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EU to Probe Oracle-Sun Deal

BRUSSELS -- The European Commission Thursday opened an in-depth antitrust investigation into U.S. software maker Oracle Corp.'s planned $7.4 billion purchase of Sun MicrosystemsInc., citing "serious concerns" the deal will stymie competition in the database market.

Associated Press

"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," said Competition Commissioner Neelie Kroes.

The commission, the European Union's executive arm, wants to ensure customer choice won't be reduced and that they won't face higher prices as a result of the takeover, she added.

"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 in-depth probe gives the commission four more months to decide whether it will require concessions from Oracle in order to allow the deal, which was recently cleared by the U.S. Department of Justice. The deadline for the commission's antitrust probe has now been set for Jan. 19, 2010, but cooperation on concessions could mean a decision is made earlier.

The database market is highly concentrated, with Oracle, International Business MachinesCorp. and Microsoft Corp. controlling approximately 85% of the market in terms of revenue, the commission said.

Oracle makes databases and other software for large corporations, while Sun makes computer servers and owns the widely used Java technology platform and the 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.

California-based Oracle will want to speed up the clearance process as much as it can, as any delay is likely to further hit Sun's market share in high-end corporate servers.

Many customers are moving to competitors like IBM because of the uncertainty surrounding approval of the deal and Oracle's product road map for Sun, analysts say. IBM has said in recent months that its business has benefited from the uncertainty surrounding the Oracle-Sun deal. The Armonk, N.Y.-based technology giant won more than 250 customers from Sun in the first half and the pace accelerated in the second quarter.

Oracle announced its intentions to buy Sun in April, snatching the computer maker from the grasp of IBM, which had made its own bid for Sun. Sun shareholders approved the deal in July. The U.S. Department of Justice approved the deal in August with no conditions after its own antitrust review in June.

The bid marked new territory Oracle, turning it into a one-stop technology shop, like IBM andHewlett-Packard Co. It is already expanding aggressively outside its core database-software business, moving into business applications, and will start making hardware if the Sun deal goes through.

—The Associated Press contributed to this article.
Category: Technology | Views: 1043 | Added by: magictr | Tags: Sun, EU | Rating: 0.0/0
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