Posted by : Anonymous on Mar 08, 2004 - 11:35 PM General

Oracle filed its first official response to a Justice Department lawsuit, denying government charges that a merger with PeopleSoft would be anti-competitive. The Redwood Shores software giant outlined its legal arguments in a 26-page brief filed in federal court in San Francisco. The reply repeats many of the arguments the company has been making throughout its takeover battle, but this time in greater depth.


Oracle insists the market for selling business software applications remains extremely competitive. It also accuses the government of "gerrymandering the market" by creating a fictitious category of large customers that would be harmed by the merger.

Oracle and Justice Department officials are working out a schedule for pretrial hearings and depositions. The company has said it is confident of prevailing in court and hopes a trial will be held by early summer.

An Oracle representative could not be reached for comment Friday.

Steve Swasey, a PeopleSoft spokesman, repeated the company's claim that Oracle was only prolonging the fight to damage the Pleasanton company's business.

"The DOJ has no ax to grind," Swasey said. "They studied it for nine months."

The Justice Department filed a lawsuit last week to block Oracle's $9.4 billion hostile takeover bid of PeopleSoft. While Oracle vowed to fight the suit "vigorously," the Justice Department rarely loses such cases.

In the lawsuit, Justice Department lawyers said the merger would be anti-competitive because it would reduce from three to two the number of companies that sell "high function" business software applications to large customers such as state governments, universities and Fortune 500 companies.

Oracle in its legal response said it was arbitrary to draw such distinctions between customers based on their size because vendors such as PeopleSoft sell essentially the same software to customers regardless of size. Oracle said the government was attempting to draw a circle as narrowly as possible around a group of customers that was primarily served by Oracle, PeopleSoft and SAP of Germany.

"Plaintiffs' `high-function' market definitions are a means of gerrymandering the market around SAP, PeopleSoft and Oracle," Oracle wrote in its brief. "They lack any factual or legal basis."

Oracle also said there were countless competitors in the marketplace. And it also said its merger with PeopleSoft would be pro-competitive because the new company would be in a better position to challenge market leader SAP and Microsoft, which has threatened to enter the market.

"No customers will be harmed by the proposed transaction, but least of all the world's largest, most sophisticated business enterprises," Oracle wrote.

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San Jose Mercury News
By Chris O'Brien
Monday, March 08, 2004 (Originally Published: 3/6/04)

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