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EC Holds Up Oracle-Sun Merger

The European Commission has opened up a full-blown antitrust investigation

The worst fears of Sun’s long-suffering shareholders have come to pass.

The European Commission has opened up a full-blown antitrust investigation of Oracle’s proposed $7.4 billion acquisition of Sun, throwing a monkey wrench into plans to close the deal now.

A decision on whether the acquisition gets a pass or a fail, or gets loaded down with conditions could take until January 19, another four-and-a-half months.

The regulators are fretting over the competitive implications of Oracle’s acquisition of MySQL concerned that Oracle may starve the rival database of resources.

The Commission said in a statement Thursday that it wasn’t sure that “the world’s leading proprietary database company” taking over “the world’s leading open source database company” wasn’t anti-competitive.

Antitrust czarina Neelie Kroes, herself an open source advocate, was quoted as saying, “The Commission has an obligation to ensure that customers would not face reduced choice or higher prices as a result of this takeover. Databases are a key element of company IT systems. In the current economic context, all companies are looking for cost-effective IT solutions, and systems based on open source software are increasingly emerging as viable alternatives to proprietary solutions. The Commission has to ensure that such alternatives would continue to be available.”

The EC said that its preliminary investigation of market found that “the Oracle databases and Sun’s MySQL compete directly in many sectors of the database market and that MySQL is widely expected to represent a greater competitive constraint as it becomes increasingly functional. The Commission’s investigation has also shown that the open source nature of Sun’s MySQL might not eliminate fully the potential for anti-competitive effects. In its in-depth investigation, the Commission will therefore address a number of issues, including Oracle’s incentive to further develop MySQL as an open source database.”

The regulators pointed out that Oracle, IBM and Microsoft own 85% of the “highly concentrated” database market in terms of revenue.

The Commission is worried that third-party developers will be able to continue to develop products based on MySQL, the AP said.

Further delays will give IBM and HP even more time than they’ve already had to rustle Sun’s remaining, uncertain, and Oracle-skittish hardware customers. They’ve been chasing them, reportedly to good effect, since Oracle announced its intentions to buy Sun and keep its server business in April.

The Justice Department waved the acquisition through without any conditions on August 20. US authorities were reportedly more concerned about Oracle’s impact on Java, a non-issue for the EC.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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