The proposed transaction, which was announced in April, would bring together two major competitors in the market for databases.
The Commission said that its initial investigation into the acquisition indicated that competition concerns on the market for databases may prove a stumbling block for it to rubber-stamp the deal.
“The Commission has to examine very carefully the effects on competition in Europe when the world’s leading proprietary database company proposes to take over the world's leading open-source database company,” said EU Competition Commissioner Neelie Kroes.
“In particular, the Commission has an obligation to ensure that customers would not face reduced choice or higher prices as a result of this takeover. Databases are a key element of company IT systems. In the current economic context, all companies are looking for cost-effective IT solutions, and systems based on open-source software are increasingly emerging as viable alternatives to proprietary solutions. The Commission has to ensure that such alternatives would continue to be available,” she said.
The current database market is highly concentrated, with the three main competitors of proprietary databases – Oracle, IBM and Microsoft – controlling approximately 85pc of the market in terms of revenue, the EU said.
Oracle is the market leader in proprietary databases, while Sun's MySQL database product is the leading open-source database.
The Commission's main concerns appear to surround Oracle's incentive to further develop MySQL as an open-source database, should it acquire Sun.
It said initial investigations into the acquisition showed that the Oracle databases and Sun's MySQL compete directly in many sectors of the database market and that MySQL is widely expected to become more or a competitive threat as it becomes increasingly functional.
The investigation also pointed to the fact that the open source nature of Sun's MySQL might not fully eliminate the potential for anti-competitive effects from Oracle's acquisition of Sun.
The Commission now has 90 working days, until 19 January 2010, to make a final decision on whether Oracle buying Sun would significantly affect competition within the EU.
Last month, the US Department of Justice cleared Oracle to acquire Sun after several months of investigation.
By Jennifer Yau
Pictured: EU Competition Commissioner Neelie Kroes