Oracle's planned takeover of Sun Microsystems will be subject to a deeper investigation by the European Commission, following "serious concerns" over the effect of the merger on competition.

Oracle announced in April that it planned to acquire Sun for about $7.4bn in cash, or $9.50 per share. The acquisition would reshape Oracle, turning it into a hardware and software vendor that can compete more intensely with IBM and HP.

After conducting a routine month-long investigation under the European Union Merger Regulation, the Commission revealed it wanted to delve deeper into the planned merger and will issue its decision on January 19 next year. This is despite the fact, the US Department of Justice and has already approved the merger.

The Commission said it "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".

Competition Commissioner Neelie Kroes said the Commission's job in the extended investigation "is to ensure that customers would not face reduced choice or higher prices as a result of this takeover".

Oracle acknowledged the Commission had extended its probe but provided no specific commentary on the decision. However Sun did not immediately respond to a request for comment.

"In its in-depth investigation, the Commission will therefore address a number of issues, including Oracle's incentive to further develop MySQL as an open source database," the Commission said.

Earlier this week Sun reported a 31 percent drop in sales during the quarter running from April to June, compared with sales during the same period in 2008. Operating loss for the quarter was $218m, compared with an operating profit of $63m a year earlier.

See also: Sun shareholders try to block Oracle sale