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

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 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.

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