DOJ Mulling Action on Oracle/PeopleSoft Spat

After months of monitoring the back-and-forth between two mortal enemies,
the U.S. Department of Justice (DOJ) appears poised to step in to attempt to thwart
hostile $7.3 billion takeover bid for applications rival
PeopleSoft .

Attorneys with knowledge of the issue say DOJ lawyers are preparing to step
in, according to USA Today, and they are in the midst of requesting
statements from customers of the warring vendors for what could be a
decisive trial in the future. The publication also said the agency named
senior antitrust lawyer Kent Hill to the investigation, which is perhaps
another indication that it is taking the case seriously.

Such action, attorneys have said, could quash Oracle’s attempt to purchase
its rival because of the heightened concern about anti-competitive issues in
the wake of the highly-publicized Microsoft antitrust case a few years back.

When he learned of the takeover attempt in June, Rob Christoper, an attorney
at Coudert Brothers in Palo, Alto, Calif., specializing in litigation on
antitrust and general business disputes for technology companies, said he
was reminded of Microsoft and a number of other cases involving possible
anti-competitive actions.

Christopher said then that he believed it is highly likely the DOJ might
issue a secondary request for information on Oracle’s bid, which it has. In
the Oracle/PeopleSoft case, Christopher said, the DOJ would likely look at
how the Oracle bid for PeopleSoft will truly benefit the customer more
closely than how it might hurt other companies in the multi-tiered space.

According to the USA Today’s sources pertaining to the case,
Christopher’s prognostications could be prophetic.

A DOJ spokesperson told that an investigation into the Oracle/PeopleSoft matter was indeed ongoing, but would not comment further.

But Oracle spokesman Jim Finn said the idea that the DOJ is looking to halt Oracle’s bid is premature. Finn said Oracle is, in fact, on track to complete the second request for information from the DOJ by mid to late October.

“It is important not to confuse process with outcome,” Finn told This is part and parcel of a normal antitrust investigation… To predict the outcome at this time is like trying to predict interest rates based on the thickness of Alan Greenspan’s briefcase.”

PeopleSoft refused to comment.

PeopleSoft became a significant threat to Oracle’s applications business
when it acquired
mid-market applications provider J.D. Edwards for $1.7 billion.

Oracle announced its intentions to buy PeopleSoft June 6 and the two have
been in court ever since, negotiating a series of legal maneuvers. The
latest issue is a battle between the two companies in Delaware district
court over whether PeopleSoft has the right to get internal e-mails from
Oracle released to the public.

PeopleSoft is trying to prove that Oracle executives and lower-rung
employees have gloated about the company’s overtures to hurt PeopleSoft en
route to scooping it up. Oracle denied such proof, noting that the e-mails
were taken out of context. A district court judge in Delaware agreed to
allow the release of several Oracle e-mails that suggest its hostile
intentions to break up its rival.

Conversely, Oracle has also accused PeopleSoft of withholding about 2,000
e-mails sent to or received by its CEO Craig Conway. The court also ordered
PeopleSoft to provide an affidavit to Oracle that justifies its actions.

In related news Thursday, PeopleSoft confirmed that it has begun cutting back duplicate job positions as a result of its merger with J.D. Edwards. Some 750 to 1,000 employees will lose their jobs a result of the elimination by the end of first quarter of 2004.

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