The European Commission has launched an in-depth investigation into Oracle's hostile $7.3bn bid to take over rival software maker PeopleSoft.
The commission said that during the four-month probe it will investigate the transaction's impact on the market for business application software used by large multinational companies.
"The initial one-month investigation has shown that the combination of two of the largest competitors in the market merits further analysis especially as the number of key players would be reduced from three to two - Oracle and SAP - in certain applications software markets," the commission said.
Software that helps companies co-ordinate and plan their financial and human resources and their relationship with customers are among the sectors the commission will look at.
In June, Oracle launched a takeover bid for rival PeopleSoft. It notified the commission about last month.
Oracle primarily sells database management programs, a market in which PeopleSoft does not participate. However, Oracle also sells business applications software, a market in which it competes with PeopleSoft as well as other software makers such as Germany's SAP.
The commission may also investigate any potential effects in the relational database market, where Oracle has a particularly strong presence.
The European Commission and the antitrust division of the US Department of Justice (DoJ) are co-operating in this case, which requires regulatory approval on both sides of the Atlantic. The DoJ examination of the proposed deal is expected to conclude in January or February.
Paul Meller writes for IDG News Service