On 25 September 2010 details were published of the appeal by Monty Program AB against the Commission's decision of January 2010 unconditionally approving the Oracle/Sun Microsystems merger. Pre-merger, both Oracle Corporation and Sun Microsystems were US companies, with Oracle the market leader in proprietary databases and Sun's MySQL database the leading open source database.
The Commission approved the Oracle/ Sun merger (after an in-depth phase II investigation), in part, on the basis of a number of informal public pledges made by Oracle (see Community Week issue 455). Additionally, despite the merger concerning two major competitors in the highly concentrated market for databases, the Commission found that Oracle and Sun did not compete across the whole database market and that there was a viable alternative open source database.
The appeal was lodged in July 2010, but details of the pleadings have only now been made public. Monty Program is appealing on the basis that the Commission erred both procedurally and in its legal analysis and is seeking an annulment of the merger decision.
Unsurprisingly, a key feature of the appeal relates to the informal pledges. The Commission's reliance on the informal pledges in clearing the merger was, at the time, unusual as a notifying party will typically be required to offer formal binding commitments to the Commission in order to address any competition concerns. Monty Program avers for example that the Commission both erred in law, and misused its powers, in classifying the informal pledges as new factual elements in the case. Further, it argues that the Commission breached its formal procedural rules by not applying its remedies notice and not market testing the informal pledges, which prevented formal comment by interested third parties.
Monty Program further contends that the Commission erred in its assessment of the competitive restraints in the marketplace, in particular its finding that other open source database providers would provide adequate competition.
It remains to be seen how the Commission will defend its stance. The appeal should however provide a useful test as to the legal status of informal pledges in future merger cases.
To view Community Week, Issue 491; 1st October 2010 in full, Click here
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