The European Commission has launched an investigation to discover whether IBM’s acquisition of Swedish application development tool vendor Telelogic, initiated in July 2007 at a price of 557 million, breaches European competition laws.

The acquisition, if approved, would make IBM the largest application development tool maker in the world. A preliminary examination of the deal by the EC found it "could have adverse effects on competition, given the strong market position that IBM would achieve for certain types of software development tools, in particular 'software modeling and requirements management' tools,” according to a statement.

A spokesperson for IBM said that the company expected the EC – which has until February 2008 to make its ruling – to find in its favour.

The Commission is perhaps emboldened by last week’s ruling against Microsoft, which upheld a previous decision to fine the company 497 million for anti-competitive practices. Also under investigation by the EC is Google’s $3.1 billion of online advertising broker DoubleClick.

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