EU issues objections to Oracle's Sun acquisition

IDG News Service - The European Commission on Monday issued its formal "statement of objections" over Oracle's planned acquisition of Sun Microsystems, saying the deal would harm competition in the database market.

Oracle responded that it would "vigorously oppose" the Commission, saying its position reflects "a profound misunderstanding of both database competition and open source dynamics." The U.S. Department of Justice, which has already approved the deal, also weighed in, saying it studied the deal carefully and concluded that it is "unlikely to be anticompetitive."

The statement of objections was rumored to be imminent last week, and follows the Commission's decision in September to launch an in-depth probe of Oracle's planned Sun acquisition. It is a procedural step in European antitrust investigations that paves the way for Oracle to make a formal response.

"The Statement of Objections sets out the Commission's preliminary assessment regarding, and is limited to, the combination of Sun's open source MySQL database product with Oracle's enterprise database products and its potential negative effects on competition in the market for database products," Sun said in a regulatory filing with the U.S. Securities and Exchange Commission.

The statement of objections is "a preparatory document" and does not necessarily mean the Commission will block the merger, Sun said. It also noted that any final decision can be appealed.

The text of the Commission's objections to Oracle was not released publicly. The Commission is supposed to issue a ruling on the matter by Jan. 19.

Oracle announced its plan to acquire Sun in April for US$7.4 billion. The deal was approved by U.S. competition regulators after a brief review, but the Commission said it was concerned about the effects of the acquisition on Sun's MySQL open-source database, which it acquired last year.

In a foretaste of the arguments it will present to the Commission, Oracle asserted in a statement Monday that the deal "does not threaten to reduce competition in the slightest, including in the database market."

"It is well understood by those knowledgeable about open source software that because MySQL is open source, it cannot be controlled by anyone. That is the whole point of open source," Oracle said.

It characterized the database market as "intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors."

It also argued that the deal is "essential for competition" in the high-end server market because it would revitalize Sun's Sparc processor and Solaris OS platforms. It would also strengthen the Java development platform, according to Oracle.

"Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction," the company said.

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