DOJ ENDS INVESTIGATION OF ORACLE’S PURCHASE OF SUN

On August 20, 2009, Oracle announced that the DOJ closed its investigation of Oracle’s acquisition of Sun. The DOJ issued a second request to further investigate the transaction in late June. The DOJ ended its investigation approximatley two months after issuing the second request without requiring any remedy.
Apparently, the licensing of Sun’s Java software platform was one of the key areas of concern for the DOJ. Many software vendors make software based on the Java language so those vendors have concerns that Oracle may in the future raise thier costs.

All of Oracle’s middleware runs on Java. More than 90 percent of the world’s cell phones and connected portable devices use Java networking software to run on Web-based networks, and a growing percentage of the world’s “smart cards,” an estimated 40 percent, use embedded Java chips to store personal, health and business information that can be accessed by card readers.

Customers and competitors raised concerns about Oracle’s acquisition of Sun. But, a number of software vendors in the database and middleware software space exist. Oracle’s and Sun’s database software products are not directly substitutable for each other, Sun’s MySQL product does not constrain the price of Oracle’s database product, and a number of database software vendors exist. The DOJ explored vertical issues relating to Oracle’s ability to raise costs to its software rivals that may rely on Java. The new administration listened to the complaints and further investigated the transaction.

It is noteworthy that the DOJ issued a second request to review the transaction given the lack of competition between Oracle and Sun and the lack of any real vertical concerns. This suggests that the DOJ gave some weight to competitor and customer concerns. It also appears that the DOJ was able to conduct a very quick but thorough investigation of a transaction that raised concerns among Oracle’s and Sun’s rivals and customers.

Andre Barlow
(202) 589-1834
abarlow@dbmlawgroup.com