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EU Objects to Oracle's Bid for PeopleSoft

Oracle's $9.4 billion bid to purchase Pleasanton, Calif.-based PeopleSoft got another vote of no confidence this week.

The Redwood Shores, Calif.-based software vendor said it received a "statement of objections" from the European Commission (EC) Friday, although it did not specify what the complaint entailed and would not comment further than to say it was expecting a clarification from the EC next week. The EC's final decision is expected to be issued on or before May 11.

"We are pleased to have clarity on what the Commission's key issues are and we will address these issues through our written right of reply and in our hearing testimony," Oracle spokesman Jim Finn said in a statement. "The process is ongoing and we are confident that the Commission will see how competitive this business truly is."

The EC notification comes in the same week Oracle met face to face with the U.S. Department of Justice in U.S. District Court in San Francisco as part of a pre-trial proceeding. The DoJ and seven states filed suit to stop the controversial takeover deal citing anti-completive protection. On Wednesday, a federal judge scheduled the trial for June 7, two weeks earlier than both Oracle and the DoJ anticipated. Both sides are scheduled to give updates in a March 19 phone conference. Lawyers are expected to be back in the courtroom April 16 to set additional pre-trial motion dates. The trial date gives each side about 60 days for discovery and to compile a witness list.

Central to the DoJ's case is the premise that the number of companies offering a full array of enterprise resource planning (ERP) tools (Human Resource Management or Financial Management Services) is currently limited to three: German-owned SAP , Oracle and PeopleSoft and that a merger would limit a customer's choices.

Oracle's defense is that it competes on the broader software market facing stiff competition from Microsoft , IBM and other mid-tier players.

PeopleSoft jumped on the EC news saying the objections supports its Board of Directors' position that the proposed combination of PeopleSoft and Oracle faces substantial regulatory scrutiny and the significant likelihood that the transaction will be prohibited under antitrust law.

"The world's two leading antitrust enforcement agencies have now asserted that the combination of these two companies is anticompetitive," PeopleSoft said in a statement.

Analysts say the odds are stacked against Oracle. Even if Oracle were to prevail against the DoJ, the European Commission would still have to issue its decision. After that, Oracle would still have to deal with PeopleSoft's "poison pill" and a liability around its customer assurance program.

As part of its third-quarter financial statement filed Thursday, Oracle said it has now spent in excess of $43.4 million in the last nine months pursuing the controversial deal.