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EU to investigate Oracle-Sun deal

Regulators opens antitrust probe into pending merger, citing concerns that the deal may hinder competition in the database market.

Final approval of Oracle's $7.4 billion takeover of Sun Microsystems has just hit a snag, courtesy of European regulators.

The European Commission announced Thursday that it has launched an in-depth investigation into the proposed merger between Oracle and Sun. The agency said its preliminary probe raised concerns that the deal could threaten competition in the database market in the European Economic Area (EEA), an association composed of 30 different European countries.

That initial investigation showed that Oracle's proprietary databases and Sun's open-source MySQL compete directly in many areas of the market, so the Commission wants to address a number of issues, including Oracle's incentive to further develop MySQL as an open-source database.

Competition Commissioner Neelie Kroes said in a statement: "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. In particular, the Commission has an obligation to ensure that customers would not face reduced choice or higher prices as a result of this takeover."

Pointing out the importance of databases to corporate IT systems, the Commission said that in light of the current economy, companies need cost-effective solutions. "And systems based on open-source software are increasingly emerging as viable alternatives to proprietary solutions," said Kroes. "The Commission has to ensure that such alternatives would continue to be available."

The Commission, which is the executive arm of the European Union, now has 90 working days, until January 19, 2010, to make a final decision on the merger.

Oracle had little comment except to say in a statement that the Commission had decided to "seek out more information regarding the merger by launching a Phase Two inquiry," which indicates a more in-depth follow-up to the initial probe.

The merger has already been approved by Sun stockholders and by the U.S. Justice Department.