Oracle/Sun (DOJ, European Commission)

The Situation

On 20 April 2009 Oracle Corporation (Oracle) and Sun Microsystems (Sun) announced that Oracle would acquire Sun, in a transaction valued at approximately $7.4 billion.

Oracle develops, manufactures, and distributes enterprise software solutions and related services, including a broad range of middleware, database, and enterprise applications software. It is one of the world's largest business software companies.

Sun provided standards-based computing infrastructure, including enterprise computing systems, software, and storage. Among others, it was well known for its open source MySQL and Java activities.

The transaction underwent close scrutiny by the US Department of Justice (DOJ) and the European Commission.

NERA's Role

Teams from NERA's New York and London offices provided economic advice to Sun in its dealings with both the DOJ and the European Commission.

The Result

In the US, after issuing a second request in June 2009, the DOJ on 20 August 2009 closed its investigation of the transaction and terminated the waiting period under the Hart-Scott-Rodino Act.

In Europe, DG Competition opened an in-depth (phase II) inquiry on 3 September 2009, and on 9 November 2009 it issued a statement of objections, based on concerns that the combination of the world's leading proprietary database company -- Oracle -- with the world's leading open source database company -- Sun, and more specifically MySQL -- in a highly concentrated market could harm consumers.

The US DOJ in response published a statement to explain that its own investigation had identified no concerns: consumers would continue to have a choice from a variety of well established and widely accepted database products, and there was a large community of developers and users of Sun's open source database with significant expertise in maintaining and improving the software, and who could support a "fork" of the MySQL code under the general public licence (GPL).

The Commission's in-depth investigation ultimately also confirmed that the case did not raise concerns, and the transaction was cleared unconditionally on 21 January 2010. During its phase II inquiry, DG Comp staff found that in many parts of the database market the parties were not close competitors, another open source database -- PostgreSQL -- could be expected to replace to some extent the competitive force exerted by MySQL, and a fork could develop to exercise a competitive constraint on Oracle.

On 27 January 2010 Oracle completed its acquisition of Sun.