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In Oracle-Sun Deal, Europeans Prove Tougher Than U.S. Regulators

After the Justice Department's approval last month of software giant Oracle's $7.4 billion acquisition of Sun Microsystems, European regulators put up another obstacle to the merger.

The European Commission said Thursday morning it launched an in-depth investigation into the merger to see whether Oracle was committed to developing Sun's rival open-source database software MySQL after the merger.

The European Commission's competition commissioner, Neelie Kroes, said in a release: "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. In particular, the Commission has an obligation to ensure that customers would not face reduced choice or higher prices as a result of this takeover.

Databases are a key element of company IT systems. In the current economic context, all companies are looking for cost-effective IT solutions, and systems based on open-source software are increasingly emerging as viable alternatives to proprietary solutions. The Commission has to ensure that such alternatives would continue to be available".

Kroes said it has until Jan. 19 to decide to approve or reject the merger.

Oracle issued a release that noted that Sun shareholders approved in merger in July and that the Justice Department's approval of the merger last month was without conditions.

Indeed, the inquiry was a surprise to investors and analysts who had thought the biggest obstacle would be the Justice Department's clearance of the deal. But this isn't the first time European regulators have proved to be tougher on antitrust enforcement than the U.S. Last May, they fined chip maker Intel a record $1.4 billion for using alleged strong-arm tactics to force computer makers to buy their chips. Antitrust experts such as Albert Foer of the American Antitrust Institute say U.S. antitrust regulators will be compelled to follow the E.C.'s lead on the Intel decision.

This all comes as the Obama administration has promised to ramp up enforcement of competition laws.

By Cecilia Kang  |  September 3, 2009; 10:40 AM ET  | Category:  Cecilia Kang
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Please email us to report offensive comments.

C'mon you guys -- you have to be used to the new European way of climbing out of recession -- It's called "protection". It's what used to happen in tough neighborhoods in the US that were controlled by a gang of thugs -- "just pay us a fee and we'll make sure nothing bad happens to you. If not, well, I'm not sure how long it will take you to open that candy store."

It has been done for a decade with Microsoft, is ongoing with Intel, and will continue with large American Technology companies until our country steps up to the plate. The only way to counter this Billion Euro racket is to run a "protection scheme" over here for European companies. So if they want to sell chocolate or airplanes to us, we will have to pass on their business methods, and a few $Billion will help us make up our mind in their direction.

He, we have a recessionary deficit to make up for too.

Posted by: tommariner | September 3, 2009 1:06 PM

It would seem to make sense to force Oracle to spin off MySql. Presumably, MySql is a minor part of the deal. Certainly, it is not a major part of Sun's business. But it is hard to believe that Oracle will serve the needs of MySql's customers.

Posted by: dnjake | September 3, 2009 1:35 PM

I am not surprised that the people whining about EU regulations are among the most ignorant. Microsoft was sued by SUN in the EU, Intel was sued by AMD in the EU, etc, as people could see that's American companies suing American companies, in a jurisdiction where there is still a justice whereas the US anti-trust so-called justice usually surrendered that past decade, some people bigoted prejudices and ridiculous litany -hi2u tommariner- being completely baseless and ignoring that Europeans companies are sued too when they deserves it.

Posted by: Sensi23 | September 3, 2009 2:55 PM

There is very little in the way of software that Sun has that Oracle doesn't already have a more than viable product. Key reasons that Oracle bought Sun was to gain control of Java and to kill off (or at least unfund) competitive open source applications. MySql is the most widely adopted and well known but Sun has worked hard at moving their entire software base to open source. That includes everything from an application server to virtualization technology. A lot of stuff that Oracle would like to have go away.


Disclaimer: I worked at Sun for 20 years.

Posted by: giff | September 4, 2009 9:08 AM

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