Oracle Receives European Union Objections Over Sun Purchase

Oracle Receives European Union Objections Over Sun Purchase


Nov. 9 (Bloomberg) -- Oracle Corp., the world’s biggest maker of database software, was told by European Union regulators that its $7.4 billion purchase of Sun Microsystems Inc. may break antitrust rules.

The European Commission, the EU’s antitrust agency, issued a so-called statement of objections today, Sun said in a regulatory filing. The commission said Oracle’s acquisition of Sun’s MySQL database software causes competition concerns.

Oracle Chief Executive Officer Larry Ellison said Sept. 22 that its database software doesn’t compete with MySQL, which is mainly used by companies to run Web pages. Ellison said Sun is losing about $100 million a month as the transaction is delayed by the EU probe. He said at the time that he won’t divest MySQL, which he views as an important asset to boost sales to small and medium-sized companies.

Oracle said in a statement today that the acquisition of Sun is “essential for competition in the high-end server market.” The company said the statement of objections shows a “profound misunderstanding” of database competition.

While the statement of objections puts pressure on Oracle to offer concessions to the EU, it doesn’t guarantee the regulator will try to block the deal. TomTom NV, Europe’s largest maker of car-navigation devices, won approval for its acquisition of digital-mapping company Tele Atlas NV after receiving an EU complaint.

Deborah Hellinger, a spokeswoman for Redwood City, California-based Oracle, didn’t respond to an e-mail seeking comment. Sun declined to comment beyond the statement, said Karen Kahn, a spokeswoman for Sun.

Job Cuts

Sun said last month that it plans to cut as many as 3,000 jobs, or about 10 percent of its workforce, to pare expenses over the next 12 months.

Oracle accounted for almost 43 percent of database revenue in 2008, according to Gartner Inc., a market research firm based in Stamford, Connecticut. Sun’s share, including MySQL, was less than half of 1 percent, Gartner said in June.

The Brussels-based commission began an in-depth review of the takeover on Sept. 3 and is scheduled to rule by Jan. 19. The investigation followed lobbying by Oracle competitors including SAP AG and Microsoft Corp.

After receiving the statement of objections, the company can request a hearing to convince the commission that there are no competition problems. Oracle can appeal an EU veto at European courts in Luxembourg.

The transaction was approved by U.S. authorities in August. In the U.S., the Justice Department scrutinized the deal’s effect on the licensing of the Java programming language. The EU has no issues with Java licensing, the EU said in September.

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