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Nortel-RIM Battle Heats Up

The Canadian government is examining whether there were improprieties to Nortel?? recent auction process.

Canadian handset maker Research In Motion alleges that Nortel offered it different terms to buy Nortel?? wireless equipment business than the terms that were presented to ultimate auction winner Ericsson. After hearing testimony today, the Industry Committee of the Canadian House of Commons is expected to investigate the allegations further next week.

The investigation is hardly a surprise, as RIM had complained that it?? been cut out of the auction process several weeks ago. But the government?? involvement clearly complicates matters for Nortel, as it could, potentially, prevent Ericsson and Nortel from closing the deal.

A delay and the resulting uncertainty could affect Nortel and the wireless business unit that?? been sold, by frightening away customers. Even if the government investigation is wrapped up quickly, RIM could yet resort to legal action, which could further complicate matters.

RIM?? end goal may be to persuade Nortel to sell it some of its valuable wireless patents, expected to come up for sale later. The patents may help RIM build smartphones that function faster and better over wireless networks, and provide the company with a considerable competitive advantage over rivals like Apple.

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