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Europe Readies Antitrust Case Against Oracle

Published by: rose 2008-11-23

Europe's antitrust regulatory body could restart its probe into Oracle's unsolicited bid for PeopleSoft as soon as next month, according to published reports.

The European Commission, the regulatory body of the European Union, is following its U.S. counterparts in an evaluation of the now $7.7 billion transaction that would join Redwood Shores, Calif-based Oracle and Pleasanton, Calif.-based PeopleSoft. After its initial inquiry, the commission had suspended its investigation back in April as it wanted to wait for the U.S. courts to resolve its case.

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Now sources close to the deal quoted by AFX News and ECT News suggest the EC could "start the clock...within weeks" even before the U.S. courts render their decision. The timetable was allegedly sped up because the EC received enough of the documents it requested from Oracle. A spokesperson with Oracle declined to comment on either the EC's investigation or its U.S. court case.

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DBAsupport.Com : Oracle 9i Central : Europe Readies Antitrust Case ::
Europe Readies Antitrust Case Against Oracle. [From internetnews.com]. Europe's antitrust regulatory body could restart its probe into Oracle's unsolicited
http://www.dbasupport.com/oracle/news/europe_antitrust_case.shtml
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District Judge Vaughn Walker is currently reviewing a U.S. Department of Justice (DoJ) request to block Oracle's bid for PeopleSoft. The government spent a little more than four weeks trying to prove that the deal would limit choice and create uncertainty in the enterprise resource planning (ERP) market.

Oracle's lawyers refuted each claim and called several witnesses, including CEO Larry Ellison, to argue that the government's ERP definition is too narrow and must be widened to include Microsoft and IBM, as well as Lawson, Fidelity and Ceridian.

The judge has called for a hearing on August 13 in San Francisco to finalize requests by third-party companies like IBM, SAP , Microsoft and others that submitted sensitive corporate information to help the DoJ and 11 states with their case.

Already the trial uncovered plans by Microsoft to acquire SAP and possibly PeopleSoft, as well as Oracle's business practices when it comes to giving discounts to undercut the competition. A spokesperson with the DoJ told

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internetnews.com that the government will file its opinion with the courts on the third-party issue later today.

Ken Marlin, managing partner of mergers and acquisitions investment bank Marlin & Associates, noted that if Oracle wins, it will still have to deal with lawsuits by the EC and several states.

"The real question is what will PeopleSoft do if the DoJ loses," Marlin told internetnews.com. "Most people will expect PeopleSoft to appeal. They probably will. But at that point, it might be smart for PeopleSoft to simultaneously try to negotiate with Oracle (or with a friendlier suitor, e.g. Microsoft of IBM).

"Remember that the PeopleSoft board gave two reasons for turning down Oracle's offer: It would never pass anti-trust muster and the price offered was not adequate. If the first issue were to go away, then they are left with only price," said Marlin. "It's fairly clear to us that PeopleSoft's stock price has gained only because of speculation that Oracle will win. Note that PeopleSoft's stock price gained in spite of reduced economic forecasts by PeopleSoft."

PeopleSoft's stock price has also been bolstered by recent market wins from Oracle and SAP. The company said this week that it secured a contract with the U.S. Department of Treasury for its PeopleSoft Enterprise ePerformance to improve "Treasury HR Connect," the Department's enterprise-wide human resources system serving approximately 140,000 employees and managers.

Last week, PeopleSoft recorded its largest contract ever -- $50 million -- with Mexico's Tax Administration Service, the equivalent of the U.S. Internal Revenue Service. The contract was sorely needed, as PeopleSoft also reported to the Securities and Exchange Commission (SEC) that it has so far spent upwards of $70 million to fight off Oracle's advances.

Stephen O'Grady, senior analyst at market research firm RedMonk, suggests the effects of the trial are already sending waves through the enterprise Application vendors market.

"PeopleSoft certainly indicates that Oracle's application partners should at once consider the possibility that they're an acquisition target, and also be concerned about the possibly of competing with their partner should Oracle choose to enter new markets," O'Grady told internetnews.com. "With respect to perceptions, I think Oracle hasn't particularly hurt itself, at least perception-wise, and has certainly bled their acquisition target with legal and finance fees. Add to that the fact that IBM would be negatively affected by the acquisition if it goes through, and Oracle is probably not displeased with the path the talks have taken."

Marlin also said once the publicity dies down, his firm "would not be surprised to see Microsoft seek to acquire one of the other players in this market -- perhaps Lawson."


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