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European Commission Objects to Oracle's Acquisition of Sun Oracle to "Vigorously Oppose" the Ruling
The European Commission (EC) issued a Statement of Objections on November 9th opposing Sun's acquisition by Oracle. According to a Securities and Exchange Commission (SEC) filing from Sun, the open-source MySQL database software is the sole issue of concern in the matter. In response, Oracle issued a statement saying the objection "reveals a profound misunderstanding of both database competition and open-source dynamics" and the company "plans to vigorously oppose the Commission's Statement of Objections as the evidence against the Commission's position is overwhelming." The Statement of Objections from the EC is a procedural step in which the Commission lays out its preliminary views about how it thinks the merger might infringe Europe's competition laws. In Sun's filing with the SEC, it noted that the EC objection is "a preparatory document that does not prejudge the European Commission's final decision." Oracle and Sun can now respond to the document by presenting arguments in response to the Commission's concerns, and once a final decision is issued, an appeal can be made to the European Court of First Instance if desired. Oracle's immediate response to the EC's November 9th Statement of Objections was issued later that same day by way of a statement, which began by defining the company's main objective in obtaining Sun: "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. The transaction does not threaten to reduce competition in the slightest, including in the database market. "The database market is intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors," the statement reads. "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 by Oracle caused the EC to respond on November 10th with spokesman Jonathan Todd clarifying that Oracle is the leading proprietary database vendor and MySQL is the leading open source vendor "and a particularly important force in the market now ... Despite MySQL being open source, Oracle would be the exclusive holder of copyright on the MySQL code, making it hard for competitors to do what they want with it." According to a report by SiliconValley.com, the EC notified Oracle executives on November 10th that if they want to challenge the commission's objections to the deal, they may do so at a hearing in Brussels on November 25th, the day before the Thanksgiving holiday is celebrated in the United States. Following the EC's formal objection, the U.S. Department of Justice Deputy Assistant Attorney General Molly Boast of the Department's Antitrust Division issued a statement of support for Oracle. "After conducting a careful investigation of the proposed transaction between Oracle and Sun, the Department's Antitrust Division concluded that the merger is unlikely to be anticompetitive," Boast said in the statement. "At this point in its process, it appears that the EC holds a different view. We remain hopeful that the parties and the EC will reach a speedy resolution that benefits consumers in the Commission's jurisdiction." It's unclear how much the EC's concerns with the merger may impact its timetable for clearance. In September, the EC began an in-depth investigation into Oracle's proposed $7.4 billion acquisition of Sun. At that time, a January 19th deadline was set for the EC to make a final decision on whether to sanction the move or propose some modifications. The Statement of Objections by the EC may signal its desire for more aggressive actions from Oracle before the deal can proceed, such as a divestiture of MySQL or other remedies. In fact, just last month Oracle Corp. President Safra Catz met with EU Competition Commissioner Neelie Kroes. Todd commented following the meeting that "Kroes expressed her disappointment that Oracle failed to produce, despite repeated requests, either hard evidence that there were no competition problems or a proposal for a remedy to the competition concerns identified by the commission. Kroes reiterated to Catz the commission’s willingness to move quickly towards a decision but underlined that a rapid solution lies in Oracle’s hands." Oracle has refused to compromise on MySQL, an asset that analysts say will help the world's No. 2 business software maker expand into new markets. Sun's open source MySQL database, while minuscule in revenue terms, is important to Oracle because it can help the company expand into other markets and improve its competitive edge against arch-rival Microsoft Corp, analysts have said, according to Reuters. "Oracle's install base represents the Old World -- the existing enterprise application space. There is a whole New World that Oracle hasn't been able to capture," said Marten Mickos, a former chief executive of MySQL. The latest statement from Oracle on the situation clearly outlines this stance with its "plans to vigorously oppose the Commission's Statement of Objections ... Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction." More Information
US Justice Department's statement by Deputy Assistant Attorney General Molly Boast
Oracle/Sun: Why European Union jurisdiction matters - By Jon Brodkin, Network World
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The database market is intensely competitive with at least eight strong players ... There is no basis in European law for objecting to a merger of two among eight firms selling differentiated products. 
European Commission Objects to Oracle's Acquisition of Sun
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