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Oracle-Sun deal faces more questions from the EU

European regulators will dig deeper into the proposed Oracle-Sun deal, focusing on whether Oracle's possession of MySQL restricts choice among users.

The European Union (EU) today threw a fistful of tacks in Oracle's path to completing its $7.4 billion acquisition of Sun Microsystems, announcing plans to dig deeper into the competitive ramifications of the proposed deal.

European regulators have concerns about the deal restricting competition in an already "highly concentrated" market for databases, according to statements released by Neelie Kroes, the European competition commissioner.

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 In that statement, Kroes made it clear one of the areas to be scrutinized by the commission involves Oracle's takeover of Sun's popular MySQL open-source database. The commission will "examine very carefully the effects on competition in Europe when the world's leading proprietary database company proposes to take over the world's leading open-source database company," she said in the statement.

The EU's investigation will determine whether users from each company would face reduced choice or higher prices because of the deal.

Some analysts believe the EU's decision will put on hold any other acquisitions Oracle may want to pursue, and allows Suns' archrivals to eat more into its server marketshare.

"The immediate impact on the deal means that Oracle will probably hold off on any new acquisitions, and competitors such as HP and IBM will be deploying their own conversion and competitive programs," said Ray Wang, a partner with The Altimeter Group. "Sun on the other hand must continue to show its value to customers prior to the acquisition and post merger integration planning will be a bit slower."

The commission has until Jan. 19 to either approve the deal or suggest changes to restructuring it.

In a tersely worded statement, Oracle said the "European Commission has decided to seek more information regarding Oracle's acquisition of Sun Microsystems by conducting a Phase Two inquiry." The statement went on to note that The U.S. Department of Justice had approved the deal "without conditions" and terminated the waiting period under the Hart-Scott-Rodino Act.

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