The California merger of two of the world’s biggest database and software companies ran into a hurdle on Thursday when the European Commission announced an in-depth investigation of Oracle’s proposed takeover of Sun Microsystems.
Only two weeks after the US authorities gave a green light to the deal, Neelie Kroes, the EU’s competition commissioner, said initial inquiries had raised worries about the impact on the databases market.
The US$7.4 billion deal was blessed last month by the US justice department, but Brussels announced a 90-day investigation to be completed by January, halting the merger at least temporarily. The inquiry is expected to concentrate on the effect of Oracle obtaining control of the open-source MySQL, the industry leader bought by Sun last year.
“The transaction would bring together two major competitors in the market for databases,” the commission said. “The database market is highly concentrated, with the three main competitors of proprietary databases — Oracle, IBM and Microsoft — controlling approximately 85 percent 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.”
Yesterday’s move reinforced Kroes’ reputation as the toughest scrutineer of some of the world’s leading companies. Brussels has had a long-running dispute with Microsoft over its dominance of the market for Internet browsers.
“The commission has an obligation to ensure customers would not face reduced choice or higher prices as a result of this takeover,” Kroes said.
Brussels will seek to ensure that open-source software designers would still be able to develop software based on the MySQL database.
Other leading software companies, such as Microsoft and Germany’s SAP, had criticized the proposed Oracle takeover, arguing that the deal could lead to price increases for databases.
The US justice department gave its approval to the merger last month after several months of investigation. Jonathan Todd, Kroes’ spokesman, said that while Brussels was concerned with competition in the database market, the Americans had examined Sun’s Java programming language and the implications of the takeover for Java’s licensing. He said this was not an issue for the EU.
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