EC Finally Approves Oracle's Sun Acquisition

By Chris Preimesberger  |  Posted 2010-01-21 Print this article Print

UPDATED: The world's second-largest software maker now can continue to do business combined with Sun in the 27-country European Union. Oracle sells more than 20 percent of its software in the European sector, so the commission's approval was urgently needed for the deal to be completed.

Oracle won its protracted legal disagreement with the European Commission Jan. 21 when the agency's antritrust regulators approved the company's $7.4 billion acquisition of Sun Microsystems.

The world's second-largest software maker now can do business combined with Sun in the 27-country European Union. Oracle sells more than 20 percent of its software in the European sector, so the commission's approval was urgently needed for the deal to be completed.

It took more than five months for the EC to execute due diligence before deciding that Oracle's ownership of a key Sun asset, the popular open source MySQL database, would not be a detriment to free trade and continued development.

There was no immediate reaction from Sun or Oracle. However, the Redwood City, Calif.-based database and middleware provider was confident enough about the sanction that on Jan. 20 it called a news conference for Jan. 27 to unveil its "Oracle+Sun" strategy for 2010 and beyond.

Oracle is still awaiting similar sanctions from Russian and Chinese regulators. Both jurisdictions have said they would wait until the EC's decision before making their own determinations. Oracle has said it also expects to obtain approvals in those countries.

The EC said in a statement to the press that "after an in-depth examination, launched in September 2009, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it."

The No. 1 sticking point for months has been MySQL, an open-source database that Sun bought for $1 billion two years ago. The EC has been withholding approval of the acquisition since August 2009, seeking some kind of assurance that MySQL, which originated in Finland and Sweden, will be allowed to innovate and compete fairly in the IT marketplace.

That Oracle's own proprietary database potentially can compete with MySQL in some markets is seen by many industry people as a conflict of interest. Oracle CEO Larry Ellison contends that MySQL does not compete directly with his company's high-margin databases, but a large number of people working in relevant fields disagree.

EC 'Satisfied That Competition Will Be Preserved'

"I am now satisfied that competition and innovation will be preserved on all the markets concerned. Oracle's acquisition of Sun has the potential to revitalise important assets and create new and innovative products," EC Competition Commissioner Neelie Kroes said in the Jan. 21 statement.

The EC said that "athough Sun's share of the database market in terms of revenue is low, as users of MySQL can download and use the database for free, given its open source nature, the Commission's investigation confirmed MySQL's position as the leading open source database. The Commission's investigation therefore focused on the nature and extent of the competitive constraint that MySQL currently exerts on Oracle and whether this would be affected by the proposed transaction.

"The Commission's in-depth investigation showed that although MySQL and Oracle compete in certain parts of the database market, they are not close competitors in others, such as the high-end segment," the EC said.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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