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EU OKs IBM’s Consulting Acquistion

September 23, 2002

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BRUSSELS, Belgium (AP) _ The European Union Commission said on Monday it cleared International Business Machines Corp.’s $3.5 billion acquisition of PricewaterhouseCoopers LLP’s consulting arm.

The deal widens IBM’s growing lead over rival consultants such as Electronic Data Systems Corp. But IBM’s advance was not wide enough to raise EU concerns in such a fragmented sector.

``Consumers will continue to benefit from sufficient choice and innovation in the sector,″ the EU Commission said in a statement.

EU clearance was the last hurdle for the deal. PwC partners voted in favor on Sept. 12 and U.S. antitrust authorities already gave their blessing.

The EU did ask questions about IBM’s ability to bundle together a range of services and hardware, fearing that could foreclose competition. But competitors and customers didn’t campaign against the deal, and the EU waved the merger through under its one-month procedure.

A combined IBM and PwC Consulting wouldn’t ``gain market power through combined sales of packaged IT solutions,″ the EU said.

The EU’s decision is good news for other computer companies looking to boost their consulting capacity. The cost of acquiring IT consultancies has plummeted along with share prices, and analysts say the sector is ripe for consolidation.

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