Oracle and the European Commission state their cases

The European Commission issued its formal statement of objections about the proposed Oracle-Sun deal, and Oracle was quick to respond.

Oracle Corp. and the European Commission (EC) are about to take off the gloves.

According to a regulatory filing by Sun Microsystems Inc., the EC released its formal "statement of objections" on Monday regarding Oracle's proposed $7.4 billion acquisition of Sun, confirming speculation that first surfaced last week.

The statement is the first step in which the EC is laying out its case for how the proposed merger violates European laws regulating unfair competition, and it could lead to the commission blocking the deal. In early September, the EC announced that it was going to conduct an extensive investigation of Oracle's plans to acquire Sun, with a particular focus on Oracle coming into possession of Sun's popular MySQL open source database.

Over the past month, EC officials made statements expressing the commission's disappointment over how, after repeated attempts, Oracle still had not responded to its requests to show evidence that the deal would not result in Oracle gaining a monopoly position in both the proprietary and open source database markets, thereby limiting the choices of European buyers.

Learn more about the EC's investigation of the Oracle-Sun deal
More on the EC's investigation

 Today, the EC finally got its response. In a statement released late today, Oracle made it clear that it thinks the proposed 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 vendor added that the deal "does not threaten to reduce competition in the slightest, including the database market."

The statement scolded the EC, stating that its 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 point of open source."

In its statement, Oracle also pointed out that it believes there are eight "strong players" still remaining in the database world, including IBM, Microsoft, Sybase Inc. and three "distinct open source vendors. The company asserted that there are "clear and distinct differences between its flagship database product and MySQL … and so there is no basis in European law for objecting to a merger of two among eight firms selling differentiated products."

In addition, Oracle noted that its proposed acquisition of Sun was quickly approved by the U.S. Department of Justice during the required Hart-Scott-Rodino review, with the DOJ concluding that there was nothing about the deal that made it unfair from a competitive standpoint.

With the EC's statement of objections now filed, Oracle and Sun can officially respond with arguments that attempt to rebut or address the EC's concerns.

 

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