The US Department of Justice is probing allegations that IBM has abused as its dominant position in mainframe computers, illegally keeping new competitors out of the market by refusing to license the use of its software.

IBM both manufactures expensive mainframe computers, used by government agencies and multinational organisations to handle vast volumes of information, and also writes the software that they run on.

The accusations are that while IBM used to license its software to competitors building mainframe computers using non-IBM hardware, the company stopped the practice a few years ago to choke off competition, according to the report by the Associated Press.

The reported cited the Computer and Communications Industry Association, a US trade body. The association said that the government was requesting information from IBM’s competitors over the anti-trust allegations.

The probe originated from complaints filed by two companies. They are Boston-based IT solutions developer Platinum Services, and Tampa-based T3 Technologies. In particular, T3, which used to resell IBM mainframe computers, has accused IBM of frustrating the smaller company’s ambitions to expand into the hardware manufacturing business. They allege that IBM denied the company licenses to use IBM software "for no reason other than to remove all competition from the mainframe market."

Currently, IBM enjoys a virtual monopoly in the mainframe computer market, but some companies try to build computers that are less expense than those offered by the computing giant, but which also run the same IBM software.

“IBM will tell big customers that if you buy that other stuff, we’re not going to let that stuff talk to our stuff. We think of the Internet as open and innovative, but that’s a lock’em up strategy. That’s very unsatisfactory for the customer base,” said Ed Black, CEO of the Computer and Communications Industry Association.

The DoJ did not comment. IBM said it will cooperate with any inquiries from the department. The company also said it believes there were no merits to T3’s claims, and that IBM was entitled to enforce its intellectual property rights.

In 1956, IBM was forced to operate under anti-trust agreement with the government over allegations it was abusing its monopoly power in the electronic tabulating machines market. The agreement also covered computers, but was gradually phased out over the years, and all its provisions were dropped in 2001.

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Under investigation for allegedly bribing foreign officials to secure lucrative defence contracts in Afica and Eastern Europe, BAE Systems has reportedly turned down an offer to settle the case for £300 million.

However, the report appearing in The Times newspaper also said that the UK defence contractor would be willing to settle the six-year investigation by the UK’s Serious Fraud Office (SFO) into its corporate conduct, but only if it is presented with compelling evidence to support the bribery claims.

The company, which is alleged to have bribed officials in Africa and Eastern Europe to win arms sales contracts, is also unwilling to settle the case if it came at too great a cost, the report said.

The BAE board is refusing to pay the rumoured £300 million settlement sought by the SFO to end the case, the report said. BAE directors were advised that it may leave themselves exposed to lawsuits alleging misuse of shareholder funds if they agreed to the amount, the report added.

The newspaper report also noted that there has been suggestion inside BAE that a payment of £20 million would be more suitable. The company was also willing to admit to a measure of guilt that its agents and middlemen had acted improperly. The report said that BAE was keen to avoid the trial over fears it would damage its reputation.

Separately, The US Department of Justice (DoJ) is believed to have also turned its attention to whether the same BAE deals in Africa and Eastern Europe breached American anti-corruption rules. The report in The Independent said that there has already been an informal exchange of information between the SFO and the DoJ, and that this is expected to become formalised soon.

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