US senators go to bat for Oracle, Sun merger

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Wat financiele bijdragen aan politici al niet te weeg kan brengen ;)

Groet / Cees

PS. Blij dat wij dit niet kennen. Even de banenjacht na(ast) de
politieke carriere buiten beschouwing gelaten, of briefjes aan 'Lieve
Els'

US Senators Go to Bat for Oracle, Sun Merger

By Erika Morphy
E-Commerce Times
Part of the ECT News Network
11/25/09 11:41 AM PT

The European Commission's hesitation over Oracle's acquisition of Sun
Microsystems has prompted 59 U.S. senators to weigh in on the matter,
urging the EC to allow the deal to proceed. The DoJ has already taken a
similar step. How the Europeans will respond to this additional pressure
from U.S. politicians is questionable.


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Fifty-nine U.S. senators are asking European antitrust regulators to
conclude their review of the Oracle (Nasdaq: ORCL) acquisition of Sun
Microsystems (Nasdaq: JAVA). The move, led by Sen. John Kerry, D-Mass.,
and Sen. Orrin Hatch, R-Utah, is an unusual one for the U.S. legislative
body.

It follows a similar action by the Department of Justice, which also
urged the Commission to wrap up the investigation. Whether this growing
pressure from the U.S. will have the desired effect, however, is
debatable.

Earlier this month, the Commission issued a formal statement of
objections to the proposed US$7.4 billion deal, based on a perceived
threat to competition -- namely, that Oracle ownership of Sun's open
source MySQL database software might represent unacceptable
consolidation in the database space.

The Justice Department, which approved the deal this summer, has asked
the Commission to consider the variety of choices customers would still
have after an Oracle-Sun merger.

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Mounting Concerns
It was never expected that the European Commission would rubber-stamp
the acquisition; however, the issuance of a formal statement of
objections was worrisome to proponents of the deal, as it signaled the
start of a process that could end with the EC requiring a divestiture of
MySQL as a condition of going forward with the deal.

That could explain why the Senate is ratcheting up the pressure.

"The EC is within its sovereign rights to set the rules for operation in
its market, but with our Department of Justice having made a compelling
case that the merger does not pose a threat to competition, it is fair
to ask the EC for the basis on which a delay on decision making is
warranted and to make a decision one way or the other," Kerry said in a
statement.

"Some have raised concerns over the company's ability to continue to
employ its thousands of workers," reads a letter signed by the 59
senators and addressed to Charge d'Affaires Angelos Pangratis, acting
head of the delegation of the European Commission to the United States.

"Accordingly, we respectfully request the European Commission complete
its investigation of this transaction as quickly as possible," the
letter concludes.


Different Approach
It's unusual for 59 senators to agree on competition policy, Ryan Radia,
an analyst with the Competitive Enterprise Institute, told the
E-Commerce Times.

Still, it is impossible to predict what impact -- positive or negative
-- this showing will have on the Commission, he said. "It probably won't
be a huge one. The European Commission takes a different approach to
competitive policy than the U.S. does. It is very focused on the impact
an acquisition would have on its competitors. In this case, they have
expressed clear concern that the acquisition would result in fewer
players in the MySQL database market."

Unlike American antitrust regulators, which consider a merger's market
effect, or lack thereof, the EU views large companies as suspect per se,
necessitating full review -- and frequently resulting in disapprovals,
Raymond Van Dyke, partner with Merchant & Gould, told the E-Commerce
Times.

For that reason, the merger will remain in limbo for a while longer, he
predicted -- despite Sun Microsystems' $100 million-a-month estimated
revenue losses as the deal pends.

That said, the Commission is by no means insulated from politics, noted
Competitive Enterprise's Radia, and "it is possible that the letter may
nudge them in the direction of approving the deal."


Image Problems
It is also possible that the letter could backfire for the U.S.
companies, Axis Technology President Mike Logan told the E-Commerce
Times.

Most countries react strongly to the perception that they are being
strong-armed by the U.S., even in business matters. The U.S. image
abroad was damaged by the perception that it played a major role in
creating the global recession, Logan said.

Oracle was unable to respond to the E-Commerce Times' request for
comment in time for publication.

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