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U.S. Senators Press EU to End Oracle-Sun Probe

Bipartisan group cites DoJ clearance as reason enough, but there might be one particular reason why it won't be.

November 24, 2009
By Andy Patrizio: More stories by this author:

U.S. Senators Press EU to End Oracle-Sun Probe
The European Commission (EC) has managed to pull off a feat that many American presidents have found plenty difficult to do: bringing about a bipartisan action in the U.S. Senate.

A group of 59 senators has sent an open letter to the EC imploring it end its probe of Oracle's acquisition of Sun and to let the deal consummate.

The group, led by Sens. John Kerry (D-Mass.) and Orrin Hatch (R-Utah), includes Sens. Dianne Feinstein and Barbara Boxer, both Democrats from California, the home base of Oracle (NASDAQ: ORCL) and Sun Microsystems (NASDAQ: JAVA).

The letter is addressed to Angelos Pangratis, the acting head of the EC's delegation in Washington. It notes that the U.S. Department of Justice has already investigated the $7.4 billion merger and cleared it, but it makes particular emphasis on the negative effect this delay -- now in its seventh month -- is having on Sun.

"In addition, due to Sun Microsystems' deteriorating financial condition and the possible negative effect on employment of the company’s workforce, we respectfully request the European Commission expedite the completion of its investigation into this transaction," the letter reads.

"Unfortunately, Sun Microsystems' financial position has become more precarious and the Commission's inquiry has continued," the letter adds. "Some have raised concerns over the company's ability to continue to employ its thousands of workers. Accordingly, we respectfully request the European Commission complete its investigation of this transaction as quickly as possible."

Earlier, the U.S. DoJ issued a statement of its own in support of the merger.

Martin Reynolds, research vice president with Gartner, appeared skeptical that the efforts would have an impact.

"You think they're going to listen?" he joked, adding that the senators' letter comes from a U.S. point of view and doesn't take into account how the EU operates.

"The DoJ runs on completely different competition rules than the EU," he said. "The DoJ looks at where there is harm to consumers. Their decision is businesses can look after themselves. The EU is more likely to be protective of competitors. They believe trade is better with more small competitors."

So it's not a policy issue, but a legal one -- one hidden away in the charter of the EU that ensures its regulators look at protecting actual businesses, and not just the end consumer.

"It's a different ruleset. If the U.S. comments were under EU rules and said there is no way this can affect trade, that's one thing," Reynolds said. "Because they are using the DoJ as a proxy for European decision, that doesn't work."

He also raised a really dark specter: While the EC has based the whole investigation on MySQL, it could come back in January and decide to add Java to the mix -- dragging out the investigation even longer.

It could happen: Reynolds said he suspects SAP, Oracle's sworn enemy, is one of the vendors pushing the EC for the investigation.

Oracle recently petitioned for and received a one-week extension to prepare its appeal to the EC's formal objection to the merger. That will take place in January.

TAGS: Senate, Sun Microsystems, Oracle, European Commission, acquisition




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