Oracle vows fight as EC objects to acquisition of Sun Microsystems

The European Commission has objected on competitive grounds to the proposed acquisition of Sun Microsystems by US business software giant Oracle, Sun.

Sun, in a filing with US regulators, said that the EC has issued a so-called preliminary "statement of objections" to the proposed $7,4-billion deal.

The EC objections were limited to the combination of Sun's pen source MySQL database product with Oracle's enterprise database products and "potential negative effects on competition in the market for database products," Sun said.

The Santa Clara, California-based Sun noted that a statement of objections "does not prejudge the European Commission's final decision" and is subject to appeal, and Oracle said it planned to "vigorously oppose" the EC move.

The Redwood Shores, California-based Oracle said "the Commission's Statement of Objections reveals a profound misunderstanding of both database competition and open source dynamics.

"The database market is intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors," Oracle said.

"Oracle and MySQL are very different database products. There is no basis in European law for objecting to a merger of two among eight firms selling differentiated products," it said.

"Mergers like this occur regularly and have not been prohibited by United States or European regulators in decades," Oracle said.

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

The US Justice Department, which gave the deal the green light in August, also reaffirmed its support.

"After conducting a careful investigation of the proposed transaction between Oracle and Sun, the Department's Antitrust Division concluded that the merger is unlikely to be anti competitive," deputy assistant attorney general Molly Boast said in a statement.

"At this point in its process, it appears that the EC holds a different view," she said. "We remain hopeful that the parties and the EC will reach a speedy resolution that benefits consumers in the Commission's jurisdiction.

"The Department and the European Commission have a strong and positive relationship on competition policy matters," Boast added. "The two competition authorities have enjoyed close and cooperative relations.

"The Antitrust Division will continue to work constructively with the EC and competition authorities in other jurisdictions to preserve sound antitrust enforcement policies that benefit consumers around the world," she said.

Sun, a one-time Silicon Valley star, is the developer of the popular Java programming language.

Sun is also the fourth-largest maker of computer servers but has been steadily losing market share to IBM as well as Hewlett-Packard and Dell.

IBM also made a bid to acquire Sun but was edged out by Oracle.

Oracle develops, manufactures and distributes company software and is the market leader in proprietary databases - big beasts fro large-scale management of commercial information by businesses.

Sun, meanwhile, has built up the leading open source databases - which are now able to support similarly large-scale commercial databases running to hundreds of computing gigabytes in size.

Oracle, IBM and Microsoft together control about 85% of the database market in terms of revenue according to the EU.