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04 September 2009, 08:57

EU: Concerns about Oracle's takeover of Sun Microsystems

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The European Commission competition watchdogs have raised concerns against the planned takeover of US server and software vendor Sun Microsystems by the Oracle software group. An in-depth investigation has been opened to find out whether the transaction is in conflict with EU Merger Regulations.

The European Commission said in a press release on Thursday that the proposed acquisition would raise competition concerns on the market for databases. According to European Commissioner for Competition, Neelie Kroes, the Commission has a particular obligation to ensure that customers would not face reduced choice or higher prices as a result of this takeover. The EC Competition watchdogs now have 90 working days, until 19 January 2010, to make a final decision.

The database market is highly concentrated, the European Commission writes, with the three main competitors of proprietary databases – Oracle, IBM and Microsoft – controlling approximately 85 per cent of the market in terms of revenue. According to the press release, Oracle is the market leader in proprietary databases, while Sun's MySQL database product is the leading open source database worldwide.

The Commission’s preliminary market investigation has reportedly shown that the Oracle databases and Sun's MySQL compete directly in many sectors of the database market. According to the release, MySQL is widely expected to exert more competitive pressure as it becomes increasingly functional. The open source nature of Sun's MySQL might not eliminate fully the potential for anti-competitive effects, said the Commission. The investigation will therefore address a number of issues, including Oracle's incentive to further develop MySQL as an open source database.

Oracle announced last April that it plans to take over Sun Microsystems for $7.4 billion (about £4.4 billion) including debts. Sun, one of the biggest server vendors worldwide, has been making losses for quite some time.

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