US DOJ approves AOL-Netscape-Sun deal

The US Department of Justice has approved America Online's proposed acquisition of Netscape Communications and AOL's related strategic alliance with Sun Microsystems, according to a brief statement released by the DOJ.

The DOJ's antitrust division said it investigated thoroughly the proposed $US4.2 billion merger and decided not to challenge it, concluding that neither the merger nor the alliance violate antitrust law.

AOL announced in November its intention to buy Netscape. The stock-for-stock deal leans heavily on a related alliance between AOL and Sun, in which the service provider agreed to buy systems and services from Sun worth $US500 million through 2002.

As part of the deal, AOL and Sun will partner to develop future versions of Netscape's software clients and build Internet devices that use Sun's Java programming language. Meanwhile AOL will receive more than $US350 million in licensing, marketing and advertising fees from Sun.

Analysts have said the merger and alliance would create a formidable Internet triumvirate that could threaten Microsoft's attempt to extend its software dominance into Internet services and software. Microsoft has cited the merger in its antitrust lawsuit with the DOJ as evidence that competition is alive and kicking in the software industry.

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