Reports circulating on Friday suggest that staff lawyers at the US Department of Justice might use a new legal theory to block Oracle Corp’s attempted takeover of PeopleSoft Inc.
Standard merger guidelines assess antitrust issues according to the harm a merger would cause a group of similar customers. A report in the Wall Street Journal, citing Oracle executives, suggests that the new theory evaluates it in terms of a single customer, based on the argument that enterprises looking for HR or financial software will find their choices narrowed from three vendors to two. This implies that each customer comprises its own market.
Market definition has always been a critical part of Oracle and PeopleSoft’s arguments, with PeopleSoft arguing for a narrow definition based on large companies buying pre-packaged integrated suites of software which effectively restricts the market to PeopleSoft, Oracle and SAP. Oracle has always said the market is much wider and encompasses point supplies of all sizes, mid-market suite players, as well as the three biggest suite providers.
The final decision rests with the Assistant Attorney General who will make the final decision whether to block the bid or not by March 2, 2004. If the decision goes against Oracle based on the new theory, CEO Larry Ellison who is said to be lobbying for support, could receive the backing needed for an appeal.
This article is based on material originally published by ComputerWire