The EC’s initial market investigation indicated that the proposed merger raised “serious doubts” and “competition concerns” relating to the database market. In opening a detailed inquiry, the EC has given itself an additional 90 working days — until January 19, 2010 — before it must render a regulatory verdict on the takeover.
Said Neelie Kroes, EC competition commissioner:
“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. Databases are a key element of company IT systems. 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. The Commission has to ensure that such alternatives would continue to be available”.
Bloomberg reports that Oracle competitors, including SAP AG and Microsoft Corp. lobbied for an extended probe, arguing the deal could drive up prices for databases.
Initially, Oracle had hoped to close the Sun deal by the end of August. Those hopes proved unrealistic. The inhabitants of the executive suites at Redwood Shores cannot be pleased that they will have to wait until well into winter before learning whether they can proceed with the integration and assimilation of Sun’s assets.
Meanwhile, as Oracle waits for a definitive outcome, Sun’s lines of business, especially its hardware business, are left twisting in the regulatory wind. Sun’s server customers are being expertly courted by IBM and HP, Sun’s financial performance and market share are suffering, and morale on Sun’s Silicon Valley campuses cannot be great.
Oracle’s master plan for Java, and everything else in the Sun fold, have been suspended. While the likely outcome ultimately remains some form of EC regulatory approval, the value of Sun’s business assets will be impaired by the extended review process.