A public spat between American and European antitrust regulators continued for a third day, as the European Union’s Competition Commissioner Neelie Kroes told Dow Jones it was unusual for the Justice Department to comment on a pending EU investigation.
“It isn’t normal [practice] to publish a statement from colleagues in Washington,” Kroes told the newswire.
Neelie Kroes
The dispute involves Oracle Corporation’s proposed $7.4 billion purchase of Sun Microsystems Inc.
The Justice Department’s Antitrust Division cleared the deal earlier this year, but the European Commission issued a set of objections this week over concerns the deal would decrease competition in the database software industry. DOJ then issued a statement taking issue with the EC’s decision.
The Antitrust Division is still in touch with its European counterparts on the Oracle investigation, according to a source at the Justice Department.
DOJ has issued similar statements in the past that highlight rifts between the two antitrust regulators.
After a European court affirmed in 2007 the Commission’s $613 million fine (according to the exchange rate at the time) on Microsoft, then Assistant Attorney General Thomas Barnett criticized the court’s decision and said it might have the effect of “chilling innovation and discouraging competition.”
And in 2001, Antitrust head Charles James blasted Brussels-based regulators after they blocked General Electric’s bid for Honeywell International: “Clear and longstanding U.S. antitrust policy holds that the antitrust laws protect competition, not competitors. Today’s EU decision reflects a significant point of divergence,” he said.
Antitrust officials in the Bush administration, including Barnett and James, often clashed with European regulators. When current Antitrust head Christine Varney took over, she withdrew a controversial Bush-era report on the conduct of individual firms outside the merger context, and pledged to work more closely with her European counterparts.
In a September speech at Fordham University, Varney stressed the need for cooperation between the two agencies. “In this context of a global economy, divergence in substantive rules and procedural approaches poses significant difficulties for members of the business community,” Varney said, according to a Dow Jones report.
Which makes the current dispute all the more surprising.
In the context of previous statements, this week’s release about Oracle is more sugar-coated. “At this point in its process, it appears that the EC holds a different view,” said Antitrust deputy Molly Boast. “We remain hopeful that the parties and the EC will reach a speedy resolution that benefits consumers in the Commission’s jurisdiction.”
The heart of the dispute involves different government approaches to free, or open-source, software. Sun owns MySQL, an open source database that programmers can access and build on for free.
Oracle argues that while its databases are used to manage complex back office functions like accounting and payroll processing at the largest companies, MySQL is used for quick web-based operations, like Google searches, and user interactions on social-networking sites like Facebook.
Not only do the two databases cater to different markets, Oracle argues, but the free nature of the software ensures that developers will continue to build on existing versions of MySQL. The Justice Department agreed.
Critics of the deal contend the markets are converging, particularly in Europe where companies turn to open source technology more often. MySQL is starting to compete in the market for the highest end databases, critics argue, and Oracle will stop providing the funding MySQL needs to remain competitive.
“Major customers in the enterprise sector already use MySQL where they previously used Oracle’s product,” said Florian Mueller, an advisor to MySQL’s creator, Michael ‘Monty’ Widenius, who has been pushing the EC to investigate the deal. ”All of this has a certain competitive impact.”
