RealTime IT News

EC Halts Probe of Oracle-PeopleSoft Bid

The European Commission (EC) Thursday said it has postponed its evaluation of Oracle and its $9.4 billion proposal to acquire PeopleSoft.

As previously reported, the EC met behind closed doors with representatives of Redwood Shores, Calif.-based Oracle earlier this month to discuss its "statement of objections" to the unsolicited bid.

Commission spokesman Tilman Lueder told the Associated Press and Reuters that the decision to suspend the EU review was made Wednesday. No new deadline has been set to replace the previous one of May 11. This is the second time the EC has requested additional information after "stopping the clock" and then restarting.

"We are missing relevant information... on the market position of Oracle in the human resource and financial management software," Lueder said.

A spokesperson with Oracle confirmed the company received a request from the EC for additional information.

"We will continue to cooperate with the Commission and will respond as quickly as possible," Oracle spokesman Jim Finn issued in a brief statement to internetnews.com.

Analysts following the case say the EC would rather have all of the facts in place before issuing its ruling. And that would mean waiting till the U.S. Department of Justice wraps up its court case against Oracle.

Lueder dismissed the assumption that the EC's investigation hinged on the results of the DoJ's case, saying there was no link between the two cases.

"There's an independent obligation to cooperation with our investigation, which is specific and precise information that we asked for, which is not fulfilled by just saying that this information is available in the US court case," he said.

Lawyers for the DoJ and Oracle are due in court Friday to discuss how both sides will present their cases in court -- including the use of videotape and secure servers. The trial is scheduled to begin on June 7.

Both the EU and the DoJ argue 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.

Melanie Hollands, president of Koala Capital, a hedge fund that focuses on technology stocks told internetnews.com that removing PeopleSoft from the ERP business (particularly now that it bought J.D. Edwards) would leave SAP with a more dominant share of the business.

"Looking at the high-end of the market, Oracle has about 35-40 percent right now and this would increase to more than 50 percent market share of the high-end if Oracle succeeds at buying PeopleSoft," she said.

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.