Oracle vs. EC: Prepare for a Fight

European antitrust regulators have come out with their objections to Oracle Corp.'s (NASDAQ:ORCL) pending $7.4 billion acquisition of Sun Microsystems Inc. (NASDAQ:JAVA), as expected. Another not-so-big surprise: Oracle is coming out swinging.

In a statement issued Monday afternoon in response to the European Commission's objections (which Sun flagged in a filing with the Securities and Exchange Commission), Oracle accused the EC of having a "profound misunderstanding of both database competition and open source dynamics." European regulators' primary concern is the effect that acquiring Sun's MySQL database management software unit will have on competition, as Oracle is a leader 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," the Oracle statement said (read the whole thing here). "That is the whole point of open source."

The U.S. Department of Justice, which gave the Sun deal a green light in August, issued its own statement Monday that laid out its reasoning for approving the acquisition:

"Several factors led the Division to conclude that the proposed transaction is unlikely to be anticompetitive. There are many open-source and proprietary database competitors. The Division concluded, based on the specific facts at issue in the transaction, that consumer harm is unlikely because customers would continue to have choices from a variety of well established and widely accepted database products. The Department also concluded that there is a large community of developers and users of Sun's open source database with significant expertise in maintaining and improving the software, and who could support a derivative version of it."

Oracle, arguing that Sun customers "universally" back the takeover, said it plans to fight the EC on this one, and, if the company's track record with its successful court battle against the DOJ on its Peoplesoft acquisition is any indicator, it knows when to pick a fight.

"Oracle plans to vigorously oppose the Commission's Statement of Objections as the evidence against the Commission's position is overwhelming," the statement read. "Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction." -- Olaf de Senerpont Domis

Comments

[BeachRider]

We need to see the EC's written opinion on this. On the surface, Larry Ellison is right. ORCL could retard new releases of MySQL, but if he deviates too far, other value-added providers could seize the initiative and deflate ORCL's investment-value. All of this could happen without anyone asking ORCL's opinion of the change.

If this proves to be some kind of Protectionism of European MySQL provider-services, that would be baaad.

2009 Nov 10 04:56 PM

[spald_fr]

Is there any way that Seeking Alpha can take down the photo of Larry Ellison? Jeez, he looks like a sleezebag homo porn star.

2009 Nov 11 03:42 PM