IBM takeover of Telelogic gets European approval

The European Commission gave the go-ahead to IBM's planned takeover of Swedish software development tool vendor Telelogic on Wednesday, after an in-depth probe of the deal. IBM bid around $745 million for Telelogic last June. Despite considerable overlaps in their business activities, the Commission concluded that the deal wouldn't hamper fair competition in the software development tools market.

With the acquisition of Telelogic, IBM will become by far the largest vendor of two types of software development tools: software modelling and requirements management tools. Initially the Commission suspected that the combined strength of the two companies would skew competition in these market sectors, pushing up prices and shutting out competitors.

However, the in-depth probe started last October found that the two companies target distinct and separate customer groups and are therefore not in direct competition with each other.

"The deal will not harm competition in Europe or in any part of Europe," the Commission said.

Modelling tools are designed to help software developers model the software before developing it. The future software product's functions are mapped out by creating visual models as well as by generating data definitions, programming specifications and ultimately the software code itself. Requirements management tools are designed to streamline and document a development team's analysis of the requirements of a project.