Concerned about competition in the database market, the European Commission has opened an investigation into Oracle’s proposed acquisition of Sun Microsystems for $7.4 billion.
The commission said that its initial market investigation indicated that the proposed acquisition would raise serious doubts as to its compatibility with the single market because of competition concerns over the databases market. By conducting a phase two inquiry, the commission intends to seek more information on the proposed acquisition.
The commission has 90 working days, until 19 January 2010, to take a final decision on whether the concentration would significantly impede effective competition within the European Economic Area (EEA) or a substantial part of it.
Neelie Kroes, the European Competition Commissioner, said in a statement: “The commission has to examine very carefully the effects on competition in Europe when the world’s leading proprietary database company proposes to take over the world’s leading open source database company. In particular, the commission has an obligation to ensure that customers would not face reduced choice or higher prices as a result of this takeover.”
The deal was originally announced in April, shortly after IBM has abandoned its bid to buy the software developer and hardware manufacturer. As per the planned transaction, Oracle has agreed to buy Sun Microsystems’ shares for $9.50 each. Last month, the US Department of Justice (DoJ) has approved the deal and waived off the antitrust waiting period.
The European Commission said that the database market is highly concentrated with the three main competitors of proprietary databases – Oracle, IBM and Microsoft – controlling around 85% of the market in terms of revenue.
The commission’s preliminary market investigation has shown that the Oracle databases and Sun’s MySQL compete directly in many sectors of the database market and that MySQL is widely expected to represent a greater competitive constraint as it becomes increasingly functional. It has also shown that the open source nature of Sun’s MySQL might not eliminate fully the potential for anti-competitive effects.
The commission said, in its in-depth investigation, it will address a number of issues, including Oracle’s incentive to further develop MySQL as an open source database.