European Commission To Review Oracle/Sun

The proposed $7.4 billion (£4.4bn) Oracle acquisition of Sun Microsystems, which was approved by about two-thirds of Sun’s stockholders 16 July and its full board of directors a few weeks before that, is facing a new legal hurdle as of 3 Aug  a possible antitrust investigation by the European Commission.

The Brussels-based EC, which is the antitrust watchdog wing of the European Union, said it has scheduled an antitrust review date of 3 Sept to discuss the multinational companies’ proposed deal. It will look closely at two main areas of concern: Sun’s Java networking software franchise and the enterprise parallel database business.

If the transaction is not approved by the commission at that meeting or shortly thereafter, it said it may decide to initiate a full due-diligence probe.

Such an investigation could take as long as four months, putting a serious slowdown in the acquisition plans. Oracle founder and CEO Larry Ellison has made it clear he wants to complete the acquisition as soon as possible.

Oracle and Sun are legally forbidden from official comment until the acquisition is sealed and approved by all regulatory agencies — national and international.

Oracle, along with its recent acquisitions of PeopleSoft and Siebel, owns nearly half of the enterprise parallel database market. IBM, with its DB2, comes in at around 22 percent. Microsoft SQL Server has about 19 percent, with Sun’s open-source MySQL, Sybase and Teradata taking up most of the final 9 percent.

Oracle would control more than half the market following the Sun acquisition, most analysts agree.

DoJ Still Doing Its Own Due Diligence

The deal is currently being investigated by the U.S. Department of Justice, which extended its probe on 23 June by 30 days and is still in the midst of its own due diligence. The DoJ, however, is investigating Oracle-Sun for concerns about the licensing of Sun’s Java networking codebase, which is used in more than 90 percent of the world’s mobile devices, laptop and desktop computers, and data centres.

Virtually all of Oracle’s enterprise middleware uses Java in its operation.

Sun, which has been bleeding dollars for nearly 10 years in the new IT economy and has the most to gain from the acquisition, does not appear to be worried about federal scrutiny. In fact, the company told eWEEK on June 29 that the DoJ action is simply an “irritation.”

“This is not unexpected,” a Sun spokesperson who asked not to be identified told eWEEK. “The new [Obama] administration is looking [more closely] at all mergers and acquisitions, by necessity. They’re looking deeply into all aspects of the economy.”

The EC is well known for being aggressive with corporations around the world when it comes to anticompetitive practices — or even the suspicion of such practices.

The EC has been in court with Microsoft for more than a decade in legal disputes surrounding the inclusion of music players and browsers in the company’s Windows operating system. Microsoft has been imposed with heavy fines, and the cases have yet to be settled.