EU Objects to Oracle's Takeover of Sun

FILE - In this April 6, 2009 photo, a sign is shown in front of Sun Microsystems' headquarters in...

FILE - In this April 6, 2009 photo, a sign is shown in front of Sun Microsystems' headquarters in Santa Clara, Calif. European antitrust regulators have formally objected to Sun Microsystems Inc.'s planned $7.4 billion sale to Oracle Corp., escalating a battle over a deal that has already been cleared in the U.S. (AP Photo/Paul Sakuma, file)

(AP)

European antitrust regulators have formally objected to Sun Microsystems Inc.'s planned $7.4 billion sale to Oracle Corp., escalating a battle over a deal that has already been cleared in the U.S.

The so-called "statement of objections" that Sun received Monday from the European Commission isn't entirely surprising, since the commission already expressed concerns about possible harm to the database market from an Oracle-Sun tie-up when it launched a formal antitrust probe of the deal in September.

The objection, though, ratchets up tension about the fate of the deal, which Sun badly needs to go through, and presents an interesting challenge for the Obama administration, which has vowed to vigorously pursue antitrust cases and now finds itself at odds with European regulators.

Uncertainty about the deal, which both companies had hoped would close this summer, has wounded Sun, which is losing market share in computer servers to rivals like IBM Corp. and Hewlett-Packard Co. Last week Sun revealed that it lost $120 million in the quarter ended Sept. 27.

In a filing with the Securities and Exchange Commission Monday, Sun stressed that European regulators' objections are the result only of a preliminary investigation and that the commission hasn't made its final decision about the matter. Sun and Oracle are allowed to argue their case to the commission, which Oracle said it will do to correct what it called a "profound misunderstanding" about the companies' markets.

The EU responded 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.