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Michigan Joins Anti-Oracle Fight

The state of Michigan is joining the U.S. government and seven other states that want to block Oracle's $9.4 billion proposal to takeover PeopleSoft, Attorney General Mike Cox said in a statement Wednesday.

Cox said that if Oracle acquires PeopleSoft, the merger would "impair competition between businesses, government agencies and other organizations that depend on their products." Some estimates place the cost to Michigan taxpayers at more than $130 million.

"We're joining this fight to make sure Michigan taxpayers do not have to pay more for goods and services, and to help guarantee a continued, diversified business market," Cox said after the state filed a motion in fFderal District Court in San Francisco to intervene in the antitrust suit. "I will fight to make sure that Michigan businesses and consumers aren't at the mercy of those who seek to evade our anti-trust laws for their own unjust gain."

Currently, Texas, Hawaii, Minnesota, Massachusetts, Maryland, New York, and North Dakota are standing behind the U.S. Department of Justice's case. The trial is scheduled to begin on June 7 in U.S. District Court in San Francisco. Judge Vaughn R. Walker is expected to hear pre-trial arguments April 16 on whether the states should piggyback on the Justice Department's case.

Oracle spokesperson Jennifer Glass declined to comment on Michigan's action or the pending litigation.

Coudert Brothers attorney Robert Christopher told internetnews.com that Michigan's entry into the fray is just one more nail in the coffin for Oracle's takeover plans.

"If I remember correctly, this Attorney General is actively involved in the process," Christopher said. "There is a possibility of a domino effect happening here, with some additional states filing to join that suit. Some states may sit back and wait for the Justice department to finish its case, because it does cost money to litigate."

Christopher would not speculate on which of the remaining states might be prompted to join behind the DoJ's suit. California State Attorney General Bill Lockyer's spokesman, Tom Dresslar, told internetnews.com the state had considered joining the original case but has not confirmed any plans to throw its hat in the ring now. Both Oracle and PeopleSoft are based in Northern California.

The government's argument suggests that the number of firms 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 between Oracle and PeopleSoft would limit a customer's choices. Oracle's defense identifies the software vendor as a competitor in the broader software market facing stiff competition in the mid-tier sector from Microsoft, IBM and others.

Last week, Oracle wrapped up two days of closed-door meetings to fend off opposition from the European Union. The EU's special Commission issued a "statement of objections" that Oracle said it received in March 2004. Specifics of the complaint are being kept under wraps. The EC's final decision is expected to be issued on or before May 11.

In related news, PeopleSoft's board of directors allowed its customer assurance program to expire. The provision would have offered rebates in the event of a hostile takeover and was put in place specifically as a deterrent against an Oracle takeover. Even if Oracle were to get beyond the litigation, it may have a hard time in a proxy war now that PeopleSoft shareholders have renewed four board positions, all of which are anti-takeover. PeopleSoft also has a poison pill in place.