SAP, Microsoft lobby EU to prevent Oracle from acquiring Sun

[Feenix566]

Oracle Faces In-Depth EU Probe Over Sun Purchase (Update3)

By Peter Chapman and Matthew Newman

Sept. 3 (Bloomberg) -- Oracle Corp.’s $7.4 billion acquisition of Sun Microsystems Inc. was put on hold as the European Commission opened an in-depth investigation two weeks after U.S. regulators approved the deal.

There are “serious doubts” about competition in the market for databases if Oracle acquires Sun, the European Commission in Brussels said in an e-mailed statement today. The EU’s initial probe indicated that the deal may lead to higher prices and reduced consumer choice, the regulator said.

“The commission has to 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,” Competition Commissioner Neelie Kroes said in the statement.

The investigation contrasts with the decision of U.S. regulators to clear the deal on Aug. 20. The EU probe focuses on Oracle’s control of the MySQL product, the leading open-source database that Sun bought last year.

“It increases the risk that Oracle will have to divest some aspects of the Sun business to get the deal done,” said Chris Hickey, an analyst at Atlantic Equities in London. He owns no Oracle shares and rates them overweight. Divesting MySQL “wouldn’t be a huge impact financially” on the deal, he said.

Earnings

Oracle, based in Redwood City, California, acknowledged the extended probe in a statement today. Oracle, the world’s second- largest software maker, has said the purchase would add $1.5 billion to operating earnings, excluding some items, in the first year.

“Closing of the transaction is subject to certain conditions, including clearance by the European Commission,” Oracle said.

Analysts, including ISI Group’s Heather Bellini in New York, had expected the EU to approve the deal during the initial 25-working day investigation. Bellini said in a note today that the EU probe won’t last the entire 90 working days.

“We continue to believe that Oracle will be successful in acquiring Sun in its current form, without the need for a divestiture,” she wrote.

Oracle competitors including SAP AG and Microsoft Corp. lobbied for an extended probe, arguing the deal could drive up prices for databases.

No Java Issues

In the U.S., the Department of Justice scrutinized the deal’s impact on the licensing of Sun’s Java programming language. The EU has no issues with Java licensing, commission spokesman Jonathan Todd said.

In Europe, the focus is on whether Oracle will have the potential of building a dominant position in the enterprise server market by acquiring MySQL. Oracle is the market leader in proprietary databases, while Sun’s MySQL database product is the leading open-source database, the commission said.

The commission said the database market is “highly concentrated” with Oracle, International Business Machines Corp. and Microsoft controlling about 85 percent of the market.

http://www.bloomberg.com/apps/news?p...d=apNy67Z0Sb34

So now if you're a big business and you can't get one big government into bed with you, you just go across the pond and get a different big government in bed with you. Of course, all this supposedly takes place to protect the interests of the consumer.

[enjerth]

Umm, the EC is concerned about Oracle "gaining control" of an open source product?

You can't "gain control" of an open source product, AFAIK. It belongs to the community. You can control how your product continues to develop, but (depending on the license) almost anyone can continue development by forking the project.

It's frickin open source, why are they so concerned about it?

[SimpleName]

This is really annoying. Companies have to be afraid to merge or acquire assets because of these EU freaks. The US is bad enough, but the EU constantly pushes it way overboard. They have repeatedly beaten the crap out of Microsoft with b/s fines that stretch in hundreds of millions. Sickening...