EC Objects To Oracle's Sun Acquisition

The European Commission fears that combining Oracle's proprietary database with the open source MySQL would hurt competition.

The European Commission issued a "statement of objections" to Oracle's plans to acquire Sun Microsystems, arguing that the purchase would hurt competition in the database market.

The preliminary assessment by the executive branch of the European Union, issued Monday, expressed concern over the market impact of combining Sun's open source MySQL with Oracle's proprietary enterprise database, according to a Sun filing with the U.S. Securities and Exchange Commission.

A statement of objections reflects the EC's thinking, but is not a final decision.

Oracle challenged the EC's objections. "The transaction does not threaten to reduce competition in the slightest, including in the database market," Oracle said. "The commission's statement of objections reveals a profound misunderstanding of both database competition and open source dynamics."

Oracle argued that an open source database like MySQL can't be controlled by any one vendor, and the database market as a whole is "intensely competitive" with at least eight major players, including IBM, Microsoft, Sybase and three distinct open-source vendors.

"There is no basis in European law for objecting to a merger of two among eight firms selling differentiated products," Oracle said. "Mergers like this occur regularly and have not been prohibited by United States or European regulators in decades."

Oracle said it would "vigorously oppose" the EC's statement of objections.

Oracle in April offered $7.4 billion for Sun. The transaction, which Sun's board approved, would make it possible for Oracle to integrate business software, an operating system, middleware and database on top of its own hardware. The integration fits CEO Larry Ellison's basic growth strategy of continuously broadening the product portfolio it offers to Oracle's 300,000 business customers.

Oracle originally hoped to complete the acquisition by August, but the EC inquiry threw a wrench into the company's plans. The commission in September set a Jan. 19, 2010, deadline for finishing the investigation.

The U.S. Justice Department approved the acquisition in August.

InformationWeek has published an in-depth report on Sun's future under Oracle. Download the report here (registration required).

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