War of words escalates between EU and Oracle

The Oracle Sun deal has hit delays in Europe

The European Commission (EC) has come under attack from both the US Department of Justice (DoJ) and Oracle after sending a Statement of Objections to both the software giant and Sun Microsystems regarding their proposed tie-up.

The EC sent its preliminary assessment to the two suppliers late on Monday US Pacific Time, saying that it believed any merger would result in Oracle gaining a dominant share of the database market, which would in turn damage competition. It has until 19 January 2010 to formally decide whether to approve or block the deal.

Oracle is already the largest single player in the database sector ahead of rivals IBM and Microsoft, and its proposed acquisition would see Sun’s increasingly popular MySQL open source database join its portfolio. MySQL is currently gaining market share from all three suppliers, particularly in the small-to-medium enterprise space.

The US DoJ, which approved the proposed arrangement in August, responded to the EC’s move by saying in a statement that it believed customers would still have a range of choices and that the merger was unlikely to be anti-competitive. It also hoped to see a speedy resolution to the situation.

Oracle, on the other hand, indicated in a statement that it intended to “vigorously oppose” the EC as it believes the deal does not threaten to reduce competition “in the slightest".

It said that people who knew about open source software understood that it could not be controlled by anyone.

“Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction," the statement said.

But Jonathan Todd, spokesman for European Competition Commissioner Neelie Kroes, reportedly said during a daily briefing today, that even though MySQL was an open source product, Oracle would still hold the exclusive copyright to its code, making rivals subject to competitive restraints.

According to Reuters, he described the US DoJ’s comments as “unusual”, adding that he could not recall the EC ever issuing a statement about ongoing investigations in another jurisdiction. Todd added that the two regulators used different approaches and applied different rules when examining merger cases.

But such remarks are unusual in themselves as the EC does not normally make any comment after issuing a Statement of Objections relating to a merger review.

Todd added that Oracle's claims that the EC doesn't understand the market were "facile and superficial".