New York/Washington: The European Commission has objected to Oracle Corp's (ORCL.O) acquisition of computer maker Sun Microsystems Inc (JAVA.O), throwing the $7 billion deal into question.
The commission said in a preliminary assessment that combining Sun's MySQL database product and Oracle's products could hurt competition in the database market, Sun said in a filing with the U.S. Securities and Exchange Commission.
Oracle said it "plans to vigorously oppose the Commission's Statement of Objections". The Commission faces a January 19 deadline on whether to approve the deal.
Earlier this year, Sun struck a deal to sell itself to Oracle after several years of failed attempts to turn itself around. The deal was seen as a way to transform Sun into a diversified technology company, selling computers alongside Oracle's software.
European Union regulators said last month that Oracle has not presented evidence to placate antitrust concerns.
The Commission's prime concern appears to be Sun's MySQL database, which it bought for $1 billion last year and which is used to run popular websites including Google (GOOG.O), Facebook and Amazon (AMZN.O).
Oracle's database -- the top-selling product in the market -- is far more robust, allowing companies to quickly access larger quantities of data. Critics of the deal worry Oracle's ownership may hinder MySQL's development.
The U.S. Department of Justice, which gave the deal its approval in August, issued a statement on Monday saying it believed customers will still have a variety of choices after the companies merge.
"The Department's Antitrust Division concluded that the merger is unlikely to be anticompetitive," the department said, adding that it hoped Oracle and Sun could reach a speedy resolution with the European Commission.
It is rare for U.S. authorities to approve a merger only to see it run into trouble with European antitrust enforcers.
But it has happened before, for example when General Electric Co (GE.N) said it would buy Honeywell in 2000. The merger was cleared by U.S. authorities but was blocked by the European Commission on antitrust grounds in 2001.
Oracle Chief Executive Larry Ellison recently said Sun is losing about $100 million a month because of uncertainty about its future, due to the prolonged investigation by European antitrust officials.
Last Friday, Sun announced that quarterly revenue fell 25 percent. Rivals IBM (IBM.N) and Hewlett-Packard Co (HPQ.N) are taking advantage of the uncertainty by luring Sun's customers with steep discounts.
First Published: Tuesday, November 10, 2009, 10:45