RealTime IT News

Judge Asks for Clarification in Oracle/DoJ Trial

A federal judge presiding over the fate of Oracle's quest for PeopleSoft asked for a clarification from both parties before he renders his decision.

District Judge Vaughn Walker issued an order Monday suggesting that the "unilateral effects" of the proposed deal were not clearly stated in court.

Last week, the two sides issued "Findings of Fact" and are expected to issue their closing arguments on July 20. Judge Walker may not render his decision until at least August.

"It appears from the evidence that 'high function' enterprise applications software is neither homogenous nor standardized and transparent in pricing. Hence, coordinated effects analysis would appear to afford the court relatively little guidance in assessing the effects of the proposed merger," Judge Walker said in his filing.

The two sides must first clarify if they believe there is a coordinated effects approach, or "collective dominance," in play. Second, the court requested that the parties provide a detailed analysis of the legal framework to be used in analyzing unilateral effects claims.

The order follows an antitrust suit filed by the U.S. Department of Justice to block Oracle's unsolicited bid. The government spent four weeks trying to prove that the deal would limit choice and create uncertainty in the enterprise resource planning (ERP) market.

Oracle's lawyers called several witnesses to the stand, including CEO Larry Ellison. The company argued that the ERP definition is too narrow and must be widened to include Microsoft and IBM, as well as Fidelity and Ceridian, which they claim bend the rules when it comes to ERP.

Rob Christopher, a partner with Coudert Brothers who has been following the Oracle case, said one thing learned from the disclosures about contemplated mergers is that the high end of the enterprise software space already is highly consolidated, highly coveted and highly influential.

"We also have seen that the presence of three major players in this segment of the software business makes for robust competition, with sometimes steeply discounted pricing that serves user organizations -- whether business or governmental -- very well," Christopher told internetnews.com. "Neither Oracle nor SAP like that, which explains their witnesses' key testimony more than any other single cause. On balance, I found Oracle's defense to be mostly smoke and mirrors, but I think it was well strategized and well presented to a judge who hinted from the outset at some skepticism about the government's case. Consequently, the outcome is far from clear."

Despite its additional legal obstacles, Oracle said it is committed to go the distance in its quest to acquire its cross-town rival.

The Redwood Shores, Calif.-based software vendor issued a statement Monday saying it would extend its offer of $21 per-share or $7.7 billion for PeopleSoft. It is the latest such extension since Oracle dropped its takeover price from $26 per-share or $9.4 billion. The company said its tender offer was previously set to expire at midnight on Friday, July 16, 2004. Oracle said it currently has approximately 4,693,092 shares or about 1.3 percent of PeopleSoft's shares in its favor.

A spokesperson for PeopleSoft characterized the offer as "another anemic response from investors."

Oracle's takeover plan for PeopleSoft still faces many hurdles including PeopleSoft's civil trial filed against the merger that is scheduled for November, the company's shareholder rights "poison pill," its Customer Assurance Program and a potential antitrust challenge from the European Union.