Update: Since this article was first published, SAP provided its perspective on the merger discussions. See the final paragraphs for this update.
The European Commission on Competition issued a formal objection to Oracle’s Sun Microsystems acquisition on Monday, according to Oracle, reiterating its worries about the fate of Sun’s open source MySQL database product.
The commission would not confirm the action today, saying that it “never comments on whether or not it has issued a Statement of Objections in a merger case.“ Without addressing the Oracle case specifically, commission spokesman Jonathan Todd explained in a press briefing that “sending a Statement of Objections is how we outline our precise concerns on why a company may be breaching the rules on merger control or antitrust.“
The commission still has until Jan. 19, 2010, to issue a final decision on “whether the [merger] would significantly impede effective competition within the European Economic Area (EEA) or a substantial part of it.”
Oracle confirmed that it had received the formal objection and fired back late Monday, releasing a statement that read, in part, “The commission’s Statement of Objections reveals a profound misunderstanding of both database competition and open source dynamics. It is well understood by those knowledgeable about open source software that because MySQL is open source, it cannot be controlled by anyone. That is the whole point of open source.”
And the Redwood Shores, CA, company showed no signs of fatigue, stating, “Oracle plans to vigorously oppose the commission’s Statement of Objections as the evidence against the commission’s position is overwhelming. Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction.”
Todd volleyed back during today’s press conference, saying, ”Oracle claims that we do not understand the market. Their criticisms are facile and superficial. Despite the fact that MySQL is open source, Oracle would be the exclusive holder of the copyright and the trademark for the MySQL code. This means that, despite the open source nature of MySQL, it could be difficult for a competitor using the MySQL code to sufficiently replace the competitive constraint currently exerted by MySQL in a timely manner. With the proposed merger, the leading proprietary database vendor Oracle would acquire the leading open source database vendor MySQL. MySQL appears to constitute a particularly important competitive force in the database market.”
The would-be deal has passed muster at the U.S. Department of Justice, which cleared it months ago and issued a statement today reiterating its blessing. The statement read, in part, “After conducting a careful investigation of the proposed transaction between Oracle and Sun, the Department’s Antitrust Division concluded that the merger is unlikely to be anticompetitive. … We remain hopeful that the parties and the EC will reach a speedy resolution that benefits consumers in the commission’s jurisdiction.”
“The statement of the DOJ is unusual," Todd said at the briefing. "We cannot recall any instance of the commission in the past issuing a statement on an ongoing investigation in another jurisdiction. However, we have a very cooperative relationship with the U.S. antitrust authorities. But we do not always have the same evidence in front of us. We have our methods; they have theirs.“
Some market observers have speculated that the commission’s stonewalling owes in some way to the influence of Germany’s SAP. Although SAP does not offer database products, the European company is Oracle’s chief rival in the applications and middleware market. In a Nov. 5 opinion piece, the Wall Street Journal reported on what it said was a Sept. 15 letter from SAP CEO Léo Apotheker to Oracle CEO Larry Ellison expressing “significant concerns about Oracle's proposed takeover of Sun.”