US Justice Department Attacks Oracle Bid

by Glen Shapiro, LawAndTax-News.com, New York

27 February 2004

The US Justice Department said on Thursday that Oracle Corp's $9.4 billion bid for PeopleSoft would be anti-competitive and filed suit in the US District Court in San Francisco to block the deal.

Oracle said it would challenge the decision. "We believe that the government's case is without basis in fact or in law, and we look forward to proving this in court," said Jim Finn, Oracle's spokesman.

The government claims that for many large corporate customers the only viable choices for enterprise management software are SAP, PeopleSoft and Oracle. "We believe this transaction is anticompetitive, pure and simple," said R. Hewitt Pate, the Justice Department antitrust chief. "Blocking this deal protects competition that benefits major businesses, as well as government agencies that depend on competition to get the best value for taxpayers' dollars.

Oracle's lawyers point out that the business applications software market is highly fragmented, pointing to a report from market-research firm Gartner which shows that SAP controls about 20% of the market, with PeopleSoft controlling 7% and Oracle 6%.

Most bids that are attacked by the Government tend to crumble away, but Oracle's combative founder, Larry Ellison seems ready to take on the Justice Department although his bid for PeopleSoft - a most unwilling target - already has a long and tangled history. Big egos are always good news for lawyers!

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