It's not the first time this happened, and likely not the last. The European Commission has objected to Oracle's (ORCL) acquisition of Sun Microsystems (JAVA) after U.S. authorities have approve the $7.4 billion deal.The issue is Sun's database product, MySQL, which European antitrust authorities fear wouldn't be developed after the acquisition since Oracle has its own database and therefore it would hurt competition in the database business. Together, the two will have quite a large share of the market, the EU contends. The U.S. authorities disagrees, saying there are enough competitors in the market and that "the merger is unlikely to be anticompetitive."
Oracle, of course, also disagrees, saying the EU doesn't understand the business. It explains that since MySQL is open source it cannot be controlled by anyone. Not only that, the database market is competitive with eight players, including IBM (IBM), Microsoft (MSFT), Sybase and three distinct open source vendors.
MySQL usually is used to run popular websites and other businesses, while Oracle's enterprise database -- the top-selling product in the market -- is much more robust in order to deal with more data.
While Oracle vows to fight the ruling, in the meantime Sun's business has been hurt by the delays in the proposed acquisition. Oracle CEO Larry Ellison recently said Sun is losing about $100 million a month because of uncertainty about its future. Its sales for the recent quarter dropped 25% from a year earlier.
But while Oracle and Sun will try to change the Europeans' minds, one can't help but remember the General Electric (GE)-Honeywell (HON) fiasco when in 2001 the U.S. approved GE's purchase of Honeywell while the EU rejected it. The deal, of course, never materialized.
Perhaps Oracle should have known better as previously IBM didn't go ahead with its acquisition of Sun on exactly these kinds of regulatory concerns. And perhaps it will still prevail.
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