investigation, in 
line with the Notifying Party’s claim, open source foundation s expect that any 
modification of Red Hat’s open source participation could significantly impair the 
value o f IBM’s investment in Red Hat. In particular, one of them  indicates  that it 
would expect the adverse effect on the  Merged E ntity’s business to be very 
significant  based in particular on the high risk that a large number of Red Hat’s 
key developers would le ave the company , as apparent from the following 
statement : “Well, if Red Hat's developers leave en masse it would mean that the 
money spent to acquire Red Hat would have been completely wasted. I would 
assume that the most likely outcome from that scenario  would be bankruptcy of 
IBM”.380  
(549)  Similarily, w hile another one  considers that the adverse effect on the Merged 
Entity would be overall limited, this f oundation clarifies  that this is because of the 
relatively limited share that Red Hat will represent in the  Merged Entity ’s total 
turnover. W ith respect specificly to the effect on Red Hat’s business, that 
foundation  confirms that the effect could be significant : “however the impact 
could well be significant for the portion of the merged enti ty’s overall business 
corresponding to Red Hat ”.381  
(550)  Finally, a third one  considers highly unlikely that the Merged Entity would 
become less “open” as a result of the Transaction. In this respect,  it states the 
following: “h aving worked with both groups extensively (IBM and Red Hat) I 
consider it highly unlikely that the merged entity will do anything to lessen the 
"openness" Indeed I expect they will be at pains to ensure the resultant entity is -
more - open than less ”.382 
(551)  In the third place, the Notifying Party has repeate dly stressed  the importance of 
the open source community’s support for Red Hat ’s business and the dramatic 
impact that antigonizing such community could have on Red Hat’s business. For 
example, the Merged Entity explains that it is “vital for Red Hat (and post-
Transaction, IBM) to maintain its good standing with the developer community ” 
since  “any attempt to affect the neutrality or openness of RHEL would alienate 
                                                 
378 See replies  to Questionnaire Q1 to competitors,  question 65. A number of other similar statements can 
be found in the competitors’ responses to question 64 and 65.   
379  See replies to Questionnaire Q3 to open source foundations, question 6.  
380  See replies to Questionnaire Q3 to open source foundations, question 7 . 
381  See replies to Questionnaire Q3 to open source foundations, question 7.  
382  See replies to Questionnaire Q3 to open source foundations, question 6.  
 
118 many of the key developers (both within Red Hat and outside) upon whom Red 
Hat relies for its commercial offerings ”.383  
(552)  In the same vein, the Notifying Party explains that it has all the incentive to share 
the source  code  of its products with the “upstream” developer community in a 
timely manner  since Red Hat needs the input of this community to mai ntain and 
further develop its products. For example, the Notifying Party explains that 
“given the small percentage of Linux code actually developed by Red Hat, 
continued developer mindshare is the single most important asset for Red Hat to 
ensure the conti nued success of RHEL and other Red Hat products and timely 
sharing of code is critical to this ”.384 
(553)  Second , the claim that the  Merged Entity would have an inc entive to delay or 
degrad e access to RHEL’s source code does not seem  supported by IBM’s 
rationale for the Transaction as stated in the Recitals in the Agreement and Plan 
of Merger and […].385  
(554)  Indeed, as explained in more details above at paragraph  (401) , the Commission 
acknowledges that IBM has made firm, public commitments to maintain and 
continue Red Hat’s open source business model and its neutral “Switzerland” 
strategy in working with third parties. In addition, internal documents provided to 
the Commission show that […]. 
(555)  Third , Oracle  claims  that, unlike Red Hat, post -Transaction the Merged Entity 
will have the ability and incentive to for eclose Oracle’s access to RHEL’s source 
code essentially because  the Merged Entity’s more diversified business will allow 
it to “ weather any temporary b acklash better than Red Hat alone, which is 
dependent on RHEL support revenues ”.386 With respect to this backlash, Oracle 
acknowledges that a “ developer backlash ” could be expected. However, it argues 
that a “ customer backlash ” is unlikely since “ enterprise customers who pay 
support are generally indifferent to whether vendors are open source or not ”.387 
In addition, Oracle argues that the merged entity will have “ an extra incentive to 
undermine Oracle Linux by blocking access to RHEL’s code ” since “ Oracle 
Linux helps O racle compete with IBM in servers, middleware and database 
management systems ”.388  
                                                 
383  See the Notifying Party’s response to the Commission’s RFI 19, question 1 . 
384  See the Notif ying Party’s response to the Commission’s RFI 19, question 1 . 
385  See for example the Agreement and Plan of Merger by and among International Business Machines 
Corporation, Socrates Acquisition Corp. and Red Hat, Inc. dated October 28, 2018. IBM agreed to 
operate Red Hat as a distinct business unit and that Red Hat would “ remain an open and neutral 
platform, partnering broadly with information technology participants  […] and continuing to support 
the open source community ”. 
386  See Oracle ’s reply  to Questionnaire Q1 to competitors, question 39 and  minutes of a call with Oracle 
dated 9 April 2019, paragraph 16.  
387  See minutes of a call dated 9 April 2019 with Oracle, paragraph 15.  
388  See minutes of a call with Oracle dated 9 April 2019, paragraph 15. I n its reponse to to Questionnaire 
Q1 to competitors, question 39, Oracle also claims that its con cerns are “ exacerbated ” by IBM’s 
ability to influence decisions th rough its “ massive consulting business ”. With respect to this argument 
as explained at the ab ove paragraph (467)  and followings, t he Commission considers that the Merged 
Entity will not have the ability to significantly influence customers’ purchasing decisions in favour of 
Red Hat products and to the detriment of competing vendors’ products, let alone significantly 
foreclose access to a sufficient customer base to Red Hat’s competitors, for the following reasons.  
 
119 (556)  The Commission considers that this specific claim from Oracle can be rejected 
based on the following reasons.  
(557)  In the first place , as explained above at paragraph s (544)  to (552) , based on its 
market investigation, the Commission considers that if, post -Transaction, the 
Merged Entity was to foreclose access to RH EL’s source code this would likely 
have a significant detrimental effect on Red Hat’s business . While certain 
competitors having responded to the Commission’ s market investigation consider 
that customers  do not attach too much importance to whether a produ ct is open 
source or not as long as it delivers the functionalities they need  and would 
therefore not necessarily switch away if RHEL was to  become less open source , a 
number of other competitors consider that, if the Merged Entity  was to deviate 
from Red Hat’s current commitment to open source, there would likely  be 
customers switch ing to other open source alternatives.389 In any case, in line with 
the feedback of several  market participants, the negative reaction from the open 
source community alone could a lready have a significant detrimental impact on 
Red Hat’s business since , as explained in more details at paragraph s (544)  to 
(552) , Red Hat’s busine ss relies to a great extent on contributions from the  open 
source community.390 
(558)  In the second place , it is unlikely that a strategy aimed at foreclosing RHEL 
clones by preventing access to RHEL’s source code could be leveraged in order 
to capture sufficient additional sales so as to offset the detrimental effect attach ed 
to such a foreclosure strategy (see above paragraph). In particular, it is unlikely 
that such a foreclosure strategy would enable the Merged Entity to advantage its 
hardware and software prod ucts by degrading the interoperability of competing 
products with RHEL since, as explained above at paragraph s (531)  to (542) , 
customers will likely still be able to use third party hardware and software 
products in combination with a number of alternative paid Linux operating 
systems. This is for  example the case for Oracle’s servers, middleware and 
database management systems. If the Merged Entity was to (i) foreclose access to 
RHEL’s source code and (ii) limit the interoperability of these Oracle products 
with RHEL, customers could still use these products in combination either with 
Oracle’s forked version of RHEL or with other paid Linux operating systems such 
as SUSE’s SLES or Canonical’s Ubuntu.  
(559)  In the third place , while Oracle acknowledges that a strategy aimed at preventing 
Oracle Linux fro m using RHEL’s source code would involve  a certain degree of 
“backlash” in particular on the part of developers, Oracle does not explain why it 
considers that this “backlash” would be only temporary and why, in spite of this 
“temporary backlash”, the Merge d Ent ity would still find it profitable to engage 
in the for eclosure of RHEL’s source code. In particular, Oracle does not explain 
how the foreclosure of Oracle Linux as a RHEL clone could provide a leverage 
                                                 
389  See replies  to Questionnaire Q1 to competitors,  question s 62 and 64. For example: “ customers would 
look to other open source alterna tives. Other players would take leadership roles in advancing open 
source projects for the benefit of the community (as Red Hat does today )”. 
390 See replies  to Questionnaire Q1 to competitors, question  64. For example: “ As mentioned in the 
previous response, it seems that one of the drivers of IBM’s planed acquisition of Red Hat is access to 
the large and passionate open source community. Changing the current commitment would elicit 
strong negative pushback from the community. Therefore we do not thi nk this is likely ” or “ in our view, 
Red Hat’s strength is having community support since they do not create their own products ”.  
 
120 allowing to capture  additional IBM sales of such  an amount that it would overall 
give the Merged Entity the incentive to engage in the foreclosure of RHEL’s 
source code.   
As regards effect  
(560)  The Commisison considers that, in any event, a potential foreclosure strategy 
targeting RHEL clones would have no significant effect on competition. This is 
because, a s explained at paragraphs (544)  to (542) , even if the Merged Entity was 
to effectively prevent R HEL clones by foreclosing access to RHEL’s source code, 
customers would still have sufficient alternatives that they could switch to. In 
particular, customers could switch to alternative paid Linux distributions that are 
not RHEL clones (mainly to SUSE’s S LES or Canonical’s Ubuntu). Customers 
could also switch to Oracle’s forked version of RHEL or to any other potential 
forked version developed by other vendor s relying on a RHEL  clone . 
(561)  The Commis sion therefore considers that, even if RHEL c lones were to be 
foreclosed, this would not result in a significant increase in RHEL’s market 
power. In line with the conclusion  at the above paragraph  (390), the Commission 
therefore considers that the Merged Entity will  most likely not have a sufficient 
degree of market power to leverage its position with RHEL to foreclose 
competitors in other markets.  
5.4. Effects on open source innovation  
5.4.1.  Potential concern  
(562)  There are hundreds of thousands of open source projects which, to different 
degrees, may serve as input into current and  future commercial products of third 
parties.  Red Hat contributes to thousands of these open source projects while IBM 
contributes to approximately […] projects.  
(563)  Some third party commercial software products that derive from open source 
projects  in which IBM and/or Red Hat are involved  may compete with existing 
IBM/Red Hat products. Some other commercial software products may also at 
some point be developed on the basis of some of these projects to compete with 
the Parties. Therefore, the question arises w hether the Merged E ntity may have 
the ability and incentive to delay the development of some of these projects or 
otherwise redirect them to reduce the emergence of competing products or reduce 
the competitive pressure of existing products.  
(564)  While the Comm ission has not received any formal complaint with respect to this 
theory of harm, a few respondant s to the Commission’s market investigation  
identified open source projects for which they consider that the influence that the 
Merged Entity will hold post-Transaction could potentially raise a concern.  These 
open source projects are the followings: Cloud Foundry, Eclipse Microprofile, 
and systemd. The potential concerns  related to these projects  are described and 
assessed below at paragraph (582)  and following s.  
5.4.2.  Notifying Party’s view  
(565)  The Notifying Party submits  that the Transaction will not give raise to any 
potential anticompetitive concerns in relation to open source innovation since : 
 
121 (a) IBM has publicly stated its intention to continue the independent open 
source approach to product development that has made Red Hat so 
successful ;391  
(b) the Transaction will not give IBM decisive “influence” or “control” over 
the activities or the strategic direction of strategic open source projects in 
which IBM and/or Red Hat a re currently involved ;392  
(c) in any event , the open source community of developers would fork the 
project if it were unhappy with the direction taken and if there was market 
interest in the fork (which would presumably be the case if the fork could 
lead to a c ommercial product which would divert sales away from an 
incumbent) ;393  
(d) any modification of Red Hat’s open source participation would result in 
developers simply “ voting with their feet ”394 and moving to a new firm, 
significantly impairing the value of IBM’s i nvestment ; and 
(e) with respect to the specific open source projects identified by market 
participants as potential concerns, the Transaction will not give the  
Merged Entity the ability and  the incentive to steer the direction of these 
projects to advantage th e Merged Entity’s commercial products.395   
5.4.3.  Commission assessment  
5.4.3.1.  As regards the general theory of harm   
(566)  The Notifying Party distinguishes o pen source projects in which Red Hat and 
IBM are currently involved between projects that are “maintained” by either IBM 
or Red Hat and projects that are “maintained ” by third part ies. Open source 
projects are t ypically maintaine d by the original publisher of th e project ( i.e., of 
the working code base ) until the stewardship is transferred to another individual 
or group . Where a project has a single “maintainer ”, the maintainer c an typically 
decide on the  direction for the main technical aspects of the project. The 
“maintainer ” will however often  invite contributions and commentary from the 
community surrounding the project  and third party contributors may also steer the 
direction of particular technical sub -areas . 
(567)  Each of Red Hat and IBM have provided a list of open source projects that they 
consider as the most relevant/ strategic for their bus iness.396 Within these lists, 
Red Hat and IBM have respectively identified […] projects which they consider 
                                                 
391  See Form CO, paragraphs 42 -44. 
392  See Form CO, paragraph 1121 and followings . See also the Notifying Party’s response to th e 
Commission’s RFI 19, question 5 . 
393  See Form CO, paragraph 205 and followings . 
394 See Form CO, paragraph 204.  
395  See the Notifying Party’s response to the Commission’s RFI 19, question 5 . 
396  Red Hat has provided a list of […] open source projects which it  considers  as being significant to Red 
hat’s commercial products and where Red Hat is a material contributor to a significant code base . IBM 
has provided a list of […] projects in which IBM is actively promoting and investing as IBM believes 
that future pr oduct developments may be based on these projects (see Form CO, Annex – Pre-
Notification RFI 3 – 4).  
 
122 as “maintained” by Red Hat (out of a total of […] strategic projects) and […] 
projects which they consider as “maintained” by IBM under the IBM open source 
governance model397 (out of a total of […] strategic projects). The remaining 
projects on IBM and Red Hat’s lists are maintained b y third parties .  
(568)  Among the projects that are maintained by third parties , a number – typically the 
larger ones – are gov erned by open source foundations  under a formal set of rules. 
Such formal  structures are implemented  to provide open source  projects with the 
organization needed to create an effective solution, while maintaining the benefits 
of a community project.  The Li nux Foundation, the Apache Software Foundation, 
and the Eclipse Foundation are examples of non -profit open source “foundations” 
that provide formal governance and support for popular community projects.  One 
open source foundation can host a large number of  open source projects. This is 
for example the case for the Eclipse Foundation which administers 380 open 
source projects.  
(569)  Overall, t he Commission considers that the  Merged Entity will not  have the 
ability and incentive to d elay the development of open so urce projects  it is 
involved in  or otherwise redirect them to reduce the emergence of competing 
products or reduce the competitive pressure of existing products.  This is based on 
the following  general  reasons  and on the specific reasons set out below at 
paragraphs (583)  to (602) .  
(570)  First, w ith respect to open source projects that are currently maintained by either 
Red Hat or IBM  or for which either IBM or Red Hat is a large contributor , the 
current ability of each of the Parties  to steer the direction of these projects will not 
increase further because of the Transaction.   
(571)  Second, based on the Parties’ best estimates,398 IBM and Red Hat’s contributions 
to source code only overlap for […]399 out of their […] most relevant/strategic 
projects. For […] out of these […] overlapping projects, the Notifying Party 
submits that the Merged Entity will have “ no greater influence ” following the 
                                                 
397  IBM open governance model  is IBM’s effective strategy to attract developers and IT industry players 
to a single open source project with the objectiv e of attaining momentum faster.  It looks to avoid 
community fragmentation and ensure s the commitment of IT industry players.   
398  For the purpose of estimating their share of contributions in open source projects the Parties have used 
GitHub as primary source of data as they believe that it is the most comprehensive repository of open 
source projects to which they contribute. Red Hat’s contribution percentages have been calculated for 
the time period from January 2014 until March 28, 2019 using the follo wing formula:  Percentage of 
Red Hat Contributions = Red Hat Project Commits/All Project Commits. With respect to IBM, IBM’s 
contribution rates represent the percentage of the total committers (as opposed to the number or the 
percentage of commits) that hav e the ibm.com domain in their email addresses. In particular, IBM has 
a script that gathers the commit logs from GitHub repositories of the relevant project, scans the data 
for the author/committer email and examines the domain, and then summarizes contrib utions by top 
level domain (e.g., ibm.com). IBM examined the period beginning January 1, 2018 through Friday, 
April 19, 2019. For the Swift Storlets project, an OpenStack project listed in tab 2, IBM estimated its 
share of contribution by using the contrib ution data published on stackalytics.com. The Parties note 
that while they have endeavoured to provide their best estimates, the share of contribution for some of 
the projects may be underestimated as Red Hat and IBM developers do not always disclose their  Red 
Hat or IBM email addresses on GitHub. In particular, Red Hat indicates that the contribution shares 
may significantly understate Red Hat’s contribution share for at least the following projects: […]. See 
Form CO, paragraphs 1115 to 1120.    
399  These p rojects are: […]. 
 
123 Transaction.400 In this respect, the data provided by the Notifying Party confirms 
that the increment of contribution share represented by IBM is limited for the 
large majority of the overlapping projects since, among the […] overlapping 
projects, the incremental share of contribution represented by IBM is only above 
[5-10]% for […] projects.401 For […] out of these […] projects, the Notifying 
Party explai ns that despite the overlap in  contribution share, the Merged Entity 
will have “ no greater influence ” in these projects following the Transaction since 
IBM’s contributions are only occasional and/or limited to the maintenance of 
specific IBM system offerings . There is only one project for which the Notifying 
Party acknowledges that the combination of IBM and Red Hat will result in 
increased influence, i.e., the […] open source project . However, as explained 
below at paragraph (589)  and followings , the Commission considers that the 
Parties’ combined influence in this project does not raise competitive concerns.   
(572)  Third, several open source projects in which IBM and/or Red Hat are involved are 
under the umbrella of  an open -source foundation that serve s as a check against 
behaviour s that might seek to concentrate influence over the proj ect in one 
contributing entity .402 IBM and/or Red Hat are members in a number of these 
foundations and may hold certain role in the gov ernance bodies of these 
foundations or in specific committees and groups within these foundations.  
(573)  In this  respect, the Parties identify  two major foundations in which they both 
currently hold a board seat, i.e., the Eclipse Foundation and the Cloud Nativ e 
Computing Foundation (“CNCF”).403 While the rules addressing affiliation 
conflicts may differ from one open source foundation to the other, the bylaws of 
both the Eclipse Foundation and the CNCF preclude multiple representatives. As 
confirmed by the Notify ing Party,404 the Parties will therefore have to give up one 
of their seats on the boards of both the Eclipse Foundation and the CNCF. In 
response to the Commission’s market investigation, another open source 
foundation hosting certain projects in which Red Hat and/or IBM are involved,  
also indicated that, following the Transaction, Red Hat will no longer be able to 
maintain a separate membership in its foundation.405  
(574)  Fourth, the Commission notes that the large majority of the competitors having 
replied to the  its market investigation are generally not concerned with the 
influence that the Merged Entity will have in open source projects. Indeed , in 
                                                 
400  There is only one project for which the Merged Entity acknowledges that the Merged Entity will 
increase its influence following the Transaction, i.e., the […] project. A specific assessment of this 
project is set out below at paragraph  592 and followings.  
401  These projects are the following s: […]. 
402 E.g., among the overlapping projects […] is hosted by the […] Foundation, […] is hosted by the […] 
Foundation, […] is hosted by the […] Foundation, […] is hosted by the […], […] is hosted b y the […] 
Foundation, […] is hosted by the […] Foundation, etc.    
403  While they do not both hold a board seat, t he Parties also overlap to some extent in the Linux 
foundation and in the Apache Software Foundation. In the Linux foundation, IBM holds the hi ghest 
(Platinium) membership level and a seat on the Linux Foundation board while Red Hat has a lower 
(Silver) membership level and does not have a board seat. As to the Apache Software Foundation, 
while a Red Hat employee serves on its board, IBM’s employ ees do not. The President of the Apache 
Software Foundation is an IBM executive but he does not serve on the Apache Software Foundation’s 
board.  
404  See Form CO, paragraphs 1150 and 1156. Also confirmed by the Eclipse Foundation (s ee Eclipse 
Foundation ’s reply to Questionnaire Q3 to open source foundations, question 4).  
405  See replies to Questionnaire Q3 to open source foundations, question 4.  
 
124 response to the Commission’s market investigation, a large majority of the 
competitors indicated that they are not involved in any open source projects for 
which either Red Hat or IBM have the ability to unilaterally adopt decisions 
having a significant impact on the direction of the relevant project(s).406 A large 
majority of competitors also responded that they are not involved in certain open 
source projects for which, following the Transaction, the combined IBM/Red Hat 
entity will gain the ability to unilaterally adopt decisions having a significant 
impact on the direction of the relevant project(s).407   
(575)  Fifth, even for projects for which the Merged Entity may have some degree of 
influence allowing it to steer the direction of a given project to some extent, the 
merged entity will likely not be able to impose a direction advantaging its 
commercial offering to the detriment of third parties because of the threat of 
forking and the threat of other developers (contributors) walking away from the 
project, which would significantly damage the project at stake.  
(576)  Open source software is typically governed by broad copyright licenses that 
permit the software’s source code to “ be freely accessed, used, changed, and 
shared (in modified or unmodified form) by anyone ”.408 Because the source code 
is freely available, developers are therefore, in theory, free to “fork” any open 
source community project if they are unhappy with the direction in which a 
project is going. Similarly, IT vendors could, in theory, “fork” the code of any 
open source project to develop their own commercial offerings.  
(577)  In this respect, there are a number of actual examples of notable forks, a number 
of which have been in direct response to actions taken by a projects’ leadership or 
sponsor that were seen as potentially impinging on innovation or commitment to 
open source community norms.409 These examples include complex projects 
which shows that, even though, as also acknowledged by the Notifying Party, the 
easiness of forking depends on the complexity of the software product and related 
source code, forking can be a possibility even in the case of complex open source 
projects. Based in particular on these past examples and on their detrimental 
impact for the original project that have been forked, the Notifying Party claims 
                                                 
406  See replies  to Questionnaire Q1 to competitors, question 62.1. For the large majority, these 
competitors did  not provide a detailed explanation of their responses. It may therefore be that they are 
not involved in any of the projects identified by the Notifying Party as “maintained” by either Red Hat 
or IBM, or it may also be that they are involved in such proje cts but nonetheless consider that even if 
Red Hat and/or IBM would have the ability to steer the influence of a given open source project, Red 
Hat and/or IBM would not have the incentive to do so (e.g. because they wish to encourage third party 
contributio ns).   
407  See replies to Questionnaire Q1 to competitors, question 62.2. 
408  See https://opensource.org/faq#osd .  
409  MariaDB was forked from MySQL in 2009 after Oracle acquired Sun and degraded MySQL, by 
stopping offering the cheapest subscription levels for MySQL and holding back test cases in the latest 
release of MySQL instead of feeding them back into the open source community ; Jenkins was forked 
from Hudson in 2011 after Oracle applied for a trademark on Hudson and did not support the 
community’s desire  to migrate hosting of Hudson from Oracle's Java net site to GitHub ; LibreOffice 
was forked from OpenOffice.org in 2010 after development slowed under Oracle’s stewardship and 
Oracle antagonized the community; X.Org was forked from XFree86 in 2004 after XFree86 changed 
its licensing terms, adding a restriction that required redistributions to explicitly acknowledge 
XFree86 ; OpenSSH was forked from SSH in 1999 after the original creator of SSH founded a 
company to profit from SSH, and licenses for SSH became increasingly restrictive. See Form CO, 
paragraph 206. 
 
125 that “ The threat of forking underpins why IBM will have no ability or incentive to 
limit Red Hat's neutrality (e.g., favoring changes that support IBM products over 
those of competitors) or its commitment to work within the norms of open source 
development ”.410 
(578)  As reg ards forking, the Commission’s market investigation confirms that it could 
be an option at least for certain open source projects in which Red Hat and/or 
IBM are involved.411 For example, as explained above at paragraph (532) , Oracle  
indicates that, if its f ull and timely access to RHEL’s source code was hampered 
by the Merged Entity, it would create its own forked version of RHEL. Another 
competitor also indicate that, following the rejection of changes that it had 
proposed to an open source project in which  Red Hat was one of the key 
participant , it has been able to fork the code of the relevant project into an 
alternative project.412  
(579)  However, competitors having provided their views on this topic also flag that 
forking can only be the last resort given the in vestment and the time required in 
order to fork a complex open source project.413 Competitors further explain that 
there are potentially significant barriers that need to be overcome such as finding 
developers with the required technical knowledge or buildin g sufficient trust in 
order to become an “enterprise grade” alternative (which includes inter alia  
building a support team).414 Finally, competitors also indicate that for a large, 
complex project to be forked it would need the involvement  of one or even 
several large market players.  
(580)  Sixth , even f or projects where a fork may  be unlikely  to occur, the Merged Entity 
will still remain constrained to some extent by the risk to lose the support of the 
open source community. Indeed, as explained above at paragraphs  (544)  to (552) , 
competitors and open source foundations having replied to the Commission’s 
market investigation consider that, if the Merged Entity was to disregard Red 
Hat’s legacy  commitment to “open source”, this could result in key developers 
leaving the company and external contributors refraining from  inputing in  Red 
Hat’s key projects . Given that Red Hat’s business is entirely based on open sou rce 
products, losing the support of the open source community could have a 
significant detrimental  on the future development of Red Hat’s products. As 
explained above at paragraph  (548)  this could in turn significantly impair the 
value of IBM’s investiment  in Red Hat .     
(581)  Seventh , as explained above at paragraph s (401) and  (554) , IBM has made firm, 
public commitments to maintain and continue Red Hat’s open source business 
model . […].415 
                                                 
410  See Form CO, paragraph 208.  
411  See replies  to Questionnaire Q1 to competitors, question 63.  
412  See replies  to Questionnaire Q1 to competitors, question 62.  
413  See replies  to Questionnaire Q1 to competitors, question 63.  
414  See replies  to Questionnaire Q1 to competitors, question 63.  
415  There is nothing in the Commission’s case file which suggests that the Transaction’s business plan 
would be premised on IBM making Red Hat’s pr oducts less open source that they are today. By 
contrast, as apparent from the Parties’ internal documents which are listed in the above footnote (284) , 
[…] (see footnote (284) ). By way of example,  […].  
 
126 5.4.3.2.  As regards the specific concerns  
(582)  With respect to the specific potential c oncerns identified by a few competitors 
having respon ded to the Commission’s market investigation, the Commission 
considers that the Merged Entity will not have the ability and incentive to d elay 
the development of these  specific  projects or otherwise redi rect them to reduce 
the emergence of competing products or reduce the competitive pressure of 
existing products.416417 This is based on the general reasons set out at the above 
paragraph s (575) to (581)  and on the following specific reasons.  
As regards Cloud Foundry  
(583)  A respondent expressed the concern that  IBM could use its influence within the 
Cloud Foundry community in order to change the direction of this project in a 
way that would advantage OpenShift , […].418 In particular, Post-Transaction, the 
Merged E ntity would have no incentive to keep improving  Cloud Foundry as an 
improved Cloud Foundry would potentially create stronger competitors fo r 
OpenShift . 
(584)  Cloud Foundry is one of the open source container orchestrator technology which 
is used by commercial ve ndors to offer container infrastructure software.  Other 
orchestration technology include Kubernetes, Docker, Swarm, Apache Mesos. 
Among these orchestration technologies, Kubernetes is  the leader and de facto  
standard .419 As explained above  at paragraph s (119) to (123) , both Red Hat, with 
OpenShift, and IBM offer container infrastructure software based on the 
Kubernetes orchestration technology. With respect to the commercial products 
that are based on Cloud Foundry the Notifying Party explains that “ the primary 
commercial non -Kubernetes competitor to OpenShift has been […] (a different 
open source container platform technology) ”.420  
                                                 
416  In addition, a  respondent expressed the concern t hat, post -Transaction, IBM would have the incentive 
to use its influence on “KVM Hypervisor for the Power and Z/LinuxOne architecture” open source 
projects to delay the release of upstream contributions in order to f oreclose competitors. However, t he 
Commi ssion considers that, in any event, post -Transaction, the Merged Entiy will not have the ability 
to exclude rival hypervisors by delaying the release of upstream contributions, or otherwise attempting 
to frustrate the progress of these extension projects s ince IBM servers represent only a tiny fraction of 
the total opportunity for hypervisors. In fact, IBM servers account for less than [0-5]% of new server 
deployments, and represent only [0-5]% and less than [0-5]% of all servers running on Linux, by 
revenu e and units, respectively (see the Notifying Party’s response to the Commission’s RFI 19, 
question 5). Accordingly, any deterioration of interoperability with IBM servers would have little to no 
impact.  
417  A respondent also mentioned a potential concern wi th respect to the Parties’ role in Open Invention 
Network (“OIN”), an independent organization created in 2005 in order to ensure a level playing field 
for Linux by safeguarding developers, distributors, and users from organizations that would leverage 
patents to hinder its growth and innovation. This respondent however did not provide convincing 
explanation on how the combination of Red Hat and IBM’s role in OIN could raise competition 
concerns. In any case, the Commission considers that the Parties will n ot be able to achieve an 
increased influence over OIN as a result of the Transaction, since in particular, as explained by the 
Notifying Party, the bylaws of OIN requires that either IBM or Red Hat transfer their interest in OIN 
to the other, and the “Cont inuying Member” will only be entitled to have one vote in total and one seat 
on OIN’s board. the Notifying Party’s response to the Commission’s RFI 18, questions 3 and 4.  
418  See replies  to Questionnaire Q1 to competitors, question 62.  
419  See Form CO, paragraph 572.  
420  See Form CO, paragraph 612.  
 
127 (585)  The Commission considers that, following the Transaction, the Merged Entity 
will not have the ability and the incentive to influence the direction of Cloud 
Foundry in order to reduce the competitive pressure on  OpenShift . This is based 
on the following reasons.  
(586)  First, based on the data provided by the Notifying Party, IBM’s contributions to 
the Cloud Foundry project amount to  only 5%, far behind Pivotal, which together 
with its affiliates Dell EMC and VMWare account for almost 70% of 
contributions.421 In addition , any attempt by IBM to unduly influence the 
direc tion of Cloud Foundry would likely be detected and hampered  by a num ber 
of companies competing with OpenShift  which are involved in the Cloud 
Foundry project , notably Pivotal but also Dell EMC, Google and Microsoft.   
(587)  Second , IBM is only one out of eight organizations with a representative on the 
Cloud Foundry Board of Dire ctors, which determines the strategic direction and 
business governance of the project and makes most of its decisions by simple or 
70% majority.422 With one board member, IBM holds only 12.5% of voting rights 
and has therefore no veto on any kind of decisio ns. As Red Hat is not currently a 
member of the Cloud Foundry project, the Transaction would not change this.  
(588)  Third , the Notifying Party explains the Transaction will have no impact on IBM’s 
incentives to keep improving Cloud Foundry since IBM will still h ave a 
responsibility to support its clients that are currently running their applications on 
Cloud Foundry through IBM Public Cloud and IBM Cloud Private.423 
As regards Microprofile  
(589)  A respondent expressed the concern that, post -Transaction,424 the Merged E ntity 
would decide to reduce its involvement in the Eclipse Microprofile open source 
project (i.e., project aimed at developing application programming interface 
“API” to extend Enterprise Java to microservices architecture) in order to reduce 
the adoption  of products competing with the M erged  Entity’s middleware  (in 
particular Red Hat’s JBoss EAP middleware which is already suitable to a certain 
extent for the microservice architecture) .425  
(590)  The Eclipse MicroProfile project is a relatively young open source project  which  
was announced in September 2016, with IBM, Red Hat, Tomitribe and Payara as 
founding members and the London Java Community an d SouJava as supporting 
members .426 The Eclipse MicroProfile  project ’s founding objective is the vendor -
                                                 
421  https://cloudfoundry.biterg.io/      
422  The other directors are appointed, respectively, by Dell EMC, VMware, SUSE, HCL, Swisscom, SAP 
and Pivotal. See further https://www.cloudfoundry.org/governance/. As an exception to the usual “one 
organization one representative” rule, Dell EMC, VMware, and Pivotal are each represented by one 
director, due to a special dispensation in the bylaws (Section 3.3 of the Cloud Foundry bylaws 
provides: “ At no time may a Member a nd its Affiliates have more than one Director who is an 
employee, officer, director, or consultant of that Member, except that Pivotal, EMC, and VMware, 
though Affiliates, shall each have one (1) Director on the Board) ”. The Cloud Foundry bylaws are 
availa ble at: https://www.cloudfoundry.org/wp -content/uploads/2017/01/CFF_Bylaws.pdf .)   
423  See the Notifying Party’s response to the Commission’s RFI 19, question 5 . 
424  See replies  to Questionnaire Q1 to competitors, question 62.  
425  See Form CO, paragraph 327.  
426  Current members include IBM, LJC, Tomitribe, Red Hat, Payara, SouJava, Hazelcast, Fujitsu, 
KumuluzEE, Hammock, Oracle, Lightbend, and Microsoft. See https://microprofile.io/ . 
 
128 neutral advanc ement and optimization of Java EE for microservices -based 
architectures, the provision of a platform portable across multiple runtimes and 
the development of an interoperable microservices architecture that allows 
communication among polyglot runtimes (not  just Java).427  
(591)  According to the Merged Entity, the Eclipse MicroProfile is currently at the stage 
of […].428 In this respect, the community is currently in the process of  actively 
recruiting participants.  
(592)  The Commission considers that, following the Transac tion, the Merged Entity 
will not have the ability and the incentive  to impede the development of the 
Eclipse MicroP rofile  project in order to reduce the actual and potential 
competitive pressure on  its middleware offering . This is based on the following 
reasons.  
(593)  First, t he Eclipse Microprofile project is hosted within the Eclipse Foundation, 
which serves as a check against behavio ur that might seek to concentrate 
influence over the project in one contributing entity.  As also explained above at 
paragraph (573) , IBM and Red Hat currently only have two out of 15 
representatives on the Eclipse Foundation Board of Directors,429 which  
determines the strategic direction and business governance of the project and 
makes most of its decisions by simple or two -thirds majority.  Following the 
Transaction, the Merged Entity  will have to relinquish one Board seat, so the 
Merged Entity with only one board member would only hold 7% of voting rights. 
Given the foundation’s governance structure, the Merged Entity will not be able 
to unduly influence the general direction of the project.  
(594)  Second, the Eclipse Foundation did not express any specific concerns with respect 
to the impact of the Transaction on the development of the Eclipse Microprofile 
project.430 
(595)  Third , while IBM and R ed Hat account for a large share of current contributions 
to the Eclipse MicroP rofile project (around 75% with IBM representing a 23% 
contribution share increment431), the Notifying Party reports that the Parties’ 
contribution shares are decreasing as the pr oject has recently grown to include a 
larger number of industry sponsors and contributors.432433 In addition, recent data 
                                                 
427  See https://projects.eclipse.org/proposals/eclipse -microprofile .  
428  See Form CO, Annex Pre -Notification RFI 10 – 1. 
429  The other representative on the Board of Directors are: one representative each for CA Technologies, 
Bosch, CEA List, OBEO, Fujitsu, SAP and Oracle (as Strategic Developer Members), three elected 
representativ es for the two classes of Enterprise and Solution Members, and three elected members of 
the Committee Members collectively. See further 
https://www.eclipse.org/org/foundation/directors.php.  
430  See Eclipse Foundation ’s reply to Questionnaire Q3 to competito rs, question 5.  
431  See https://projects.eclipse.org/projects/technology.microprofile/wh o.     
432  See the Notifying Party’s response to the Commission’s RFI 19, Question 5 . 
433  Corporate sponsors and members of the project other than IBM and Red Hat include enterprises and 
foundations like Payara, Tomitribe, Lightbend, LJC, SouJava, Hazelcast, Fujitsu, KumuluzEE, 
Hammock, Microsoft, and Oracle ( see https://microprofile.io/ ). Third party -affiliated and independent 
developers include developers from the corpora te sponsors and other corporations, including e.g. 
Phoenix Contact, Creative Arts & Technologies, DSoft, Apinauten, and Deutsche Telekom  (see 
https://microprofile.io/contributors/ ).   
 
129 shows that the adoption of the project among Java EE developers has been rising 
significantly in the last year.434 Even if IBM and Red Hat s lowed down or 
reduced their contributions, th e Commission therefore considers that this would  
likely only have a relatively  short term impact on the development of the project 
as other contributors would be able to  increase their contr ibutions and assume 
leadership positions.  
(596)  Fourth, the Notifying Party claims that it will have no incentive to reduce 
contributions in order to advantage the Merged Entity’s  offering of middleware 
since, in particular, this project remains key to maintaining the relevance of 
IBM’s middleware products in the new cloud -native microservices environment. 
In this respect, as set out above at paragraph (241) , IBM’s Java EE middleware 
still currently constitute a significant stream of revenues.435 
(597)  Fifth, even if the Merged Entity were to reduce its contributions in the Eclipse 
MicroP rofile  project in a way that would make it more difficult for competing 
Java EE middleware to be competitive in new microservices environment, there 
are already a large number of middleware offerings  other t han the ones offered by 
Red Hat  and IBM that are suitable for microservices environment.436 This market 
segment would therefore in any case remain competitive.    
As regards Systemd  
(598)  A respondent expressed the concern that, post -Transaction, the Merged Entity  
would have the incentive to leverage Red Hat’s ability to steer the direction of the 
“systemd” open source project  in order to prevent the development and/or the 
extension of alternatives to RHEL.437  
(599)  Systemd is an open source project that provides basic building blocks for a Linux 
operating system.438 It is one of the many components of a Linux operating 
system. Systemd was initially cofounded by a Red Hat engineer and was 
introduced by Red Hat five years ago as part of RHEL 7. Systemd was originally 
develo ped to create an alternative to Canonical’s Upstart init system project that 
developers considered superior from a technical and governance perspective. 
System d has today  been adopted more widely by the majority of Linux 
distributions and it is considered in the industry as a “de facto standard ”. 
(600)  The Commission considers that  the Transaction  will not have any effect on Red 
Hat’s current ability to use its influence on the system d project in order to reduce 
                                                 
434  A 2019 survey indicates that Eclipse Microprofile’s reported usage am ong Java EE developers grew 
from  13% in 2018 to 28% in 2019, and Eclipse MicroProfile is listed as one of the top three 
frameworks for building cloud native applications and top cloud native technologies, alongside 
Spring/Springboot and Kubernetes  (See https://eclipse -foundation.blog/2019/05/10/results -2019 -
jakarta -ee-developer -survey/  and https://jakarta.ee/documents/insights/2019 -jakarta -ee-developer -
survey.pdf ). 
435  See the Notifying Party’s response to the Commission’s RFI 19, question 5 . 
436  These offerings include e.g. Apache Tomcat, Glassfish, Wildfly, Jetty, Pivotal tc Server, Tomtribe, 
Mulesoft Tcat Server , etc.  
437  See replies  to Questionnaire Q1 to competitors, question 62.  
438  See the Notifying Party’s response to the Commission’s RFI 19, question 5; replies to Questionnaire 
Q1 to competitors, question 62 and replies to Questionnaire Q3 to open source foundations, questions 
1 and 5.  
 
130 the competitive pressure exercised by alternative L inux distributions on RHEL.  
This is because, while the Commission’s market investigation confirms that Red 
Hat currently exercises a significant influence on the direction of systemd, based 
on the data provided by the Notifying Party, IBM today appears to be a very 
minor contributor to systemd. In fact, out of a total of 40,409 contributions on 
“github”, only 58 are associated with an “ibm.com” email address, which 
represents a contribution of less than 2%.439   
(601)  In addition, the Commission considers that it is unlikely that the Merged Entity 
will have the ability and the incentive to use its influence on the systemd project 
in order to foreclose RHEL’s competitors . In this respect, the reasons set out at 
paragraphs (527)  to (559)  with respect to the potential  foreclosure of RHEL’s 
clones through withholding, delaying or degrading access to RHEL’s source code  
apply mutatis mutandis .  
(602)  With respect specifically to a foreclosure strategy based on Red Hat’s  influence 
over systemd, while  systemd has recently emerged  as a de facto industry standard, 
it is only one type of “init” system for Linux and RHEL’s competitors could 
therefore migrate to other alternative existing open source init systems such as 
Upstart or System V  and contribute to the further development of these alternative 
projects .440 In any case,  the Merged Entity’s competitors on the paid Linux -based 
server operating systems  could react by forking the source code of systemd and 
creating a new community open source project having similar functionalities. 
Indeed, systemd is one of more than 10,000 RHEL components and, while it is an 
important and increasingly complex component, it is likely that the sophisticated 
players active on the paid Linux server operating systems market (e.g., Oracle, 
SUSE, or Canonica l) could team up to develop a fork of systemd . In this respect, 
the Notifying Party explains that approximately half of the top 10 systemd 
contributors do not work for Red Hat. With respect to  systemd’s top contributors 
who are employed by Red Hat, the Mer ged Entity explains that ”they could 
conceivably leave Red Hat (or IBM) to work on system for another vendor using 
system technology ”.441  
                                                 
439  The analysis is based on contributors’ email addresses associated with git commit records to the master 
branch of the project, as disclosed on https://github.com/systemd/systemd. For purposes of this 
analysis, a “contribution” is considered to be equivalent to one commit record in the git source code 
version control system that is merged in the master branch of the project.  See Notifying Pa rty’s reply 
to RFI 19, Question 5 . 
440  See the Notifying Party’s response to the Commission’s RFI 19, question 5 . 
441  See the Notifying Party’s response to the Commission’s RFI 19, Question 5 . 
 
131 6. CONCLUSION  
(603)  For the above reasons, the European Commission has decided not to oppose the 
notified operation and to declare it compatible with the internal  market and with 
the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of 
the Merger Regulation and Article 57 of the EEA Agre ement . 
For the Commission  
 
 
(Signed)  
Margrethe VESTAGER  
Member of the Commission