The European Commission (EC) has objected on competitive grounds to the proposed acquisition of Sun Microsystems by US business software giant Oracle, Sun said on Monday.
Sun, in a filing with US regulators, said the EC has issued a so-called preliminary “statement of objections” to the proposed US$7.4 billion deal.
The EC objections were limited to the combination of Sun’s open source MySQL database product with Oracle’s enterprise database products and “potential negative effects on competition in the market for database products,” Sun said.
The Santa Clara, California-based Sun said a statement of objections “does not prejudge the European Commission’s final decision” and is subject to appeal, and Oracle said it planned to “vigorously oppose” the EC move.
“The transaction does not threaten to reduce competition in the slightest, including in the database market,” Oracle said in a statement.”
Oracle, base in Redwood Shores, California, said “the Commission’s Statement of Objections reveals a profound misunderstanding of both database competition and open source dynamics.”
“The database market is intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors,” Oracle said.
“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,” it said.
The US Justice Department, which gave the deal the green light in August, also reaffirmed its support on Monday.
“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,” Deputy Assistant Attorney-General Molly Boast said in a statement.
“At this point in its process, it appears that the EC holds a different view,” she said.
“We remain hopeful that the parties and the EC will reach a speedy resolution that benefits consumers in the commission’s jurisdiction,” Boast said.
Sun, a one-time Silicon Valley star, is the developer of the popular Java programming language. Oracle develops, manufactures and distributes company software and is the market leader in proprietary databases — big beasts for large-scale management of commercial information by businesses.
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