EU rebuffs Oracle's criticism of Sun merger investigation

Observers expect a 'bare-knuckles fight' between Oracle and the Commission over the inclusion of MySQL in the Sun deal

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In an unusually blunt rebuff, the European Commission has dismissed as "facile and superficial" criticism of its decision to issue formal objections to Oracle's planned acquisition of Sun Microsystems.

The Commission sent a statement of objections to Oracle and Sun late Monday because it believes the tie-up would result in Oracle cornering the market for database software. Oracle is in its own right the largest player in the database market, ahead of rivals IBM and Microsoft. The Sun deal would hand it Sun's MySQL, an open source database tool which is stealing market share from all three.

[ In anticipation of the statement of objects, Oracle began prepping last week for a long battle with the EU. |  Revelations last week that SAP tried to meet with Oracle has fueled suspicions that the EU is blocking the Oracle-Sun merger due to SAP's lobbying efforts. ]

"Despite MySQL being open source, Oracle would be the exclusive holder of copyright on the MySQL code, making it hard for competitors to do what they want with it," said Commission spokesman on competition matters, Jonathan Todd said on Tuesday.

While Oracle is the leading proprietary database vendor, MySQL is the leading open source vendor "and a particularly important force in the market now," he added.

Reacting to the statement of objections it received late Monday, Oracle had insisted the deal "doesn't threaten to reduce competition in the slightest, including in the database market."

"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," Oracle said.

Oracle claims MySQL doesn't compete in the high-end server market made up of banks and similar organizations requiring superfast and secure database access, and instead it is used by websites and other less critical clients.

"Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction," the company said.

Those comments provoked Todd's outburst Tuesday. Normally the Commission doesn't make any comment at all when it issues a statement of objections in a merger review.

Last week, a source close to Oracle warned that if a statement of objections was issued it would be "gloves off time".

"Looks like we are in for a bare-knuckle fight over the inclusion of MySQL in the deal," said one person close to the Commission who is following the merger review closely.

Tags: regulation, mergers and acquisitions, regulatory compliance, Sun Microsystems, Oracle

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