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EU Issues Formal Statement of Objections to Oracle's Acquisition of Sun

by Charles Humble on Nov 11, 2009 |

According to a Sun Securities and Exchange Commission filing, the EU issued a formal statement of objections involving the merger of Sun Microsystems and Oracle on Monday 9th November. As expected these concerns are limited to Oracle's acquisition of MySQL. From the filing:

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. The issuing of a Statement of Objections allows addressees to present arguments in response to the Commission's preliminary assessment of the competitive effects of a notified transaction. A Statement of Objections is a preparatory document that does not prejudge the European Commission's final decision. Any final decision by the European Commission is subject to appeal to the European Court of First Instance.

The EU's decision to issue a statement of objections isn't surprising. The commission fired a warning shot to Oracle last month when a spokesman for Competition Commissioner Neelie Kroes stated that Kroes had:

expressed disappointment that Oracle had failed to produce, despite repeated requests, either hard evidence that there were no competition problems or, alternatively, proposals for a remedy to the competition problems identified by the Commission.

The EC further stated it would be happy to move quickly to approve the deal providing its concerns over MySQL are met.

Oracle is currently showing no sign of contrition. In a strongly worded response it argues that the EU, and by implication MySQL founder Monty Widenius and Free Software Foundation founder Richard Stallman both of whom have backed the EU's position, simply don't understand open source software:

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 goes on to to state that the database market is "intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors."

Despite the EU's objections Oracle remains confident:

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 case has led to a rare difference of opinion between anti-trust regulators on either side of the Atlantic, with the US Department of Justice clearing the transaction in August. In an unusual move, the Department of Justice issued its own statement on Monday reiterating its view that the proposed deal does not give rise to anti-trust concerns. Molly Boast, deputy assistant attorney in the anti-trust division, said it had concluded that:

Consumer harm is unlikely because customers would continue to have choices from a variety of well established and widely accepted database products.

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