European Commission Issues 'Objections' To Oracle-Sun Deal

database software

The latest development could further delay Oracle's efforts to wrap up the acquisition, which has been approved by Sun shareholders and the U.S. Department of Justice.

Word of the EC position was included in a Sun Microsystems filing with the Securities and Exchange Commission Monday. The EC objection is limited to Oracle's potential ownership of Sun's MySQL open-source database.

Oracle issued a defiant response calling the EC position "a profound misunderstanding of both database competition and open source dynamics."

The EC announced in September that it had concerns about the acquisition and was launching an inquiry into the issue. The commission specifically cited questions it had about the impact of Oracle's acquisition of MySQL.

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But Oracle has refused to make any concessions -- CEO Larry Ellison said at Oracle OpenWorld last month that his company would not give up MySQL. And last week a story in The Financial Times quoted EC officials as saying Oracle had not provided evidence that the deal would not be anti-competitive, nor had Oracle discussed possible remedies.

"Oracle's acquisition of Sun is essential for competition in the high end server market, for revitalizing Sparc and Solaris and for strengthening the Java development platform," Oracle's statement said. "The transaction does not threaten to reduce competition in the slightest, including in the database market. The Commission's Statement of Objections reveals a profound misunderstanding of both database competition and open source dynamics. 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.

"The database market is intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors. Oracle and MySQL are very different database products. There is no basis in European law for objecting to a merger of two among eight firms selling differentiated products. Mergers like this occur regularly and have not been prohibited by United States or European regulators in decades," the statement said. "Sun's customers universally support this merger and do not benefit from the continued uncertainty and delay. Oracle plans to vigorously oppose the Commission's Statement of Objections as the evidence against the Commission's position is overwhelming. Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction."

A formal EC Statement of Objections allows parties in a case to present arguments in response to the commission's preliminary assessment, according to Sun's SEC filing, and is not a final decision.