EU puts brakes on Oracle's Sun acquisition

Posted by Aharon Etengoff

San Francisco (CA) - The European Union has announced plans to review Oracle's pending acquisition of Sun Microsystems. An EU official explained that regulators would "carefully" examine the potential effects such a deal would have on the "highly concentrated" database market.

"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," said Competition Commissioner Neelie Kroes. "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."

Kroes explained that databases were 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."

EU puts brakes on Oracle's Sun acquisition

Kroes added that the Commission's preliminary market investigation illustrated that Oracle databases and Sun's MySQL "competed directly" in numerous sectors of the database market. The Commission also determined that MySQL is "widely expected" to represent a greater competitive constraint as it becomes increasingly functional.

In addition, the investigation found that the "open source nature" of Sun's MySQL might not "fully eliminate" the potential for anti-competitive effects.

"The proposed transaction would bring together two major competitors in the market for databases. The database market is highly concentrated with the three main competitors of proprietary databases – Oracle, IBM and Microsoft – controlling approximately 85% of the market in terms of revenue. Oracle is the market leader in proprietary databases, while Sun's MySQL database product is the leading open source database," the Commission added in an official statement.

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