European and American regulators clashed yesterday over the fate of Oracle’s $7.4 billion (£4.4 billion) bid to buy Sun Microsystems, which looks set to be mired in months of legal delay.

European antitrust regulators have objected to the deal, drawing a rebuke from the US Department of Justice (DoJ).

The delay is costing Sun and Oracle hundreds of millions of dollars as Sun’s corporate customers flee the uncertainty and choose rivals, such as IBM, for their computing needs. Oracle reacted to the European statement of objections with fury, accusing regulators of a “profound misunderstanding” of the computer database market.

The DoJ, which approved the deal in August, reaffirmed its support in an echo of the transatlantic clashes in 2000 over the bid by General Electric for Honeywell. Molly Boast, a deputy assistant attorney-general, said: “After conducting a careful investigation of the proposed transaction between Oracle and Sun, the department’s antitrust division concluded that the merger is unlikely to be anticompetitive. At this point in its process, it appears the European Commission holds a different view. We remain hopeful that the parties and the Commission will reach a speedy resolution that benefits consumers in the Commission’s jurisdiction.”

Those comments provoked a diplomatic putdown from a spokesman for Neelie Kroes, the European Competition Commissioner, who said: “I cannot recall any instance where the European Commission has ever issued a statement concerning ongoing investigations in another jurisdiction. We have our methods, they have theirs. We apply European merger control rules, they apply US merger control rules.”

In the end European regulators blocked the GE takeover of Honeywell and this pattern may be repeated.

The European Commission fears that businesses could have fewer choices and face higher prices if Oracle, the world’s biggest proprietary database company, swallows Sun, whose MySQL division makes the leading open-source database.

The stand-off could be resolved if Sun sells or spins off MySQL, which it bought for $1 billion last year. Larry Ellison, founder and chief executive of Oracle, has ruled out that option.

Uncertainty about the deal has wounded Sun, which is losing market share in computer servers. Sun said last week that it had lost $120 million in the past quarter and has said that it would cut 3,000 jobs over the next 12 months. Its stock has been stuck below Oracle’s $9.50-a-share offer.

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