EU, Oracle enter war of words over antitrust probe

By AOIFE WHITE

BRUSSELS

The European Commission and Oracle Corp. entered a war of words Tuesday after the company criticized EU regulators' objection to its takeover of Sun Microsystems.

Oracle said Monday that a formal antitrust charge sheet from the European Commission laying out problems with the proposed $7.4 billion acquisition of Sun Microsystems Inc. "reveals profound misunderstanding of both database competition and open source dynamics."

The European Commission, the executive branch of the EU, replied Tuesday that such criticism was "facile and superficial."

EU spokesman Jonathan Todd said regulators were obliged to investigate "a whole series of complaints from customers of these companies expressing their concerns" that Oracle's purchase of open-source database software MySQL could eliminate a crucial rival.

The EU executive has until Jan. 19, 2010 to decide whether to clear or block the deal. Todd would not confirm that regulators had sent formal charges to Oracle -- a rare move that signals that the EU sees major antitrust problems with a takeover and could forbid it going ahead.

Last month, Todd complained that Oracle had not tried to soothe regulators' worries by offering possible solutions -- possibly selling off MySQL, which Oracle says it does not want to do. Neither has Oracle supplied proof that there were no antitrust problems with databases, he said.

Todd repeated Tuesday that the EU was concerned that the world's biggest proprietary database company wanted to take over the world's leading open-source database provider.

The EU commission says it is worried about customer choice and higher prices and it is keen to see that open-source software continues to rival larger companies that develop their own code and don't share it with others.

MySQL is popular among Web-based companies and regulators say it will increasingly pose a threat to Oracle's market-leading database software as it adds features and attracts more customers. Sun paid $1 billion for it last year.

Todd said Tuesday that Oracle would become the exclusive holder of the copyright and trademark for MySQL code "which means that despite the fact that MySQL is open source, it could be very difficult for a competitor using MySQL code to sufficiently replace the competitive constraint" that MySQL places on database rivals.

The commission is concerned that Oracle could refuse to license MySQL to some companies or for some uses in order to favor its own software.

"Just because MySQL is open source, does not mean that if you want to apply it in the commercial context, that you can do what you like with it," Todd said.

Todd said EU regulators did not want to return shots with the U.S. over a Department of Justice statement Monday that described the takeover as "unlikely to be anticompetitive" and said it was hopeful that that the EU commission would reach "a speedy resolution."

He said such a statement was "unusual" and hinted that it was inappropriate for the U.S. to comment on EU antitrust issues.

"I cannot recall any instance where the European Commission has ever issued a statement concerning an ongoing investigation in another jurisdiction," he said. "We have our methods, they have theirs ... We do not always have the same evidence in front of us."

The EU objection ratchets up tension about the fate of the deal, which Sun badly needs to go through. It lost $120 million in the quarter ended Sept. 27 and is rapidly shedding market share to rivals like IBM Corp. and Hewlett-Packard Co.