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Brussels readies full investigation of Oracle Sun

Larry's stubbornness backfiring?

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Oracle has resigned itself to the likelihood of a full European competition investigation into its takeover of Sun Microsystems.

Although the deal has already been approved by US regulators, the European Competition Commission is less happy with the deal. Larry Ellison's high-handed strategy of refusing any compromise seems likely to lead to a full investigation, according to observers talking to the FT.

Neelie Kroes, European Competition Commissioner, is concerned about what Ellison will do with open source database software MySQL, which could be seen as a competitive threat to Oracle's core business. The worry is that Oracle has little incentive to invest in something which, over time, could damage its own revenues. It is currently carrying out an initial probe, short of a full investigation.

Kroes said in September: "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."

Senior management seem to have been surprised by Europe's less than rapturous response to the deal.

Brussels has still to issue any formal statement of objections to the deal, so it could be Oracle is just keeping its powder dry until it knows exactly what Kroes and the Commission are unhappy with.

A full investigation does not necessarily mean the deal is blocked or approved. The Commission could also request structural or behavioural remedies - either a spinning off of MySQL or some kind of undertaking to continue investment in the open source database. ®

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