Legal News

Neelie Says ?Not So Fast? on Sun/Oracle Merger

By Ashby Jones

So earlier this morning we got word, yet again, that the European Commission doesn’t exactly like the looks of another merger between two U.S.-based companies. The unlucky souls: software maker Oracle Corp. and Sun Microsystems Inc.

According to this WSJ story, the EC earlier today opened an in-depth antitrust investigation into Oracle’s planned purchase of Sun, citing “serious concerns” that the deal will stymie competition in the database market. Click here and here for further coverage from the Financial Times and the New York Times, respectively.

For now, a little background: Oracle makes databases and other software for large corporations, while Sun makes computer servers. But Sun also owns the widely-used MySQL open-source database program. As MySQL develops, it is expected to become a bigger competitor in the software market, the commission said, adding it will investigate Oracle’s plans to develop MySQL during the probe.

Said Neelie Kroes, the EU’s competition commissioner: “In the current economic context, all companies are looking for cost-effective IT solutions, and systems based on open-source software are increasingly emerging as viable alternatives to proprietary solutions,” she said. “The commission has to ensure that such alternatives would continue to be available.”

The probe gives the commission four more months to decide whether it will require concessions from Oracle in order to allow the deal, which was cleared last month by the U.S. Department of Justice. Oracle’s planned takeover was announced back in April.

For a little more information, we checked in with John Briggs, the co-chair of Axinn, Veltrop & Harkrider’s antitrust practice. Briggs called the EC’s announcement “surprising,” partly because the antitrust laws at issue are relatively congruent in both the U.S. and Europe, and partly because he expected Kroes-and-crew’s position to follow that of Christine Varney, her counterpart at the Department of Justice.

Given today’s ruling, Briggs says, he’s “not sure if he’s more surprised by the fact that Kroes announced a stepped-up investigation or that Varney didn’t put up more of a fight.”

Briggs added, though, that the discrepancy could owe, at least in part, to the fact that the EU puts a bit more credence in complaints from competitors. “We don’t exactly know who said what to whom,” adds Briggs, “but that could be part of what’s going on here.”

So far, in 2009, the EC trust-busters have not been altogether kind to U.S.-based companies. In May, it slammed Intel with a $1.45 billion fine for allegedly monopolistic behavior. Also in May, word broke that European Union regulators are pursuing a new round of sanctions against the Microsoft for the way it bundles its Web browser with its Windows software.

Full post as published by Law Blog - WSJ.com on September 03, 2009 (boomark / email).