IP/10/40
Brussels, 21 st January 2010
Mergers: Commission clears Oracle's proposed acquisition of Sun Microsystems
The European Commission has approved under the EU Merger Regulation the
proposed acquisition of US hardware and software vendor Sun Microsystems
Inc. by Oracle Corporation, a US enterprise software company. After an
in-depth examination, launched in September 2009 (see IP/09/1271 ), the
Commission concluded that the transaction would not significantly impede
effective competition in the European Economic Area (EEA) or any
substantial part of it.
Competition Commissioner Neelie Kroes said: "I am now satisfied that
competition and innovation will be preserved on all the markets
concerned. Oracle's acquisition of Sun has the potential to revitalise
important assets and create new and innovative products."
Oracle is a supplier of business software, including middleware (i.e.
software that connects software components applications), database
software, enterprise application software and related services.
Sun provides network computing infrastructure solutions that include
computer systems, software, storage and services. In 2008, Sun acquired
the open source database, MySQL.
The Commission's in-depth investigation, opened on 3 September 2009
assessed whether the acquisition of the world's leading open source
database MySQL by Oracle, the leading proprietary database vendor, would
lead to a significant impediment of effective competition within the
EEA. The database market is highly concentrated with the three main
proprietary database vendors – Oracle, IBM and Microsoft – accounting
for approximately 85% of the market in terms of revenue.
Although Sun's share of the database market in terms of revenue is low,
as users of MySQL can download and use the database for free, given its
open source nature, the Commission's investigation confirmed MySQL's
position as the leading open source database. The Commission's
investigation therefore focussed on the nature and extent of the
competitive constraint that MySQL currently exerts on Oracle and whether
this would be affected by the proposed transaction.
The Commission's in-depth investigation showed that although MySQL and
Oracle compete in certain parts of the database market, they are not
close competitors in others, such as the high-end segment.
Given the open source nature of MySQL, the Commission also assessed
Oracle's ability and incentive to remove the constraint exerted by MySQL
after the merger and the extent to which this constraint could, if
necessary, be replaced by other actors on the database market.
The Commission's investigation showed that another open source database,
PostgreSQL, is considered by many database users to be a credible
alternative to MySQL and could be expected to replace to some extent the
competitive force currently exerted by MySQL on the database market. In
addition, the Commission found that 'forks' (branches of the MySQL code
base), which are legally possible given MySQL's open source nature,
might also develop in future to exercise a competitive constraint on
Oracle in a sufficient and timely manner. Given the specificities of the
open source software industry, the Commission also took into account
Oracle's public announcement of 14 December 2009 of a series of pledges
to customers, users and developers of MySQL concerning issues such as
the continued release of future versions of MySQL under the GPL (General
Public Licence) open source licence. Oracle has already taken action to
implement some of its pledges by making binding offers to third parties
who currently have a licensing contract for MySQL with Sun to amend
contracts. This is likely to allow third parties to continue to develop
storage engines to be integrated with MySQL and to extend the
functionality of MySQL.
The Commission also examined the potential impact of Oracle's
acquisition of the intellectual property (IP) rights connected to the
Java development platform in the context of the proposed transaction.
It found that Oracle's ability to deny its competitors access to
important IP rights would be limited by the functioning of the Java
Community Process (JCP) which is a participative process for developing
and revising Java technology specifications involving numerous other
important players in the IT industry, including Oracle's competitors.
The Commission also found that Oracle would not have the incentives to
restrict its competitors' access to the Java IP rights as this would
jeopardise the gains derived from broad adoption of the Java platform
and therefore the proposed transaction would raise no competition
concerns in respect of the licensing of IP rights connected with Java.
The Commission also examined the potential effects arising from the
proposed transaction on the market for middleware and in the 'IT stack',
where the merger would strengthen Oracle's presence. It concluded that
no competition concerns would arise in these areas in the light of the
merged entity's market shares and prevailing competition in the markets.
More information on the case is available at:
http://ec.europa.eu/competition/mergers/cases/index/m110.html#m_5529
original document link:
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/40&format=PDF&aged=0&language=EN&guiLanguage=en
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