The European Union has officially objected to Sun Microsystems' $7,4-billion acquisition by Oracle saying the combination of Sun's MySQL with Oracle's database products could have a "potential negative effect" on competition in the database market.
In a Securities and Exhange Commission (SEC) statement issued yesterday, Sun confirmed the EU's objection.
"On November 9, 2009, the European Commission issued a statement of objections relating to the acquisition of Sun by Oracle Corporation," it says. "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."
Oracle was quick to defend the proposed acquisition, issuing its own statement.
"Oracle's acquisition of Sun is essential for competition in the high end server market, for revitalising Sparc and Solaris and for strengthening the Java development platform," Oracle says. "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," it continues. "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."
Oracle points out that the US Department of Justice has already sanctioned the deal.
"The US Department of Justice carefully reviewed the proposed acquisition during the normal Hart-Scott-Rodino review and considered it again when the European Commission initiated a second phase review. On both occasions the Justice Department came to the conclusion that there is nothing anticompetitive about the deal, including specifically Oracle’s acquisition of the MySQL database product. The US Department of Justice approved the acquisition without conditions and terminated the waiting period under the Hart-Scott-Rodino Act on August 20, 2009.
"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," Oracle says.