Stonesoft's complaint to the EC regarding check point's distribution practise. (Security News).

In June 2001 Stonesoft Corporation lodged a complaint with the European Commission asserting that the Israeli security software company Check Point Software Technologies Ltd. was attempting to exclude Stonesoft from the market. Following this complaint, the European Commission commenced extensive investigations into Check Point's position and behaviour in the firewall and VPN market. As the Commission's investigation, Check Point has agreed to provide a formal undertaking to the Commission regarding its distribution practices. The undertaking has been used very seldom by the European Commission. So far only two prior cases, are recorded in the field of information technology; IBM in 1984, Microsoft in 1994.

Check Point Software Technologies Ltd. has agreed with the European Commission to an undertaking restricting Check Point's business practices after a complaint by Stonesoft Corporation that Check Point was abusing its dominant market position to exclude Stonesoft from the market. Stonesoft released its new generation StoneGate firewall and VPN solution in the spring 2001. Based on reports of certain actions taken by Check Point towards distributors and value added resellers, Stonesoft lodged a complaint with the European Commission in June 2001. Following this complaint, the European Commission commenced extensive investigations into Check Point's market position and behaviour. The Commission stated that it was concerned that Check Point had told some of its distributors and resellers that if they attempted to sell Stonesoft's competing firewall/VPN product, they would no longer be supplied with Check Point's own product. Given Check Point's market presence, the Commission was concerned that this was having a negative foreclosure effect in the market for firewall/VPN software in violation of European Union competition rules. Following negotiations between the Commission and Check Point, Check Point agreed to provide a formal undertaking to the Commission that addresses the Commission's concerns.

The terms of the undertaking are as follows: Cheek Point confirms that it will not place undue or unacceptable pressure upon its distributors and resellers regarding their independent decision whether or not to sell competing products; in this respect, Check Point will confirm to its distributors and resellers their right independently to choose to handle products of other manufacturers which directly or indirectly compete with Check Point's own products. Therefore, Check Point will inform all its distributors and resellers by letter that it will not condition the supply of its products, or the terms and conditions of supply of its products, on whether or not its distributors and resellers stock, market and sell competing products. A copy of this letter will be provided to Stonesoft.

Check Point will also ensure that its sales and other relevant personnel are informed about the EU competition rules and that they understand the requirement to comply with those laws in their business dealings. We are pleased with the outcome of the extensive investigations made and the strong and active role the European Commission took in achieving this settlement. From our point of view this was the fastest and the most effective way to ensure free and healthy competition in the market. For our partners and customers this undertaking offers now a possibility to freely select new innovative products", says Stonesoft CEO Esa Korvenmaa.

As a result of Check Point's undertaking, Stonesoft agreed to withdraw its complaint. The Commission will continue to monitor developments in this market in order to ensure that the terms of the undertaking are respected.

What is an undertaking?

Generally an undertaking is a voluntary commitment made by the company under investigation to the Commission to change its behaviour as specified in the undertaking. Frequently this is after a large-scale investigation and the opening of formal proceedings. Unless otherwise stated in the undertaking, it is unconditional and given for an unlimited period of time. Undertaking is under constant monitoring by the European Commission. Undertaking has been used very seldom. So far only two other information technology cases - an IBM case in 1984 and Microsoft in 1994 - have had similar outcomes.

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