European Commission objects to Sun-Oracle deal

The European Commission has objected to Oracle Corp's proposed $7.4 billion acquisition of Sun Microsystems, saying that the deal could threat competition in the market.

The statement of objections was regarding the combination of Sun's open source MySQL database product with Oracle's enterprise database products and its potential negative impact on competition in the market, Sun Microsystems said in a filing to the the US Securities and Exchange Commission.

A Statement of Objections is a preparatory document that does not prejudge the European Commission's final decision.

Any final decision by the commission is subject to appeal to the European Court of First Instance.

Meanwhile, Oracle said in a statement: "The transaction does not threaten to reduce competition in the slightest, including in the database market. The Commission's Statement of Objections reveal a profound misunderstanding of both database competition and open source dynamics."

As per Oracle the database market is intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors.

"There is no basis in European law for objecting to a merger of two among eight firms selling differentiated products. Mergers like this occur regularly and have not been prohibited by United States or European regulators in decades," the Oracle statement added.

Issuing of 'Statement of Objections' allows addressees to present arguments in response to the Commission's preliminary assessment of the competitive effects of a notified transaction.

In April this year, Oracle Corp had announced that it would acquire Sun Microsystems for $7.4 billion.

Earlier last month, EU Competition Commissioner Neelie Kroes has reportedly expressed disappointment that Oracle had failed to produce any hard evidence that there were no competition problems or, alternatively, proposals for a remedy to the competition problems identified by the Commission.

On October 21, Sun Microsystems had said it would slash 3,000 positions worldwide in the backdrop of delay in the acquisition of the company by Oracle.