Though anti-trust officials in the U.S have blessed the deal, European Commission, the anti-trust body of the EU, has raised concerns over issues of competition.
The EC’s opposition may not prevent the deal from coming through, but will pose considerable hindrances for its smooth passage. Though the chances of stalling the process completely are remote, it cannot be ruled out. In 2000, a merger that was approved by US authorities between General Electric and Honeywell was rejected by the European Commission in 2001 on anti-trust grounds.
The objection has miffed the US Depart of Justice that had cleared the merger as harmless and viewed it as “unlikely to be anticompetitive”. The Department of Justice issued the clearance after reviewing it thoroughly. It studied earlier such probes, consulted industry experts, and examined internal documents.
Molly Boast, the Deputy Assistant Attorney General said, “consumer harm is unlikely because customers would continue to have choices from a variety of well established and widely accepted database products.”
Oracle has responded to the objections with displeasure and plans to oppose them vigorously. “The commission’s statement of objections reveals a profound misunderstanding of both database competition and open- source dynamics. The products don’t reduce competition in the slightest,” says a spokesperson for Oracle.
World’s biggest as well as world’s most popular
Oracle Corp. is the world’s biggest database software maker catering to the corporate world. Sun is the fourth largest producer of servers, owner of Java programming language, and Solaris operating system. It had purchased open source database software MySQL in 2008 for $1 billion.
MySQL is the most popular and freely distributed database in the world. MySQL is indispensable for running a majority of the websites and it is downloaded nearly 60,000 times per day. Garter Inc., a Stamford based research firm, reported that Oracle captured 48 percent, a lion’s share, of the database market in 2008. Sun had less than 0.5 percent share of the market.
Apart from viewing the merger as harmless to competition, Oracle views it as a necessity to fight competition in the high-end server market where IBM and Hewlett-Packard Co are the major players. However, competitors including SAP AG and Microsoft don’t subscribe to the view. They have been lobbying for stricter reviews of the merger.
The final verdict
The European Commission has been conducting in depth investigation of the merger since September. It has time till Jan. 19, 2010 to give its final rulings on the deal. Till such time Oracle will not sit idle.
“Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction,” vows Oracle.
Post new comment