IBM has abandoned a proposed multimillion euro acquisition of an Irish unit of Schlumberger, following a decision by the Competition Authority to block the deal.

The US technology giant told The Irish Times yesterday that it had decided not to appeal the decision because of the likelihood of lengthy delays during any appeal to the High Court.

An IBM spokesman said the proposed deal had already been up and running for seven months and a further delay would not help the employees or customers at Schlumberger in the Republic.

He said IBM's decision not to proceed with the purchase of the Irish disaster recovery division of Schlumberger would not affect the global agreement between IBM and Schlumberger.

This deal is worth €200 million and will see IBM take over Schlumberger's global disaster recovery and business continuity operations. These operational divisions enable businesses to maintain their critical technology operations during emergencies or unforeseen events.

The Irish market for these types of services is estimated to be worth €15 million a year. Schlumberger controls about €10 million of this market, with IBM its nearest competitor. The Competition Authority's statement last month said the two firm's competed "directly and closely" with one another. Authority chairman Mr John Fingleton estimated the merged entity would have controlled 80 per cent of the market.

IBM's decision not to appeal the Competition Authority's decision will generate uncertainty about the future for the Irish division of Schlumberger's disaster recovery subsidiary. Schlumberger may be forced to sell the division to another party or management could propose a management buyout of the division.

IBM had until last weekend to lodge an appeal to the High Court against the Competition Authority's decision. The decision was the first made by the authority under merger control legislation introduced last year.

Schlumberger refused to comment on the decision by IBM to drop its planned acquisition of Schlumberger Ireland.