Re: Not commenting on the business practices
@Andy The Hat “but tying a customer into a contract that is impossible to get out of by making a closed agreement with alternative suppliers would be dangerously close to cartel-like behaviour”
That was my thought as well. Having read all 106 pages of the pretty damming on IBM final judgment it is nothing like cartel behaviour.
Basically, IBM is in the outsourcer business who AT&T have outsourced the running (which includes the BMC software) and maintenance of their mainframes to. But IBM don’t have licenses to run BMC software as the AT&T BMC license does not permit outsourcing.
The OA (Outsource Agreement) that IBM have with BMC gives IBM the right to use their outsourcing customer’s (AT&T) license or purchase the licenses at 72%. Part of the agreement is that IBM will not displace BMC software with their own. If IBM do displace BMC software, they liable for 1 year’s license and support fees. This only applies to customers that IBM is the outsourcer for and using the customer’s BMC licences which is the case with AT&T.
In 2015 IBM signed a contract with AT&T to replace all BMC software with IBM software. The also renegotiated the OA contract and tried to remove the displacement clause but BMC would not sign if the clause was removed. They did manage to get the list of customers that the displacement clause applied to reduced but could not get AT&T removed from the list. The new OA was signed in 2015 after the AT&T contract.
IBM entered into the new OA contract with BMC in bad faith as they had no intention of abiding by that contract. This is backed up by the IBM negotiator. The judge considered fraudulent, which is why IBM ended up with this. From the judgement:-
12. BMC shall recover direct and punitive damages from IBM on its fraudulent
inducement claim, plus prejudgment interest in the amount of 5% and post-judgment
a. BMC is entitled to recover from IBM $717,739,615 in actual contractual damages.
b. BMC is entitled to recover from IBM $168,226,367.29 in prejudgment interest on
the actual damages described above.
c. BMC is entitled to recover from IBM $717,739,615 in punitive damages based on
fraud found by clear and convincing evidence.
d. BMC is entitled to recover from IBM post-judgment interest from the date of the
entry of judgment at the federally mandated rate. 28 U.S.C. § 1961.